We have heard of this saying ” If you fail to plan, you plan to fail” but what does planning, particularly strategic planning mean for your business. Planning stage starts with evaluating where you are today.
Strategic Planning Process
First, in order to get a clear picture of your current state, examine your business from customer’s point of view, look at what you do best and who your competitors are.
Think of this process as a guiding map, a GPS.
After realizing where you are today, try to picture where you want to take your business to and set future directions.
Second, define your business priorities and identify critical success factor for your organization. Meanwhile, remember that every company can have a unique strategy.
In order to have a clear and achievable vision, John Kotter, professor of leadership at Harvard university suggests a set of questions you can ask yourself.
So, when you go through your business priorities, consider:
- Does it show how your business future will look like?
- Would internal and external stakeholders (e.g. employees, partners and lenders) be impressed by it?
- Do your goals seem SMART: Specific, Measurable, Achievable, Realistic, Timely
- Is it clear enough to provide guidance in decision making?
- Is it general enough to allow individual initiatives and alternative responses considering
- Have you considered the changing conditions?
- Is it easy enough to be clearly explained in five minutes?
- Is it ambitious enough to force people out of their comfort zone?
Then, communicate those priorities and progress with your team.
The next step is to look at the strategic options.
These following questions can give you a framework to successfully create the strategic options:
- Which choices should you make to ensure future success?
- What differentiates you from your competitors?
- What are the core activities you must do well?
- How do you encourage, motivate and fulfill your people’s needs?
The option needs to be commercially viable, align with company’s capabilities and competencies, operationally feasible and deliver the competitive advantage.
Hence, it is important to evaluate the options you have to understand if they are strategically fit and if they deliver your vision and mission.
How to Evaluate Strategic Options
In order to determine the most appropriate option, there are several evaluation techniques. In this post, we explain value/ effort assessment and weighted criteria evaluation.
Value/ Effort Assessment
Value effort assessment shows the highest reward possible by considering the resources needed against the value that option generates. For example, think about this method as making a lemonade to brewing a beer. The later is more fun but selling bottles of lemonade are your quick wins.
Weighted Criteria Evaluation
In this method, you can choose different criteria to compare your options. The total weight of each, will show you the most promising option to choose. For example, you can list return on investment or profitability as deciding factors.
Perform a Risk Analysis
Next, after carefully drafting the choices you have, it is time to assess the risk and evaluate the likelihood and impact of each.
Sometimes, thinking about risks and surprises can be unsettling. However, risk analysis can minimize uncertainty, mitigate the loss and protect possible damages.
Establish Key Performance Measurements (KPMs)
Lastly, you need to establish Key Performance Measurements to ensure the strategic options are performing as planned.
Some common KPMs are listed below:
- Customer satisfaction: Surveys, number of new and repeat customers
- Financial performance: Revenue growth rate, profit margin, net profit
- Internal processes: On time deliveries, full capacity utilization
- Employees: Hours of training, employee turnover and engagement rate
Before finalizing your decision, review the options and conduct a pre-implementation review. Try to involve your managers and other parties in the review process and ask for feedback. In your pre-implementation process, consider significant changes that happened in internal and external environment since the start. Also, consider that planning phase might take a long time. So, do not rush because you are running out of time.
Finally, SMART planning can take your business to places you never imagined possible.
Are you ready to plan?
Let’s explore the future together