Originally published at www.PlanRiver.com
The Seven Deadly Sins of Strategic Planning
The strategic planning process in most organizations, if there even is a process in place, is severely flawed.
The planning process in most cases consists of a two or three day retreat each year, wherein the senior management of the organization, and sometimes the board of directors, discuss where they want to take the business. Many times the chance to get away from the day-to-day exigencies of operating the organization puts the planners in a great frame of mind, and the retreat yields some great ideas. The output of the process is often a Word document full of ideas and perhaps an Excel document with some goals and milestones. Unfortunately, as the following cartoon depicts, that’s where the planning process for that year often ends.
This article talks about the common mistakes we see in strategic planning, which here we call the “Seven Deadly Sins” of strategic planning. These “sins” include:
• Not Executing The Plan
• Not Taking Risk Factors Into Account
• Not Making Sure The Goals And Strategic Initiatives Are In Line With The Vision/Values/Mission Of The Organization
• Not Getting Everyone Involved
• Not Having Accountability, With Specific Initiative Owners and Deadlines
• Not Allocating Budgets To Meaningful Initiatives And Projects
• Not Prioritizing Activities Based On Potential Impact And Contribution To Identified Goals, Initiatives and Projects
Each of these “sins of strategic planning” will be explored further herein.
Deadly Sin One: Not Executing The Plan
This is, of course, the “cardinal sin” of strategic planning. A plan that sits in a drawer is not worth much. That being said, it is valuable to go through the planning process, even if the plan is not excuted, as the process itself causes those involved to consider and examine many issues that otherwise may go unnoticed.
In our experience and research, a large percentage of strategic plans (or “business plans”, if you’d prefer) end up in the drawer of someone’s desk, never seeing the light of day until the following year’s planning process, when someone asks, “Hey, what did we do with last year’s plan”?
Why do most plans go unexecuted? Is it simply human nature, or are there other forces at work here? In our estimation, the lack of execution typically has a lot to do with the lack of a system, structure and flow for documenting and tracking progress against the objectives of the organization. We like to characterize the planning system as represented in the following flow chart. The various levels and elements of this flowchart will come up repeatedly in the “sins” explored in this article.
Exhibit 1: Strategic Planning Flowchart
Deadly Sin Two: Not Taking Risk Factors Into Account
It is hard to dispute that we live in a “risky” world.
Far too often, we see organizations embark on the strategic planning process without taking into account the risks associated with each potential Goal, Strategic Initiative, and Project. All elements of the plan and process are subject to risk, in fact, but for these elements, it can be particularly problematic if such risks are not identified up front and mitigated to the extent possible.
Let’s take, for example, a Goal of increasing revenues by $30 million within six months, for a company that currently has $100 million in sales. In the absence of considering risk factors, while a Goal of increasing revenues in six months may sound aggressive, it would nonetheless seem appealing on the surface.
Now let’s consider for a moment some of the potential Strategic Initiatives and Projects associated with such a Goal. One strategic initiative may be moving into three new geographic markets. Another may be introducing two new products. And another may be increasing prices on existing products by twenty percent. There could be several more Initiatives associated with this Goal, but let’s just take these three for the moment. If we weren’t to consider risks, we would just plow ahead with Projects associated with accomplishing these three Initiatives. These Projects could include hiring a Director of International Business Development, picking two products to launch, and communicating to our channel partners that prices were rising by twenty percent, among other potential Projects.
Now let’s consider risk factors for a moment. First, and perhaps most importantly, is six months enough time to accomplish all this? Can we wisely select the correct new geographic markets, the right two products to come out with first, and the effect that a twenty percent price increase will have with existing customers in such a short period of time? This is an extreme example and the answer is “of course not”.
Risks must be identified as much as possible, quantified, weighed for severity, then monitored on an ongoing basis. A well-structured and executed planning system and process can help significantly with such risk management. A “shoot from the hip” approach can be very risky indeed.
Sin Three: Not Ensuring Alignment Of The Goals And Strategic Initiatives With The Vision/Values/Mission Of The Organization
Most organizations that go to the trouble of strategic planning, do develop at least a Mission Statement, if not a Vision and Values Statement as well.
The Mission Statement usually talks in broader terms about how the organization sees itself making a grand contribution to its markets and to the rest of the world. The Vision Statement usually addresses where the leaders of the organization see it going over the short, medium and long term. And the Values Statement usually states those things the leaders of the organization value in their approach to employees and other constituencies with which they deal and whom they serve.
The Vision, Values and Mission Statements are very important, as they define the parameters within which the organization is run, where the organization is expected to go, and the “contribution” that the organization is expecting to make to the world.
The mistake or “sin” arises when the Values/Vision/Mission are created, but then are not used as the yardstick by which to measure potential Goals, Strategic Initiatives, Projects and Tasks. What value is there in creating the Values/Vision/Mission, if they are not going to be used as a consistency or integrity check for the activities of the organization?
As Exhibit One above illustrates, Values/Vision/Mission are at the top of the heap – the top level of the flow chart. They are the guiding light. When a member of the team is looking at a their Task list for the day, or considering the Projects they are trying to accomplish, they should not have to wonder if what they are doing is making a contribution. All Tasks should flow into Projects, which flow into Strategic Initiatives, which flow into Goals, which flow up into and are consistent with the Values/Vision/Mission of the organization. If any of these cannot be traced upward, or are inconsistent with the Values/Vision/Mission, then they should not be part of the activities being conducted by the organization.
Deadly Sin Four: Not Getting Everyone Involved
While it may be the reality that the leadership of the organization may set the Values/Vision/Mission, Goals, Strategic Initiatives and even many of the Projects of the organization, it’s unlikely that they will be executing everything themselves.
It has been proven beyond doubt that people will put in a much better effort to accomplish objectives if they have a part in formulating them. In fact, if they don’t have a part in formulating them, or don’t at least understand how their efforts fit into the bigger picture of the organization, they may simple bide their time, doing the minimum possible to take home a paycheck.
While it is typically not realistic to have everyone involved in determining the Values/Vision/Mission, the Goals, and the Strategic Initiatives, they will undoubtedly be involved with the Projects and Tasks that contribute to the successful execution of the plan. Make sure that they understand how their activities are contributing to the overall success of the organization, in line with its plan. With this approach, most of the time you will be pleasantly surprised by how much more engaged and enthusastic everyone is about helping the organization accomplish its Goals and fulfill its Mission/Vision/Values.
Deadly Sin Five: Not Having Accountability, With Specific Initiative Owners and Deadlines
Accountability is without question one of the most uncomfortable, yet essential elements in allowing your organization to accomplish its Goals and Strategic Initiatives, and ultimately, fulfill its Vision/Values/Mission.
In order to increase the probability of success of Goals, Strategic Initiatives, Projects, and Tasks, it’s key that each have just one “owner”. It is fine if that owner has one or several collaborators, but there must be one person ultimately responsible. As some like to call it, the “single neck theory” – having one’s neck on the line can be particularly motivating.
In order to have accountability, it is also important to have target dates (deadlines). Without such targets, one’s feet don’t get “held to the fire” and there is no true accountability. Constantly moving target dates, budgets, and Project owners, does not lead to a culture of accountability and accomplishment. Such behavior simply leads to a lack of execution of the plan, another of the “deadly sins” of strategic planning.
Deadly Sin Six: Not Allocating Budgets To Meaningful Initiatives And Projects
Making sure the activities of the organization are consistent with its Values/Vision/Mission is, of course, important. Setting measurable Goals, with a target completion date and accountability, likewise, is obviously essential. So what about the Strategic Initiatives and Projects that will help your organization accomplish its Goals and stay true to its Values/Vision/Mission? Should we expect to be able to get these done without allocating any budget to them?
Let’s take the example again of trying to increase revenues by $30 million within two years. Will this happen magically? It’s not likely. If we need to pursue particular Strategic Initiatives to accomplish this Goal, we may need to be willing to invest a bit in those Initiatives. For example, if we want to go into several new geographic markets, we may need to hire new employees to help us get there, or we may need to purchase certain market data in order to better understand the potential new target markets. In both cases, we may need to invest some money and take some risk in order to accomplish our Strategic Initiatives and Goals. We simply cannot expect it to happen by chance.
The estimate budget should be assigned to the Initiatives and Projects at the beginning, so that the “owner” has a target in mind from the start. While budgets may have to be adjusted, given inaccurate forecasting without complete information at the beginning of the Initiative or Project, the budget should not be changed constantly, just to “come in under budget”. There must be a sense of accountability and for this to exist, target dates and budgets cannot be constantly moving.
Deadly Sin Seven: Not Prioritizing Activities Based On Potential Impact And Contribution To Identified Goals, Initiatives and Projects
Given the world we live in, full of distractions, it is important to have a way to prioritize the Tasks at hand on a daily basis. There are many potential ways to prioritize activities, for example, those that are easiest to complete or those that are most enjoyable often get done first.
It makes more sense though, to prioritize based on the potential impact and contribution to the accomplishment of the Goals, Initiatives and Projects of the organization. In order to do so, it is important that each Goal, Initiative and Project is given an estimated “Impact”. For simplicity, we recommend a potential Impact score between 1 and 10 be assigned.
Thereafter, when you are considering which activities to focus on, you can do so according to which activity has greater potential Impact. Low impact activities thus naturally fall to the bottom of the list and high impact activities are always given preference. Such an approach should lead to less wasted time, better results and quicker accomplishment of the organization’s objectives.
Many organizations do strategic planning. Most great organizations understand that while planning is important, it is equally or more important to execute effectively. In order to plan and executive effectively, you must avoid the seven “deadly sins” of strategic planning, which are:
• Not Executing The Plan: it would, of course, be tough to “execute effectively” if you don’t execute at all. Don’t fall into the trap of going through the motions of strategic planning, and then have your organization’s plan sit in a drawer somewhere.
• Not Taking Risk Factors Into Account: plan and execute, but do so mindful of the various risk factors involved with each of your organization’s Initiatives. Take the couple of extra moments necessary to consider what may go wrong and try to put mechanisms in place to mitigate those potential risks.
• Not Making Sure The Goals And Strategic Initiatives Are In Line With The Vision/Values/Mission Of The Organization: make sure you have an approach, or better yet, a system that ensures that the activities of those execting your plan are aligned with the Values/Vision/Mission of the organization.
• Not Getting Everyone Involved: try to get as many persons as you can involved in the strategic planning and execution of your organization. While it is typically not realistic to have everyone involved in determining the Values/Vision/Mission, the Goals, and the Strategic Initiatives, they will undoubtedly be involved with the Projects and Tasks that contribute to the successful execution of the plan. Make sure that they understand how their activities are contributing to the overall success of the organization, in line with its plan.
• Not Having Accountability, With Specific Initiative Owners and Deadlines: accountability is essential to successful execution of your organization’s strategic plan. Make sure that a particular individual “owns” responsibility for the Goals, Strategic Initiatives, Projects and Tasks of the organization. That individual may have one or several collaborators, but they know that they are ultimately responsible individually to meet the relevant deadline for completion.
• Not Allocating Budgets To Meaningful Initiatives And Projects: make sure that your organization acknowledges the reality that some, if not most, Initiatives and Projects may require budget dollars in order to make the necessary contribution to the achievement of particular Goals. This will, of course, entail a certain amount of risk, but it is not realistic to think that the organization’s Goals will be accomplished without risk.
• Not Prioritizing Activities Based On Potential Impact And Contribution To Identified Goals, Initiatives and Projects: sensible prioritization of the activities of the organization is necessary in order to increase the probability of accomplishing Goals and fulfilling the Vision/Values/Mission as expeditiously as possible. The best way to prioritize is based on the potential impact of a particular activity. The potential impact of all Strategic Initiatives, Projects and Tasks should thus be estimated and taken into consideration in the prioritization process.
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About the Author
Paul Morin is a strategic advisor and serial entrepreneur who has dedicated the majority of his career to entrepreneurship. Mr. Morin is the Founder and CEO of Plan River Systems, the company which brought the Strategic Plan Dashboard™ to market, which is a system for strategic planning and execution. Mr. Morin is an advisor to entrepreneurs, senior management, owners and Boards, in the areas of proactive management of risk, strategic planning and analysis, financial modeling, and identification of and diligence on acquisition and strategic partner targets. Mr. Morin has worked extensively with publicly-traded, privately-held, and family owned business in North, South and Central America.
Mr. Morin holds a Bachelor of Science degree in Economics and an MBA from the Wharton School of the University of Pennsylvania. Mr. Morin has lived, worked and traveled extensively in Latin America, Europe, and Asia and speaks and writes English, Portuguese, and Spanish.
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