What is strategic plan management and how does it benefit teams?

A lot has been written on corporate strategy. Classic corporate strategy revolves around finding and maintaining a competitive advantage. A company would use frameworks such as Porter’s 5 Forces or BCG’s Growth Share Matrix to make sense of its strengths, competitors, and where it can succeed in the market. 

In the past two decades, classic strategy has had to adapt. In some cases this means yielding, to markets and a business environment that has become less stable or predictable.

Strategy has evolved, with more iterative approaches gaining favor and moving away from the 5-year plan, yet the basic steps of strategic management can apply regardless of the approach. 

1. Determine where/what you want to be. Do you approach strategy from the inside-out — identifying the organization’s capabilities and competitive advantages first — or the outside-in — understanding long-term forces and how they are shaping the market first? Be clear about what assumptions you are making. Are the assumptions based on short-term trends in the industry, longer-term trends for customers, or are they focused on analyzing the competition? 
2. Gather others to test assumptions. Bring together leaders and others with different perspectives and frames of reference to pressure-test the assumptions. What additional information would validate or clarify an assumption? How might you get that information? How would that adjust the plan? Involving others also creates buy-in.
3. Analyze strengths and weaknesses. What capabilities and assets does the company have relative to where it wants to play? You can run a SWOT analysis here to examine your opportunities and successes.
4. Formulation of the plan. When you do the homework, you can make choices and trade-offs — where the company wants to go, what it will need to develop to get there, what it will do, and what it will have to abandon. This stage includes convening representatives from key stakeholders, clarifying the vision, developing an overview of the plan including goals and objectives, and outlining responsibilities, resources, and timelines. They also establish benchmarks to measure progress.  
5. Execution. The strategy group has to stay engaged, keeping contact with the various parts of the organization and making sure they have the resources, clarity, and motivation to keep executing the strategy.
6. Monitor, review, and adjust. This step might be the biggest opportunity for differentiating the success and sustainability of a strategic plan. Is reporting and evaluation of results just a check-box formality? An exercise in covering and one-upmanship? Or, is this a frequent check-in where business leaders can talk through what they are doing  and surface roadblocks, concerns and new information that might warrant revisiting the plan?

Many organizations cover the first four steps and consider themselves complete. Often they fail because they don’t have the strategic management team at the table right from the beginning to put to action and monitor the plan.

 In The Balanced Scorecard, authors David Norton and Robert Kaplan report that 90% of organizations fail to execute their strategies successfully. They contend that because companies have not created a plan for execution, the strategic plan falls flat. 

John Kotter, former professor at Harvard Business School and noted expert on innovation says, “Strategy should be viewed as a dynamic force that constantly seeks opportunities, identifies initiatives that will capitalize on them, and completes those initiatives swiftly and efficiently.”

What to include in a strategic plan

When managing a strategic plan, it is important to check that all of the necessary elements exist. Otherwise, you could end up revising parts of the plan or pivoting more often than you would with these elements.

To keep things running smoothly, each strategic plan document should include the following components:

1. The company’s mission statement
2. The organizational goals of the plan
3. A vision statement
4. A roadmap with time frames for each step of the plan
5. The methods and tactics you will use to reach these business goals

Leadership deficits or lukewarm commitment

In this HBR article, Ron Carucci from consulting firm Navalent reports that 61% of executives in a 10-year longitudinal study felt they were not prepared for the strategic challenges they faced after moving into senior leadership roles.

A lack of commitment to the plan is also a contributing factor. In addition, leaders attending to quarterly targets, crisis management, and reconciling budgets often push execution down the priority list.

Lack of metrics  

Companies fail to apply metrics to track progress, which leads to ambiguous goals. Without metrics, it is easy to go off-track or to not recognize when conditions have changed and the plan should be revised. 

Lack of systemic alignment 

When strategies aren’t linked to budgets, strategic “priorities” don’t get resources. Local budgeting often reflects the conflicting objectives or goals for a group or business unit that are not consistent with strategic priorities.  

Insufficient communication

Lack of down-the-line communication leads to confusion and lack of information enterprise-wide. This sparks distrust and negatively impacts commitment. The people closest to the customer are often in the dark. Kaplan and Norton report that on average, 95% of employees are unaware of the strategy. 

Insufficient management capabilities

A study by the Economist found that “only 41% of respondents say their companies have a sufficient number of skilled personnel to implement high-priority strategic initiatives.” In the same study, only 18% reported prioritizing hiring people with the skills to drive strategy implementation. 

Lack of robust employee performance and development plans.

Kaplan and Norton report 70% of middle managers and over 90% of frontline employees have no link to the success or failure of execution. W. James McNerney, Jr. Chairman of 3M argued that by improving the average performance of every employee by 15%, irrespective of what his or her role is, a company can achieve and sustain consistently superior performance.

Joseph Hrebiniak, Emeritus management professor at Wharton warns that the strategic plan has to be reconciled with the organization’s talent. “If you don’t have what it takes, you’re going to have to get it, or modify the strategy to be more realistic.” Develop leaders, managers, and employees to meet the strategy.

Resistance to Change 

Change is threatening. In an organization, change often corresponds with budget and resource allocations representing shifts in power and influence for the leaders involved. For employees, fear and anxiety about their own competence, status, and job security also contribute to resistance.

Strategic planning management is designed to address the factors that often lead to execution failure. As such, how strategic management is implemented is ultimately unique to each organization. The goal is to provide structure and discipline to ensure success while also being responsive to particular conditions and changing environments. 

How does strategic management address the failure points?

• The organization and its people are set up to succeed.
• Leadership is supported in keeping up momentum.
• Everyone in the organization is aware of the strategic plan and how they contribute to it.
• Progress to plan is communicated throughout the organization and to the board.
• Metrics facilitate course correction.
• Budgets enterprise-wide are based on strategy.
• Cross-organization alignment as opposed to silos.
• Robust employee performance and compensation plans are created.
• Calls for commitment to training and education.
• The right people are in the right jobs.

Developing and executing a successful strategy is hard work. Strategic management doesn’t solve everything.

• Complex operations. Global companies with multiple people, multiple products, in multiple countries make enterprise-wide coordination complex.
• Localized ecosystems. A more flexible approach is needed when execution depends on many outside players. For example, a large retailer enters a new market and negotiates terms and commitments with suppliers as they would in the U.S. If the suppliers refuse to play by those rules, the company has to reevaluate its strategy.
• Power struggles. If CEO’s feel managed rather than supported, they will be resistant to an OSM.
• Disempowerment. Possible resentment from middle management who may regard the OSM as taking away their autonomy.
• Not-invented here. When strategy formulation and management is conducted by an outside group, employees may not buy in.

• Build trust by focusing on how you can facilitate people’s success. Beware of acting in ways that cast you as a watchdog or the police.
• In discussions around evaluation, lead from what’s going right and discourage blaming.
• Have empathy for executives amid distracting issues and pressures. Do whatever you can to support the CEO.
• Create a multiple outlet/multiple media communications plan to keep stakeholders up to date along the way.
• Enlist trusted colleagues or advisors to give you support and perspective when you need to address complex and challenging situations.
• Learn to think on two-time horizons to avoid becoming reactive during rapid change. Even with in-the-moment actions and initiatives, consider how they serve the North Star of the longer-term strategy, either through building capabilities or gaining useful insight. 

Coaching and leadership development opportunities:

• Executive team coaching for the leadership team. Often leadership teams unwittingly find themselves in the weeds. Executive team coaching can help members to support one another in observing from a higher and more strategic vantage point while holding one another accountable for execution.
• Action learning groups for leaders in cross-functional areas. Individual members bring project-specific strategic issues and opportunities to a common table for ideas, support, and accountability. They are crucibles for synergistic learning.
• Periodic conferences for groups across the organization for updates and knowledge-sharing. Employees can give important feedback to leaders about how things are going.
• Training leaders to be coaches of their teams.
• Coaching emerging leaders, equipping them with skills to manage change as strategic planners.

Though companies have varying structures for implementing strategic management, having a discrete functional unit at the corporate level to drive execution activities is key. This case study on the Balanced Scorecard illustrates how strategic management comes into play.

After innovation successes in the 1990s, US automaker Chrysler was in trouble by 2000. High costs and competition led to a deficit of more than $5 billion.

DaimlerChrysler, the parent company, stepped in. Dieter Zetsche became the CEO and introduced the Balance Scorecard (BSC) as part of the turnaround strategy. Bill Russo, vice president of business strategy, and his unit were put in charge of managing the strategy.

First, this “office of strategy management” worked with the executive team to define the new strategy using the Balanced Scorecard as a framework to align and prioritize strategy initiatives. Their efforts produced a scorecard for the enterprise. This was vetted through senior leadership.

Next, the enterprise-wide scorecard cascaded down through the organization to business units and support units. Each created their own scorecards based on what local operations would need to do to support the larger strategy, creating alignment within the organization. Russo’s strategic management group collected and analyzed this data and created processes for the scorecards. 

Then the strategic management group led a communication rollout plan to over 90,000 employees. The strategic management group also set the agenda for monthly reviews and strategic planning budget supervision.

Finally, to keep momentum and raise critical issues, before management meetings Russo would brief Zetsche on issues emerging from the scorecard reporting so that things that needed management attention would be on the agenda. Following the meeting, he would follow-up and ensure proper communication was in place.

Throughout the process, the strategic management group was a central resource and clearing house for data: 

• Served as a repository of ideas emerging through the organization
• Supported Human Resources for training and education on the process.
• Communicated strategy, targets and initiatives. 
• Supported the business units with communications planning and ensuring clear and consistent messaging.

Optimizing your strategic planning management

With so many moving parts and considerations, managing strategic plans can seem daunting. But it is critical in order to see plans through and ensure actions align with goals. 

Try the strategies we’ve noted here as you build out and develop your next strategic plan. And remember to continually assess goals and objectives as time goes on.