To develop a strategic plan, there needs to be a systematic approach with many steps involved. It starts with matching strategic priorities on one hand and internal and external factors on the other. Based on this analysis, various strategic choices are likely to be identified. The strategy planner must then narrow down the choices to the most suitable ones and then prepare a plan of action.
Here’s a quick summary of the essential steps of strategic planning, which are covered in greater detail in the next sections.
- Define your strategic priorities
- Analyze the internal and external factors
- Evaluate different strategy choices
- Define key variables such as timeframe and goals
- Assign roles and responsibilities
- Monitor and review progress
- Evaluate strategy outcomes
- Use actual outcomes to improve future strategic plans
It is important to bear in mind that strategic plans are never an end goal. Strategic planning is just the first step of laying the groundwork, while executing the plan is what leads to actual results (and is easier said than done). In fact, one of the commonly repeated statistics in strategy planning is that there is often a high rate of failure. Harvard Business Review mentions a statistic that 67% of strategic plans fail due to poor execution. This is usually because benefits were overpromised by strategy planners, or not achieved as quickly or as effectively as expected.
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Why do you need a Strategic Planning Checklist?
The importance of a following a strategic planning checklist has to do with the fact that decision-makers often have too many variables to consider. On one hand, there is a tremendous amount of raw information and data on the business and markets, while on the other, there are various complementary or conflicting strategic choices to pick from. Having a checklist helps to focus on the essential steps that can make or break the strategy planning process.
What is included in a Strategy Checklist?
A strategy checklist is a list of key points that a decision-maker must consider when developing a strategic plan. The goal of using of a checklist is to make sure that the strategist does not overlook certain aspects of strategy formulation.
1. Define your Strategic Priorities, Objectives, and Goals
The first step of strategy implementation is to clearly define your objectives and set some clear targets, if possible. Strategic priorities can include broad and general decisions such as how to position the company in relation to competitors, what kind of products or industries to focus on, or how to go about it (organically, or by acquiring companies or building alliances).
Objectives and goals are what narrow this down further. As an example, the strategy practitioner can define their objective as increasing the market share for a specific business unit. They can further narrow this down by identifying related goals such as capturing a certain additional percentage within a given timeframe. It is crucial that you consider only realistic and attainable objectives and targets. Knowing the goal that you want to work towards is also essential for choosing the right approach and tool of analysis, which brings us to the next step.
2. Identify Internal and External Factors using the Right Tools
Once you have goal in mind, you must conduct a full evaluation of the resources, capabilities, and other internal aspects of the organization, such as organizational culture and structure. We have a dedicated guide on how to conduct internal analysis in strategic management contexts. Simultaneously, companies must also look at their external environment to identify some of the most relevant factors and forces. One of the examples of this is an industry analysis which analyzes the impact of five forces.
3. Compare and Link the Internal and External Factors
It is not enough to just make a general list of internal and external factors and consider that you have completed your analysis. Instead, you must ensure that you are finding the links between these factors to have a more comprehensive view of where your business stands in relation to the competition. Finding links between internal and external factors will make the next steps of brainstorming strategic options and strategy formulation much easier. As such, the information which you analyze in this step shall serve as crucial building blocks in your strategy planning an execution.
4. Select the most Appropriate Strategy Tool
As part of having a systematic approach, it is highly recommended that you make use of the established tools of strategy planning. Before you can do that though, you need to select some specific strategy tools that are best suited for your situation. This decision is taken by considering your strategic priorities, and the specific internal or external factors which you looked at in the previous steps. Here’s a strategy toolkit which contains a comprehensive list of various tools used to implement strategy plans.
5. Compare Alternative Strategies and Narrow them Down
Once you have chosen a suitable strategy tool you should then use that to come up with various alternatives. Some tools are more suited for brainstorming ideas, while others are better used for evaluating the generated ideas based on specific criteria. Based on the predetermined strategic priorities and the internal and external factors of significance which were identified, companies must take a decision regarding the strategic direction which is likely to be best suited to their situation.
6. Prepare a Strategy Implementation Plan
After deciding on the strategic direction for the company, the next major step of the strategy checklist is to prepare a plan of action. for each strategic initiative the company must also specify appropriate targets and milestones. It is recommended to also form a strategy committee which will oversee the execution of the strategy plan. With any strategy, the decision maker also needs to take into account the period over which the strategy will be implemented. The use of a strategic plan timeline can help with this.
7. Assign Roles & Responsibilities
You must also ensure that all the relevant parties are aligned and have a common understanding of the strategic direction. Strategy plans often end in failure due to a lack of alignment between the strategy planners, senior executives, and employees. Poor organizational culture and communication could also lead to poor strategy execution. Hence, companies must clearly communicate the expected outcomes of strategic initiatives to all parties. The plan of execution should detail the specific roles, responsibilities, and expectations of the relevant team members.
8. Review Progress Periodically using Evaluation Measures
A strategy plan can only succeed if its constantly monitored and reviewed at periodic intervals. Tracking the outcomes of strategic plans is very important during strategy implementation. It must not be put off as an exercise to only cross off the list at the end. We need to establish some control measures right from the planning stage. These measures should be monitored during the implementation phase to evaluate whether the strategic plan is providing the expected results. Strategy managers must make time to review the progress of their team. They should discuss openly with them regarding the challenges which they may be facing. This is a critical step for course-correction of strategic plans.
9. Have Contingencies to Cover Different Scenarios
Building upon the previous step strategy practitioners must ensure that their strategic plans have a degree of flexibility for course-correction. Having focus in strategy planning does not mean that it is static. Instead, companies must be willing to change their strategy choices dynamically in response to the market situation. If the periodic review reveals shortcomings or misalignment between the strategic plan and its implementation, adjustments or tweaks must be made. In other words, while strategic plans must be focused and specific, they should include a few contingencies for adjustments. This is required to minimize the risk of failure, at least to cover some of the most likely ‘worst-case’ scenarios.
However, there is a fine line between having contingencies and entertaining distractions. The latter must be avoided at all costs. Once a strategic direction has been chosen, companies must not waver and distract themselves from the main goal to pursue smaller targets. Contingencies and course-correction efforts should be carefully considered after weighing the benefits and drawbacks of altering the chosen strategic direction.
10. Learn from Challenges and Mistakes
The last, yet most crucial step when developing strategic plans is to learn from previous strategy implementation efforts. This requires both a critical reflection of workplace experiences and a formal review of the planned outcomes versus the actual results from previous and current strategy initiatives.
Some of the questions which can be considered are as follows:
- How well did we achieve the objectives of the strategic plan?
- If we fell short on our goals, what could have helped, if done differently?
- Were there any challenges which slowed progress or affected strategy implementation?
- How can such challenges be overcome in the future?
- How well was the strategy execution supported by senior executives and company management?
- How well did employees understand and embrace the strategy initiative?
- Were there any unexpected developments in the market that impacted strategy execution?
- If so, how can we plan contingencies for this in the future?
- Are there any other key lessons that must be considered during future strategic planning?