Strategic Planning: How to Build a Roadmap to Transformation

For strategic execution to be successful, enterprises need to start with a strategic plan that identifies the problems an organization plans to address; and a roadmap that cuts across all facets of the organization. This allows for a clear prioritization of work and resources across the various departments and business units.

The need for effective strategic planning is especially important for organizations that are setting out on digital transformation initiatives – as many are doing today in a variety of industries. This can involve everything from launching cloud deployments to building a mobile technology environment to creating a big data/analytics infrastructure to elevate customer experiences with the company’s products and services.

For a growing number of businesses, transformation might also involve a foray into the Internet of Things (IoT). This includes linking potentially thousands of objects and gathering voluminous data that can provide new business insights, such as learning how customers are using household products or how well factory systems are performing.

Although strategic planning is a basic business concept at the heart of what organizations do to compete, many are struggling to make it work. Research firm Gartner Inc., in a 2018 report on the topic, said “strategic planning is often a disappointment to all involved. The objective sounds simple enough: Define the organization’s strategy and make resource allocation decisions to pursue it. The problem is, the results often fail to meet expectations.”

The firm surveyed 464 executives and found that more than half of the time executives and their teams spent on strategic planning (56%) is wasted. That’s a glaring statistic. Something is clearly wrong if planning teams are spending so much time spinning their wheels rather than actually helping the organization to move forward and be more innovative.

Strategic planning in and of itself does not guarantee success. In fact, if it’s done poorly, strategic planning can cost a company:

• Time
• Money
• Competitive edge
• Customer base
• Market share
• Skilled employees
• Other valuable assets

That’s a lot to risk!

Fortunately, there are steps organizations can take to make strategic planning efforts less arduous and line them up well with corporate goals as well as the reality of the marketplace.

Here are some ideas to consider when planning a business strategy.

Identify the business problems to be solved

One of the first things an organization needs to do is set goals to be achieved through the strategic planning effort. Regardless of how the planning gets done, if there is no clear, consistent understanding of the company objectives and problems the organization is facing, how can the planning process provide viable solutions?

As the Gartner report noted, many executives lack a coherent roadmap for creating their strategic plan. Functional leaders can’t plan properly if they are not clear on the enterprise and business mission, vision and objectives, and they can’t execute their own strategies without appropriate, measurable goals.

An organization might be facing any number of challenges or problems that need to be addressed. For example:

• A retailer trying to maintain or grow market share in the face of new competition from online businesses
• A manufacturing company that needs a way to modernize its production processes in the face of rising costs and declining demand
• A college seeking to improve its national ranking and boost enrollment
• A hospital looking for ways to reduce re-admissions of patients as part of a broad effort to enhance the health of the community

Once an organization has a complete understanding of what problems it needs to solve and what it is hoping to achieve, it can develop or revise its strategic plan.

Form an inclusive planning team

Perhaps the worst thing a company can do is limit the strategic planning team to a few high-level executives meeting in a conference room with no real input from outside this exclusive group.

Certainly, the effort needs to have participation and support from the highest levels of the organization, including the CEO, COO, CFO, Chief Strategy Officer (CSO), and other members of the C-suite. Planning based on the overall objectives of the organization must start from the top.

Other executives, managers, and experts from different parts of the organization should be involved as well, however. The team could also include leaders from IT, human resources, and general managers from key lines of business.

It is important to also have input from outside the organization. For example, key business partners, business consultants, and lighthouse customers can weigh in on the strategic plan, if not be directly involved in the actual planning.

The point is, strategic planning can’t take place in a vacuum or a silo; there should be input and an exchange of ideas from a variety of factions. To that end, frequent collaboration and communication should be encouraged. That way the team is more likely to cover lots of ground and be comprehensive in forging a plan that will achieve broad results.

Gartner suggests providing managers with a checklist to help them effectively convey key messages about functional strategy to employees. Once the strategic plan is complete and communicated, it’s critical to:

• Measure progress against the objectives
• Revisit and monitor the plan to ensure it remains valid
• Adapt the strategy as business conditions change

Determine what types of planning are needed

Aside from strategic planning, there are many other types of planning, and each of these could come into play at different times at a large enterprise or even a smaller organization. It’s good to understand the different types, and how they might interact and impact strategic planning.

One type of planning tied most closely to strategy planning is outcome planning and roadmapping. Outcomes define the deliverables from investments that are needed to deliver the strategic plan. Understanding the outcomes enables managers to bring the right expertise across products, technology, applications, and services into a plan that crosses business units.

Organizations then move to investment and capacity planning. This involves creating capital plans that integrate strategic and organizational financials to drive performance. Companies continually assess portfolio priorities against available capacity to determine which combination of the two best helps the company meet its goals for growth and innovation.

Program planning supports:

• Creation of cross-functional, integrated programs
• Development of business cases to support programs
• Ability to deliver the measurable business results desired from strategic initiatives

In many cases, the business objectives of programs are transformational and cross departments and/or business units.

Project financial planning and budgeting is designed to help organizations manage the financial factors that are associated with projects. This can include the amount spent on resources needed to complete work and on capitalized and expense / non-capitalized costs. It might also cover the return on investment (ROI) for projects.

Make sure the planning process is continuous

As teams create a strategic plan, they should keep in mind that plans must be dynamic and adaptive, so that they can account for expected and unexpected changes.

The whole idea of the Agile methodology that so many organizations are moving toward is to be flexible in the face of changing conditions. So too must strategic planning be flexible. Updating strategic plans once every year or even every six months is inadvisable in today’s business environment. An enormous amount of change can occur in a relatively short period of time, especially with so many startups arising with the help of cloud-based services that make launching a business much more feasible.

As business consulting firm McKinsey & Co. noted in a 2018 report, “messy, fast-changing strategic uncertainties abound in today’s business environment. The yearly planning cycle and the linear world of three- to five-year plans are a poor fit with these dynamic realities. Instead, you need a rolling plan that you can update as needed.”

The best way to create such a plan is to conduct regular strategy conversations with the team, perhaps as a fixed part of a monthly management meeting. To make those meetings productive, the team should maintain:

• A dynamic list of the most important strategic issues
• A roster of planned big moves
• A pipeline of initiatives for execution

“At each meeting, executives can update one another on the state of the market, the expected impact on the business of major initiatives underway, and whether it appears that the company’s planned actions remain sufficient to move the performance needle,” the McKinsey report says. That way, the strategy process becomes a journey of:

• Regularly checking assumptions
• Verifying whether the strategy needs to be refreshed
• Exploring whether the context has changed so much that an entirely new strategy is needed

This philosophy of continuous planning is also espoused by the Association for Strategic Planning (ASP), a non-profit professional society whose mission is to help people and organizations succeed through improved strategic thinking, planning, and action.

As the association states, “the world is changing in unprecedented ways, and our business ecosystem must also evolve to ensure our relevancy. By adopting an adaptive, resilient, and transformative [ART] philosophy, leaders will not only be poised to take advantage of the present landscape of unprecedented change, but also uniquely positioned to champion the creation of a new type of sustainable enterprise for years to come.”

Choose the right technology

Software platforms designed to help organizations with strategic planning can make the difference between success and failure. They enable companies to build roadmaps that connect their strategy to the investments and outcomes that drive transformation, execution, and delivery.

With an enterprise roadmap, managers can:

• Measure progress, understand the impact of various decisions, and adjust plans accordingly
• Optimize funding and resource allocation to cross-functional initiatives
• Prioritize initiatives, evaluate funding alternatives, and compare trade-offs between proposed decisions

Look for software that provides program management capabilities to define plans, track status, and measure progress, as well as maximize the return on investment from strategic initiatives.

Also important is the ability to keep executives informed and engaged via reports, dashboards, and interactive visualizations. They can tap into a system that connects strategy and delivery performance to analyze progress and identify trends.

The concept of strategic planning within a business context has been around for decades. In many ways, the same principles that applied years ago still apply today. But what has changed dramatically in the business environment is the need to be highly flexible – to be able to shift gears at virtually a moment’s notice.

Although strategic planning might be a well-entrenched idea, organizations and teams need to remember that knowing how to plan is an ongoing learning experience. Even for veteran planning stakeholders at well-established companies, there is always something new to learn, a better way of doing things. Perhaps early assumptions about the business or its markets were flawed and need to be updated. Planning team members should always be open-minded about learning from failures and missteps to make incremental improvements in the planning process.

Take the right steps to excel at strategic planning for efforts such as digital transformation. This will enable creation of a roadmap that will prove to be an excellent guide on the journey to success and prosperity.