Strategic Planning & Implementation

Using an entertaining analogy, a strategy and its implementation can be compared to being in cross-country competitive road car races. You’ve entered car racing passionate, and are committed to win.

You struck a Business Plan on paper, and vetted it to ensure it is a viable option. You are now behind the wheel of the car, once again, with a team at the ready. You are understandably excited, and somewhat nervous. You appreciate that your team will continue to be tested on many fronts. You are ready!

A culture for the organization has been set at the top, and filtered throughout. It is well understood by all, and supported. You walk your talk.

You led your team in developing a strategy pointedly toward the vision. You all clearly understand the mission, and the overall purpose of why you are in this race. Your values are clearly evident and integrated into both policies and action. Realistically, you appreciate that these values will be tested, and you have bestowed upon your team the respective authority and responsibility to discharge their duties within the framework of the established culture and values of the organization. They’ve earned your trust, and yours theirs as the leader.

You feel confident in the strategy, and support the implementation plan. It is simplified and practical; it can be easily understood and referenced by the team, and evaluation points have been established along the way to make important and timely changes. It informs your stakeholders to what success will mean, and how it will be measured along the way measurable objectives

Each team member understands the tactics that will be undertaken, and how each area integrates effectively into the overall plan. The risks have been identified and understood - not just the obvious external ones, but also the internal organizational ones. Your management team knows which risks are going to be accepted due to their lower impact or a low probability of occurring, and have established mitigation plans for those risks with higher impact and/or higher probability of being realized .

Chances for success are greatly enhanced. You are confident. Your team is empowered. You all know what is to be done. You will not only be efficient, you will be effective. You know you are ready to put your vehicle into gear with greater confidence of a win.

The race is underway; the results are showing. You are hitting the milestones as planned, and managing the challenges effectively. You know, however, that in order to be successful you need to understand, as clearly as possible, the changing conditions in which you will be competing (macro and micro environmental scans); finding alternate routes when unexpected road blocks occur, and to regularly monitor to ensure that you continue to have the unique and sustainable competitive advantage.

“The ability to learn faster than competitors may be the only sustainable competitive advantage.”

“-- Arie de Geus, strategist and author ”

Those occasional misses encourage an objective evaluation process; lessons are gleaned and processes tweaked. You empower and support your team to continually adapt and renew to an ever-changing environment. You are an adaptive, learning organization. You are strong.

As you have your eye clearly on the road and a focus on the race, you are maintaining a pulse on the organization; ensuring that continued relevant competencies and resources are in place, and that your stakeholders’ needs and promises are understood, and held uppermost in priority. These vitally important relationships are solid; they are mutually beneficial and meaningful.

Yes, it is a complex set of gears that you are managing, but you are passionate about the race and know that there are opportunities toward even further evolution as a company. Those that are supporting this endeavor believe in you, and your strategy. The horizon looks bright and promising.

Succinctly, a strategy is a comprehensive, integrated plan that ensures the basic objectives of the organization are reached. Amongst academics and the savvy business community it is well documented that success is often realized in those organizations that have both strong and well-executed strategies. A well articulated, well supported, and professionally presented strategy is a valuable communication tool for shareholders, Board of Directors/Advisors, employees and community stakeholders.

Far too often, however, we see well-intentioned strategic plans shelved due to the inevitable day-to-day operational demands, improperly integrated plans, or lack of organization-wide acceptance. Unfortunately, the results are typical: increased crisis management, ineffective use of resources, and lost opportunities. It is little wonder then that the strategic planning sessions for many organizations have created the dichotomy of hope and frustration.

“You don’t get what you plan.
You get what you resource. You get what you measure. You get what you reward.”

-- David Brown, Brown Governance

Today’s rapidly changing environment suggests that an adaptive enterprise is one that has a great opportunity for success. This creates a “living” document that is particularly relevant and useful.

The cycle of excecuting strategies

Source: Pietrson, Willie. Reinventing Strategy – Using Strategic Learning to Create & Sustain Breakthrough Performance. John Willey Sons Inc., New York (2002)

 

A successful strategic process will include the following key steps:

This section of the Raj Manek Mentorship Toolkit is presented under the assumptions that you are an active small- to medium-size business entity, with a complete business plan. If you are not, then it is recommended that you discuss your situation with your Raj Manek Mentor.

Three sections are provided for easy reference, and utilize a practical and simplified approach to strategic planning. Each section can be treated as stand-alone, but are presented sequentially for those wishing to follow a more linear approach:

  1. Situational Analysis to Perspective
  2. Strategic Choices & Alignment
  3. Implementing Strategy & Evaluating Progress

Your firm has unique needs. It is, therefore, encouraged that you utilize the following as a guideline only, and that you source professional advice to customize and/or fine-tune your strategic plan.

Please note:

  1. The terms “organization” and “firm” are used interchangeably throughout this document.
  2. Helpful hyperlinks and web links are provided throughout the document for those wishing clarification or further insight.

Although the sections can be addressed as stand-alone, the next sequential step is “Situational Analysis to Perspective”.

To assist you in developing a more robust strategy, let us begin with a quick introduction of two distinct types of strategies - intended and emergent. Sometimes they occur simultaneously, such as when one decides to enter an emerging market. A prudent organization will, however, recognize the environment in which one is operating and consider both, scaling the strategies accordingly.

  • Deliberate strategies are seen in the more traditional format. They are carefully articulated with clear goals and measurements, and widely communicated throughout the organization before being implemented.
  • Emergent strategies are flexible and responsive. We increasingly see these strategies used when the operating environment is unstable (consider the high tech industry, particularly in its early years), too complex, or too imposing to defy. This strategy often used to respond to an evolving reality, requiring that management make decisions before full information is known. In its most extreme form, it requires a fully dynamic, engaged and adaptive environment (consider Apple under the leadership of Steve Jobs, co-founder of Apple Inc.).

 

Impact of Intended Stragegies, deliberate strategise, and emergent strategies on Realised Strategy

 

In this process, strategy:

  • Addresses major initiatives, considering both deliberate and emergent initiative (to be adaptive).
  • Involves management, and
  • Uses resources to enhance firm performance in competitive environments, on behalf of the organization’s owners.
  • Drives and determines the organizational structure, as it adapts to the environmental changes in which it operates.
  • Considers the environment (political, economic, social, technical, environmental and legal) in which it operates.
  • Positions itself inimitably, with a distinct competitive advantage.
  • Has identified its dynamic capabilities, which will strengthen its competitive position.
  • Articulates clearly how it will compete, i.e., product/service leadership, operational excellence or customer intimacy, and how it will measure its success.

“The ability to make fast, widely supported and high-quality strategic decisions on a frequent basis is the cornerstone of effective strategy.”

– Kathleen Eisenhardt

Prior to the strategic session, it is important that the organization prepare appropriately. The following information is designed to provide an objective process by which the firm can assess where it stands within industry, as well as with its core stakeholders. Take a deep breath, be open-minded; defensiveness has no role in this exercise:

  1. Have available and reviewed appropriately objective data from/about stakeholders i.e.,
    1. Stakeholder satisfaction surveys i.e., customers, shareholders, employees, etc.
    2. Firm’s performance data – financial, sales and marketing, production, etc.
    3. Industry benchmarks (if available) – this will assist in comparing firm performance to industry.
    4. Current and anticipated external environmental changes in: industry, politically, economically, social, technologically, legally (compliance, safety, etc.), and environmentally (See PESTLE Analysis below).
  2. Pull forth and have at the ready your firm’s:
    1. Vision
    2. Mission
    3. Values, and
    4. Purpose : Purpose/Rally Statement for staff/team

    Review at the beginning of the exercise, and then at the end of the exercise if the vision, mission, values and purpose still firmly support the position of the organization, and reflect clearly on its mandates, and those of its owners.

  3. Invite to your strategy session, senior managers and even, perhaps, carefully selected stakeholders whom you believe will provide a meaningful contribution to the process. All guests should be prepared to sign a non-disclosure, to provide assurance of confidentiality.
    1. Logistics:
      • Preferably, the meeting should be held off-site in an environment that promotes good discussion, away from the distractions and interruptions of daily business operations.
      • Participants should be comfortable (business casual is often recommended, if professional dress is usual dress code in the office).
      • Catering should offer healthy options to keep energy levels strong. Avoid sugary foods, and offer protein in the morning with healthy options for beverages.
      • Offer fresh air and stretch breaks to keep energy levels primed.
      • Room temperature should be optimal for comfort.
      • Room set-up should optimize group breakout sessions, if needed.
      • Provide flip charts, sticky notepaper and markers for feedback.
      • Consider a facilitator that is not directly involved with the organization, but can assist with facilitating insights and bridging to core observations.
      • Participants should be encouraged and feel free to openly and respectfully share and dialogue. The focus is on ensuring the best outcomes for the organization, and a sustainable and strong future.
      • Expect that this component is the beginning of the journey. Make an organizational commitment to investing concerted energy toward completion, and successful execution.

 

Analysis Tools

The following are selected analytical tools to encourage robust discussions toward meaningful insights. It is helpful to use some of these concurrently; returning to fill in spots as more information comes to light. Do take a moment at the end of the session to review and note if there are any new insights to garner from the overall exercise.

Strengths, Weaknesses/Challenges, Opportunities & Threats.

  • What are the newly identified Strengths and Weaknesses/Challenges of the firm? (Internal to the firm)
  • What are the identified Opportunities and Threats? (Industry and external environment)

SWOT Diagram

Keeping a finger on the pulse of changing macro environmental conditions within which the firm operates is critical to effective strategy development. Analyzing the Political, Economic, Social, Technological, Legal and Environmental conditions and anticipated regulatory changes will be important. Those of significant impact can also be included within the SWOT analysis, to help determine risk/opportunity.

 

PESTLE Analisis Chart

The rapidity of change in both your industry environment and changing consumer social morals and behaviour will impact your business. This exercise will help identify the vulnerability of your organization, and assist with strategic direction to strengthen your competitive position.

 

Five Forces Analysis Diagram

 

You can watch a video about Mike Porter’s Five Forces Analysis here

We’ve addressed earlier the importance of having a unique, inimitable position. It bears repeating: To ensure a strong competitive advantage, your product/service needs to be unique, and impossible to imitate, replicate or substitute (or at least, very difficult or prohibitively costly to do so). The easier it is to do so, the greater your chance of losing market share due to your competitor(s).

How do you address this effectively? Focus on strengthening your market position in either cost leadership or differentiation and, along one of the following three value creating disciplines:

  • Product leadership (ex: Apple)
  • Operational excellence (ex: McDonalds Restaurants)
  • Customer intimacy (Four Seasons Hotels)

This portion of the strategic assessment portion provides an excellent opportunity for you to identify and discuss the vulnerabilities and strengths against your market positioning. Your findings can be added to your SWOT/SCOT Analysis framework. It may be helpful to consider these along with Mike Porter’s Five Forces Analysis, previously discussed.

Your firm will sustain competitive advantage by performing strategically important activities better than your competitors. Michael Porter’s Value Chain Framework emphasizes that competitive advantage can come from not just great products or services, but any activity along the value chain. It may be surprising, but it is not purely about money, nor is it primarily about customer value for money; it is also about the value of innovation, and the quality and culture, more generally. Simply, in order to retain a competitive advantage, the firm must be stronger than its competition in a key area of value. Today, we see competitive advantages being realized through strong core competencies, as well as dynamic capabilities of the team.
  • Core Competencies, which could include, but is not limited to its track record in Research & Development, the strength of its reputation, the extent of difficulties competitors have in imitating the products/services, the firm’s ability to access more readily a wide variety of markets, and its ability to influence industry to achieve its goals.
  • Dynamic capabilities – speaks to the mastery, process and speed by which the firm can adapt its resources to respond to changes in the marketplace, and to emerging opportunities. These could include exceptional technical know-how, intellectual property (Patents), business process know-how and speed, the quality of customer and business relationships, the strength of the organization’s culture and values, and the strength of its resources – human, assets and financial.
Developing an inventory of both, and assessing them against the SWOT/SCOT will help identify areas of risk and opportunity. Questions to ask include:
  • What core competencies do our firm have? (Rate against poor to strong)
  • What core competencies do we need, but do not have?
  • What core competencies do we have but will need to strengthen?
  • What dynamic competencies do we believe our firm has that provides us with a competitive advantage?
  • What do we need to do to protect/strengthen these dynamic competencies?

The strategic plan is the set of decisions and actions, which lead to the development and realization of an effective strategy. Strategic decisions typically have long-term organizational implications for key success factors. These are important in terms of the actions to be taken, the resources to be committed and the precedents set.

A few questions that you might consider to drive your decision-making process might be:

  • “What are the underlying forces that are driving our industry?”
  • “What are those few things our organization must do outstandingly well to win, and to continue winning in this environment?”
  • “What are the drivers of success?”
  • “What are the critical success factors for us?”
  • “Which are the objectives that will drive our success?”
  • “How will we mobilize the organization to implement these?”

“Tomorrow always arrives. It is always different.
And even the mightiest company is in trouble if it has not worked on the future.
Being surprised by what happens is a risk that even the largest and richest
company cannot afford, and even the smallest business need not run.”

-- Peter Drucker

Considering the development of measurable objectives, the acronym SMART is often used, prudently suggesting that measurable objectives be:

Specific, Measurable, Attainable, Realistic & Time-bound

The Balanced Score Card (BSC) has been used for many years in management. It views the organization from four perspectives, and suggests developing metrics, collecting data and analyzing performance relative to each of these perspectives: Financial, Internal Processes, Customer/Shareholder, and Leadership & Growth. The BSC is an in-depth school of study. Those protégées interested in learning more are encouraged to do so. In the meantime, we’ve gleaned some tools that are both simple and practical, as a starting point.

Note: KPIs – abbreviation for Key Performance Indicators.

 

The Balance Score Card

 

It is important to link and align the organization around its strategy. Do focus on identifying measures that are the main drivers to success, and in putting weighting factors to measures. Ultimately, in business, all measures support financial growth.

Example:

Perspective Area Measurement Target Initiative Budget
 
Financial: Operating Income 20% Income Cost analysis and efficiency review xxxx
Sales vs. Last Year 12% increase Expand product accessories line xxxx
 
Customer Market Share 20% by Year 3 Add 2 distribution outlets xxxx
Customer Loyalty 5% increase Year 2 Introduce on-line incentives xxxx
 
Internal Response time Reduce by 50% Year 1 Full Process review xxxx
 
Learning & Growth Skill Development Industry Skills Training Certification: 5 staff – Year 1 SIAST Program xxxx

 

Sample measures for each perspective area might include:

Financial : Economic value added, return on capital.
Customer : Market share, satisfaction, repeat customers.
Internal : Quality, response time, delivery time, cost.
Learning & Growth :         Training hours, skill development, rotation positions, R & D%

Although the sections can be addressed as stand-alone, the next sequential step is
“Implementing Strategy & Evaluation Progress”.

Understanding and mitigating emerging and inherent risks are fundamental to your firm’s long-term viability, and a critical component of your strategic analysis. Risk and mitigation are always in a state of flux. A practice of defining and verifying assumptions, and identifying and framing risk in both probability and impact risk is the first step. The second involves aligning objectives and tactics, accordingly. Risks from emergent events include those from:
  • Stakeholders: Customers/Clients; Employees; Governments; Creditors; Lenders; Suppliers; Donors; Fundraisers; Activists, and Media
  • Economic
  • Financial
  • Social
  • Political
  • Legal, and
  • Environmental factors.
  The Risk Analysis Table   Helpful Hint : Once identified, risks that require mitigation can also be added to your other respective matrices as appropriate, such as the Michael Porter’s Five Forces, the PESTLE, and the SWOT/SCOT matrix.

At this stage you will have defined what competencies are needed, and how they will be deployed most effectively. You understand the dynamic competencies of your team, and how effectively this structure integrates for best, more efficient and synergistic outcomes.

These elements will include the:

  • Identification of your firm’s core capabilities;
  • Identification of those core competencies that need to be built;
  • Required technical support competencies, and the
  • Required organizational structure and linkages across the different capabilities.

You should now have enough information to be able to develop key perspectives and to reaffirm and/or adjust elements of your Vision, Mission, Values and Purpose to more closely reflect your direction. It is now time to begin making strategic choices, which will drive your organizational design toward success.

Although the sections can be addressed as stand-alone, the next sequential step is “Strategic Choices & Alignment”.

In its entirety, the implementation strategy it is a highly confidential internal operations document that sets out the decision, tactics, and resources (human, financial, technical, etc.) that are required, and demonstrates how they will effectively integrate and align to reach the stated strategic objectives. It guides the entire operational team, and is the document, from which reports are written, issued and adjustments made to successfully realize established objectives. It becomes the “living” document, referred to frequently for progress evaluations, and adjustments.

“A strategy, even a great one, doesn’t implement itself”

 

Steps to implementing strategy

It is through the implementation plan that policies, management systems, and organizational structures are designed to support the strategy. Regular progress reports on major initiatives, with operating variances highlighted help keep the implementation plan top of mind. Once major initiatives are completed, a review and written report on the projects are recommended, including reports on operating and financial performance.

Evaluating the progress of the implementation plan, as well as undertaking mini environmental scans quarterly will assist in maintaining a learning, nimble organization that has a greater competitive advantage.

Of great importance is for the leader to set a tone at the top that the organization builds a culture of performance, adaptation and learning. This culture will survive under conditions of market challenges, and thrive in emerging market opportunities. It will be a firm that seeks to be great, and prides itself from being the best.

Clegg, Carter, Cornberger, Schewitzer, et al. STRATEGY: Theory and Practice.
www.coursesart.com(2011)

Pieterson, Willie. Reinventing Strategy – Using Strategic Learning to Create & Sustain Breakthrough Performance. John Willey Sons Inc., New York. (2002)

The Directors College. McMaster University DeGroote School of Business. Conference Board of Canada. Module 3. Oversight & Finance. (2014)

Jeroen-de-Flander.http://jeroen-de-flander.com/strategy-quotes-update#.VEv16od3W5Y (October 25, 2014)

Disclaimer : The information contained herein is for general business information purposes only and does not replace the need for independent advice.  It is recognized that each business has its own unique needs, and readers are strongly encouraged to seek separate independent advice.

Silvia Martini, Vice-President – Interlink Research Inc., is a Director of the Board for the Greater Saskatoon Chamber of Commerce, and past member of its Governance and Executive Committees. She is a director of the Board for the SaskWater Corp., a Crown Investment Corporation. She is a member of its Governance Committee. In business since 1982, she is a strategist and entrepreneur, consultant, writer and speaker. Silvia can be reached at martini.interlink@sasktel.net, or at (306) 281-9019.

Copyright 2014. S.L. Martini. Interlink Research Inc. martini.interlink@sasktel.net