Strategisk planering: Ställ in riktningen för att leverera värde
Strategic Planning in an Uncertain World
Strategic planning is nothing new; however, now more than ever, companies must leverage strategic planning to deliver a roadmap of how to navigate the waves of change and uncertainty. Transformation abounds, spanning digital, business, organizational, and agile, resulting in operating models changes that inevitably impact strategic planning and execution. Without a strategic plan, daily work continues, but lacks a shared sense of purpose or priority.
Gartner says, “Adaptability is the key to success in a volatile environment.” Executives need an adaptive strategy to manage threats as well as opportunities. Companies cannot ignore change nor wait to see what happens; winners embrace uncertainty and respond to changes as they happen.
What Is Strategic Planning?
Strategic planning is visionary and realistic, looking at where you are now, where you want to be, and how you plan to get there. Instead of big steps, in these times of uncertainty it’s better to set objectives as incremental and iterative – a series of smaller steps that together keep the company focused on the right initiatives to continually bring value to the customer. When steps are small and manageable, it is easier to change course to adapt to shifting priorities, initiatives, and customer demands.
Strategic planning is about understanding and prioritizing strategic objectives and then setting the direction as to how to achieve them. The resulting strategic plan serves as the North Star for the entire organization.
Strategic planning is not about leadership developing a static list of goals and tasks that sits on a virtual shelf without regard. It is not based on certainty or things completely under the company’s control. For instance, Harvard Business Review says companies cannot control consumer spend (revenue), but they can focus on how they acquire and retain customers and how they respond to change (fixed versus adaptive strategy).
While strategic planning is visionary, the strategic plan is not vague or unattainable. Unrealistic or incomplete plans result when there is ambiguity about strategic goals and priorities. For strategic planning to be of value, companies must be intentional, clear, and pragmatic in their approach.
The Many Benefits of Strategic Planning
Effective strategic planning offers many benefits to organizations of all sizes and levels of maturity. With a shareable, adaptable roadmap to transformation, there is a corporate-wide sense of clarity, confidence, and a mechanism for continual improvement. Because strategic planning includes cross-functional involvement, employees from across the business are engaged with a greater sense of ownership, accountability, and productivity.
Strategic planning continually focuses resources on key business priorities instead of to-do lists, pet projects, emergency rush jobs, and keep-the-lights-on projects that are not aligned with business objectives and fail to drive value. When teams understand those priorities and how their specific roles contribute to achieving them, collaboration and innovation flourish.
3 Strategic Planning Misconceptions
Strategic planning is a basic business school concept, yet there are many misconceptions about how to go about it, who should be involved, and how to execute the strategic plan once it is created. Unfortunately, the confusion often leads to incomplete or inadequate plans that do nothing more than check a “done” box. Among the most common misunderstandings are:
Misconception #1: Strategic planning only needs to happen annually and look near-term
For many companies, strategic planning is an annual exercise based on the budget cycle. This can turn into a short-term point of view which only continues what is already in progress and a limited set of new initiatives over the next year.
This approach often limits innovation and the change needed for the longer-term strategic direction and priorities of the business. A Constant Contact survey found that 63 percent of businesses plan one year (or less) in advance. Because looking ahead feels risky, leaders prefer a more myopic approach.
Unlike adaptive strategic planning that embraces revisions when change happens, the annual planning process does not allow for flexibility with change.
Further, many investments do not experience ROI within a year, giving a false impression that the investment is a failure and funds should be diverted elsewhere. Without proper time to develop measurable results, leaders cannot see cause and effect or dependencies. These measurements are precisely what allows for in-flight adjustments to achieve greater agility.
Misconception #2: Leadership should create a solid plan that always minimizes risks, then tell employees what to do
Unlike traditional strategic planning that takes place behind closed doors and results in a static strategic plan. Dynamic planning, the kind of planning that embraces change, requires a more responsive, inclusive plan. Gartner says, “Adaptive strategic planning transitions away from a rigid, top-down, calendar-based process to a more adaptive, event-driven strategy approach.”
There will always be risk, and not all risk is bad. What is important is to balance risk with expected value. Harvard Business Review says, “True strategy is about placing bets and making hard choices. The objective is not to eliminate risk but to increase the odds of success.” Strategic planning is not about perfection but adapting as you go.
A key element to any strategic planning exercise is to involve stakeholders from each business unit, employees on the front lines, and staff who have different perspectives on the business, competition, market, and customers. Strategic planning involves a team effort, one that assesses the entire business, vendors, partners, and external forces. The strategic plan is not commanded from the highest ranks; it is the guide by which everyone sees their role in meeting corporate objectives.
Misconception #3: Strategic planning doesn’t have much purpose
According to Gartner, business executives say 56 percent of the time spent on strategic planning is wasted and only 31 percent of corporate strategists say their strategic plans prepare their organization to hit five-year revenue growth targets. Strategic planning is neither strategic nor a plan.
But when strategic planning is done correctly, at the right pace, and iteratively, it sets the company up for success, since everyone knows where the company is headed and why. It allows the company to be quick to adapt to changing initiatives and priorities with less disruption, fewer wasted resources, and greater responsiveness. It is the foundation for execution and delivery.
Making Strategic Planning Successful
For strategic planning to be successful, leaders must overcome common challenges, such as properly communicating the plan across the organization and bridging cross-functional silos, particularly with digital products and services. Gartner found 67 percent of key functions are not aligned with business unit and corporate strategies. Because organizational priorities and enterprise objectives often change, this alignment can be especially difficult if the strategic plan cannot adapt.
Gartner also mentions that a lack of resources continues to be a challenge for organizations trying to improve execution of strategic objectives. Many organizations admit that execution can be a sticking point and a surprisingly large number of them are unable to measure progress towards outcomes. There is a better way, however, one that will put the company in an improved position to weather the storms of change and thrive despite them.
Strategic planning is complex, but it does not have to be complicated. Once a business can establish a cadence using best practices, strategic planning becomes iterative and dynamic. Beyond the typical steps or phases of strategic planning, there are general recommendations that lay the foundation for successful strategic planning:
- Include initial feedback from the entire business and then establish a continual feedback loop to measure progress; cross-functional feedback provides leaders with different perspectives while fostering engagement and encouraging ideation
- Always tie strategic planning to company goals and to delivery
- Keep it simple vs comprehensive
- Continually scan the business, performance, areas of opportunity, market changes, competition, etc. to inform smarter decisions throughout the process
Gartner believes strategic execution to achieve strategic objectives should have “clear and consistent priorities, sufficient bandwidth, and clear direction and purpose” instead of “conflicting priorities, overloaded resources, and confusion about direction.” Additionally, companies must establish transparent measurement of progress towards outcomes.
Strategic Planning Timing
A common question around strategic planning is about when it should occur and how often. More often than not, strategic planning should happen more than just annually. Gartner found 83 percent of strategies can fail due to faulty assumptions; therefore, those assumptions need to be revisited regularly in order for companies to be able to respond to changes as they happen.
Management Help says the timing and frequency will depend on the environment and the needs of the organization. The more change an industry of market endures, the more frequent planning and revisions. While there is no set guideline that fits every company and scenario, there are a few indicators:
- Upon starting up a new company to set the initial mission, objectives, and direction
- Unexpected disruptions, such as the COVID-19 pandemic
- Transformation, such as digital, business, organizational, and agile
- Any new launch, including products, services or initiatives (internal or external)
Strategic Planning Traps
The key to strategic planning in today’s fast-changing environment is to transition from concrete, comprehensive planning to dynamic, adaptive planning. Companies must be able to adapt to change, taking those smaller execution steps towards fulfilling objectives rather than giant steps that leave little opportunity to easily pivot when needed. Dynamic planning keeps companies agile and focused on the right priorities right now instead of being too tightly committed to goals that may not align with the most current corporate objectives.
A common strategic planning trap is to manage the plan and the progress using spreadsheets that become outdated as soon as data is entered.
They rely too heavily on manual data transmission between disparate systems and provide little visibility into the true and current status of work and resources. Instead, strategic planning software ensures everyone is on the same page and headed in the same direction, automates processes, and provides a transparent, accurate, and real-time picture of every aspect of the strategic plan.
Companies can also fall victim to using the wrong measures. Balanced Scorecard says, “Effective strategic planning articulates not only where an organization is going and the actions needed to make progress, but also how it will know if it is successful.”
Measurement is more than looking at costs; it assesses the entire picture. Gartner says metrics must support the story you are trying to tell, measuring what truly matters to the business.
Updating Your Strategic Plan
The strategic planning process does not end with measurement, as measurement serves only to indicate performance towards stated objectives. The final phase is updating the plan based on what the metrics show. Companies must instill a regular practice of keeping the plan updated based on changing initiatives and priorities.
According to The Hartford, 37 percent of businesses say one of main reasons strategic initiatives succeed is because there is a good fit between specific initiative and general strategy. As initiatives change, so must the strategy.
Harvard Business Review recommends updating the strategy and making necessary adjustments when the plan fails to produce the desired outcome. This requires continual measurement, feedback, and reviews.
Strategic Planning Examples
C-Suite and executives
When a crisis hits, leaders must reimagine paths to revenue without losing sight of current growth initiatives, process improvements, and long-term strategies. McKinsey found that companies that move early and decisively in a crisis deliver approximately eight percent excess total returns to shareholders. Dynamic strategic planning reduces risk and enables the company to quickly realign priorities and resources to seize opportunities.
Finance leaders must be able to see how changes in strategic direction impact portfolio investment funding. Dynamic planning allows Finance to reallocate funding in the context of the entire portfolio by modeling different priorities, weighing alternatives, and evaluating trade-offs. McKinsey reported that companies that reallocate 8-10 percent of budget drive significantly greater value than those that allocate less.
Gartner says nearly 75 percent of strategists report strategy-execution alignment has become a major concern over the past three years. EPMOs should always be exploring how the organization can be more competitive and innovative: Embracing change, responding to crises, and delivering value. Dynamic planning gives an EPMO a flexible, adaptive plan that connects strategy to delivery and execution, no matter the internal or external environment.
Change and transformation have become the norm. Remaining in a comfort zone is no longer an option and companies must find ways to become more agile as they manage the evolution of how they execute and deliver on strategic objectives. Dynamic strategic planning is a powerful enablement mechanism to build a foundation for adaptability and successfully delivering long-term value.