Five Ways to Help Your Annual Strategy Succeed
As likely as not, the annual strategic plan that starts strong out of the gate loses relevance as the first quarter fades into the second, the third, and finally ends where the process began—assembling a plan for the next year. Here’s how to turn an annual ritual into a meaningful exercise.
March 27 2012 by Vasudev Murthy
It’s a familiar exercise. The CEO assembles a team and repairs to an off-site meeting with cell phones, whiteboards, and iPads to produce multi-colored charts depicting visions, missions and goals, both qualitative and quantitative. The result? The annual strategic plan.
Familiar, yes. But productive? Not always. As likely as not, the annual strategic plan that starts strong out of the gate loses relevance as the first quarter fades into the second, the third, and finally ends where the process began—assembling a plan for the next year.
Why are so many annual plans shoved aside when day-to-day issues intervene? For some companies the strategic plan is an annual exercise in wishful thinking, with goals that are unrealistic or too complex to achieve. For other companies, the goals are achievable but are poorly defined or not actionable. Then there are the plans that require a new technology, a revamped workforce, or a new partnership that fails to materialize.
Any one of these things can derail a well-intentioned plan—and since many of them are predictable, they can be prevented with a bit of foresight. Here are five things that smart executives can do to align strategy with capabilities for success:
- Make it simple. Some annual plans require complexity to address anticipated unusual market conditions. But for most companies, business growth is a relatively straightforward matter that can be defined with easily understood goals. The head of a major unit of a Petrochemical company I work with asked his team for a plan to transform the business in twelve months. Knowing that they would own the plan, the team divided the tasks into just five buckets of issues that could be readily explained at every level of the unit.
- Market it internally. Small teams at the top of a company typically prepare the annual plan and pass it down to those responsible for implementing it. You can improve the odds that your plan will be well received by thinking of it as a new product. The same Petrochemical company team described above branded each of their five strategic initiatives to create enthusiasm and ownership. Today the unit is buzzing with work that ties back to these “marketing plans,” with strategy and execution seamlessly connected.
- Organize your people resources. Longtime employees have a deep knowledge of your business, while new employees, or employees borrowed from elsewhere in your company, may have different perspectives and fresh ideas. Balance the two to maximize innovation. The CEO of a retail business I work with mixed middle-level managers with his C-level executives for the annual business review meeting. The result? A previously unrecognized supply chain roadblock was identified and addressed in the annual plan by centralizing the company’s procurement function.
- Assess your technical capabilities. The days of IT being isolated as a support function are long gone, and your CIO needs to be a key part of the strategic planning process to ensure there is a match between your goals and your technologies. The CEO of a fast-food chain in Saudi Arabia appointed the CIO to be a key member of a marketing team assigned to reach younger consumers using online media. Since the marketing strategy and technology requirements were seamlessly integrated from day one, the marketing plan was rolled out on time and on budget.
- Be realistic. Evaluate whether you can develop and execute your strategy on your own or if you need a partner—especially if there are non-core functions that can be performed more effectively and less expensively by a third party. The CFO of a major airline in the Middle East told me the core business of his company is profitably flying planes and everything else is non-core. At the upcoming annual strategy meeting, even the CFO function, minus the Treasury, will be up for consideration for outsourcing to create efficiencies and cost savings. A gutsy move that has the potential to transform the business.
An annual strategy session should not be the sole impetus for wholesale organizational change. But if every year you develop a plan that’s never actually followed because it is too complex or your organization is not able to carry it out, then taking a hard look at your capabilities and making changes is essential.
These are unsettled times, and annual strategic plans must consider the risk of disruptive technologies, shifting customer expectations, and political and financial turmoil. But the assessment and anticipation of such risks needs to rest on the foundation of an annual plan that is simple, well marketed internally, and grounded in the reality of your organization’s capabilities. Following the checklist can help ensure that your next annual retreat is meaningful and not just another exercise.