Strategic planning is crucial to profitable business growth, but companies typically realise only about 63% of their business strategy's potential financial value because of defects and breakdowns in strategic planning and implementation. Put another way, the opportunity value of getting your strategic plan execution right is huge!
Problems of strategic plan implementation
A survey of our client base found that before we started working with them, only 15% of our clients made it a regular practice to go back and compare their business results with the performance forecast for each of their business units in its three-to-five-year strategic plan. Furthermore, when they did make the comparison, they found that performance rarely matched the previous year's projections.
Implementation is the most difficult part of the strategic planning process. It involves achieving the objectives set out in the strategic plan while remaining alert and flexible to new opportunities as they unfold.
For successful implementation, the strategic plan has to be robust in the first place. In other words, it must be realistic and solidly grounded in the underlying economics of the organisation's markets. For guidance on drawing up a high quality strategic plan, see the TCii White Paper "Strategic planning".
What is effective strategic plan implementation?
Implementation effectiveness can be measured by how well the business meets the financial projections set out in the strategic plan.
To achieve effective implementation, a business must ensure that any changes initiated by the strategic plan are reflected in areas such as budgeting, reward schemes and information systems. The overall goal is to integrate the results of strategic planning with daily, weekly and monthly routines.
The goals articulated in the strategic plan should drive marketing and sales efforts, human resources practices and research and development. These goals become a central part of the business by guiding daily operational activities.
Four fundamentals of strategic plan implementation
Once you have a robust strategic plan in place, the following actions are crucial to successful implementation.
- Avoid common implementation mistakes.
- Reach out to stakeholders.
- Measure progress in the strategic plan.
- Monitor the strategic plan.
1. Avoid common strategic plan implementation mistakes
Strategic planning entails risks. The strategic planning process may expose underlying conflicts within the organisation. It may disrupt the flow of information and the ways decisions are made. The point is not to allow current operating problems to dictate or deter long-range strategic planning.
Some of the commonest strategic plan implementation mistakes are outlined below.
- Just saying no. Management ends up discarding the strategic plan, choosing instead to make intuitive decisions that clash with accepted strategic objectives. The result is confusion throughout the ranks of employees.
- Lack of communication. The strategic plan is not communicated to front-line employees, who are therefore working in the dark.
- Losing sight. Managers are so tied up in day-to-day operating problems that they lose sight of the long-term strategic goals.
- "Bolt-on" syndrome. The strategic plan is treated as something separate and removed from the daily management of the business.
- Business as usual. Once the strategic plan has been drawn up, managers simply carry on as before.
- Wimping out. Management recoils from making the tough choices that the strategic plan may call for.
- The wrong scoreboard. Managers measure what's easy, not what's important.
- No yardstick. The business neglects to benchmark itself against its competitors, so it can't measure its progress against them.
- The be-all and end-all. Management sees the strategic planning document as an end in itself.
- Confusing terminology and language. People don't understand what you want because it isn't expressed clearly in the strategic plan.
2. Reach out to stakeholders
Channels of communication
Above all else, the business must communicate strategy clearly and regularly to employees. When the CEO and top management demonstrate the link between business strategy and specific business decisions, front-line staff are encouraged to think strategically too.
We suggest an informal chat between strategic planning team members and employees. Take the written strategic plan document back to the people you influence and discuss it with them in a conversational manner. Set up a feedback mechanism – suggestion box, one-on-one meeting, monthly updates – so that they have a chance to respond as well.
Communicating the strategic plan facilitates employee "buy-in" and a broader understanding of the organisation's strategic goals and objectives.
The underlying process of strategic change
Strategic change is like an iceberg: around two thirds of it is beneath the surface. In an organisation, everyone focuses on the content of the strategic change. But the problem isn't just to identify what needs to be done differently. You also need to think about how the strategic change will be managed.
The question is whether you make this process work for you or against you.
If your people don't buy into the underlying process of change management, it will fail.
Opening other communication channels
Don't just reach out to your employees: share the strategic plan with other stakeholders, such as investors, customers and alliance partners. An "open book" approach will likely generate more helpful ideas and suggestions about the future of your business.
3. Measure progress in the strategic plan
You can measure how well strategic plan implementation is progressing through key indicators such as revenue, gross sales and the number of new customers. The strategic planning team must decide what measurements are most applicable to long-term strategic objectives.
If you can't measure it, you can't manage it. So what things should you be measuring? Here are a few ideas:
- number of new customers
- total new product sales
- percentage margin
- return on assets
- return on equity
- return on investment
- market share
- employee morale
- customer satisfaction.
4. Monitor the strategic plan
Finally, to keep your strategic plan alive, you must monitor it. Here are some guidelines.
- Regular updates. Review progress on a monthly or quarterly basis, depending on the level of activity and time frame of the strategic plan. This applies to corporate, regional and departmental strategies. Specific tasks should be part of relevant strategic management meetings.
- Challenge underlying assumptions. While monitoring the strategic plan's progress, continue to examine its underlying assumptions, the continued validity of its strategic objectives and the influence of unanticipated events.
- Create a champion for every strategy and action. The strategy champion has to be someone other than the CEO, because the latter isn't accountable to anyone. The strategy champion doesn't necessarily have to complete the actions, but must see that they get done.
- Stay committed. Every strategy-related action must have a due date. As CEO you can let the due date slip, but don't let it go away. This tells the strategy champion that you aren't giving up on the strategy. If you keep following up, the strategy champion will see that you're serious about the strategy and putting it into effect.
- Conduct short-term strategy reviews. We suggest scheduling team "huddles" every 90 days to keep the strategic plan reviewed, reloaded and re-energised. These huddles also allow you to distinguish those individuals who are getting things done and those who aren't (the "empty suits"). Alternatively, you can schedule 60-day strategy reviews by senior management. These are an opportunity to take another look at the original plan, determine whether strategic objectives are being met, and agree new action steps as necessary.
- Expand skills. In the weeks and months following the strategic planning process, expand employee skills through training, recruitment or acquisition to include new competencies required by the strategic plan.
- Target sales. Sales and marketing tools form the link between business strategy and sales strategy. Designed correctly, these sales tools communicate an organisation's value and message to the marketplace, and generate positive feedback from customers and clients.
- Set strategic plan milestones. Go beyond monitoring: build into the strategic plan milestones that must be achieved within a specific time frame. Many companies do this on a monthly or weekly basis.
- Reward success. Find creative ways to motivate people and reward them for focusing on the strategy and vision. We call it the "pucker factor". Establish some positive/negative consequences for achieving/not achieving the organisation's stated strategy. These consequences may be great or small, so long as they serve to make the strategy a priority in people's minds.
The strategic change process: an 11-point checklist
- Finalise a strategic plan or major change with a roll-out plan.
- Align the budget to annual priorities and fund the strategic change.
- Build all department, division and unit annual plans around the organisation-wide annual priorities and goals.
- Set up a bimonthly or quarterly strategic change leadership steering committee to manage the strategic change process.
- Establish key success measures and a tracking system.
- Revise the performance management and rewards systems.
- Examine your organisational structure and staff/succession planning to ensure that they support the vision projected in the strategic plan.
- Initiate staff development to build your own internal cadre of expertise with skills to achieve your vision and core values.
- Draw up a game plan to ensure a critical mass for strategic change.
- Set sponsorship teams in place for each core strategy.
- Set a date for an annual strategic and business planning review.
What next for your strategic plan?
After considerable work and effort, a strategic plan is in place. Is the job done? The answer is a firm NO!
Be prepared to switch strategies
Over the life of a strategic plan, a company's vision may stay the same but its strategies will probably need to be revised. Some businesses can maintain a strategic plan for a year or longer, while others have to respond to market changes in less time. Usually, this means refining specific strategies and goals to meet changing circumstances each year.
A strategic plan should be "proactively reactive". Move ahead with the strategic plan as designed, but be prepared to let go and switch strategies as necessary. In other words: "If the horse is dead, you have to get off."
Choose your strategic approach
No one strategic planning model is right for all organisations or circumstances. Strategic planning teams can choose from a variety of models with an even wider range of approaches. But we believe a business that develops and executes a strategic plan well gains significantly from the experience.
Make your strategic plan a living document
In today's business environment, everyone is short on time and money. But being "too busy" may actually result from an unwillingness to confront certain long-term issues, such as accessibility of resources, acquisition of new technology, co-ordination of personnel efforts, even questions about the company's overall direction. Until such issues are finally addressed, precious time is lost for other urgent needs.
Similarly, many organisations feel inhibited from strategic planning during periods of limited financial resources. But by setting future business goals and objectives in place, the strategic planning process helps to set new priorities for funds and personnel. A good strategic plan allows a business to deal imaginatively with restricted time and budgets.
The strategic plan has to be a living document. The lifespan of a strategic plan can be anywhere from three months to three years, but the important thing is that the strategic plan represents a shared vision of where the business is headed and what's needed to get there in the time to come.
Strategic planning implementation: best practice examples
Here are three examples of how good implementation of strategy can deliver extraordinary results.
1. Strategic planning to track performance
Dow Chemical's performance was in free fall. TCii developed a performance improvement strategy to address the issue.
We devised clear performance metrics for each of Dow's 79 business units. Performance on these units was tracked against strategic plans on a weekly basis, and the Dow leadership team discussed any serious discrepancies first thing every Monday morning. These weekly sessions forced everyone to live the details of strategy execution, and let the entire organisation know how they were performing.
This simple strategy implementation step played an important role in the dramatic revival of Dow's business.
2. Strategic planning to improve turnaround times
The performance of the Carphone Warehouse logistics centre in the UK West Midlands was poor, with unacceptably long service and delivery times to its 610 UK stores and to individual online purchasers.
We devised a logistics centre development strategy in close co-operation with both the company's HQ in London and the local management of the logistics centre.
The key steps of the strategy were broken down into smaller steps and allocated to local task force teams, who reported weekly on progress, difficulties and planned next steps.
The logistics centre general manager and the head office team reviewed progress of the strategy every week, and agreed changes and/or corrective action. These requirements were fed back the same day to the local teams, who then met briefly to agree individual actions for the team members.
This process was so successful in improving turnaround times and removing bottlenecks that it became a permanent feature of the logistics centre. Head office has now rolled out the practice to all operations.
As a result, Carphone Warehouse now has a culture of overperformance, which has been reflected in an improvement in the company's reputation among potential recruits and an increase in its share value. In short, the strategy's successful implementation has created a virtuous circle of improvement for the company.
3. Strategic planning to increase market penetration
Henkel's adhesives business in the Russian Federation had grown rapidly over a four-year period. The company asked TCii to help develop and implement a business strategy to drive the next phase of business expansion.
First we analysed the existing business and identified gaps and strategic opportunities. Our research showed that the majority of goods distributed in Russia flowed via the 12 cities with a population of 1 million or more. But within these cities, Henkel's products had an average market penetration of only 20%.
We helped the Henkel team draw up a strategic plan to gain a significant part of that missing 80%. After making a detailed "market map" showing the key sales channels in each of the 12 cities and their surrounding areas, we overlaid it with a map of the channels in which Henkel already had a presence.
We analysed the gaps in detail: store types, numbers, locations, relative importance, and so on. We then drew up a prioritised target list of the potential distribution points, and a dedicated business development team was directed to secure these.
Finally, we arranged for progress to be analysed on a weekly basis, and for experience and learning points to be shared in the team – for example, via an online progress database and in Monday morning review meetings.
During the next two years Henkel's market penetration increased from an average of 20% to an average of 60%, and sales doubled. We continue to use the system today, to grow distribution still further.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.