Ultimate Guide to Strategic Planning
What does it really take to be strategic?
Businesses often set ambitious goals only to end up with stalled progress and overwhelmed employees. They may claim to have a strategic plan, but are they really doing what it takes to focus and achieve long-term success?
Strategic planning isn’t a document you stick in a drawer.
When done right, it crystalizes your company’s vision, focuses your resources, and breaks long-term goals into manageable chunks. A solid plan becomes the driving force in your organization, keeping your employees engaged and your business on track.
How do you build an effective strategic plan?
To get the best results, your organization needs to commit to a four-step process:
Keep reading to find out more about the keys to success at each stage and learn about measurement tools that will help you along the way.
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TABLE OF CONTENTS
Chapter 1
What is the Strategic Planning Process?
Strategic planning creates a roadmap for your business. It identifies measurable results to help you achieve your vision, charting short-term and long-term goals. When your business knows where it’s going and how to get there, you can focus time and resources, making everyone in your organization accountable for achieving those results.
Strategic planning is never a one-and-done exercise – it’s an ongoing process driven by four critical steps:
- Market Positioning – Using customer insights and market trends to determine the current position of your business and establishing how you want your brand perceived in the marketplace.
- Strategic Planning – Identifying short-term and long-term business goals and developing a strategic plan to achieve them. The plan should be based on solid market research and incorporate a budget and project timeline.
- Executing the Strategy – Carrying out the strategic plan, breaking the bigger goals into smaller, tangible goals, and then tracking and reporting on their progress.
- Revising the Plan – Reevaluating the strategic plan, updating assumptions and growth projections based on real-world results.
Integral to an organization’s long-term success, an effective strategic planning process:
- Engages everyone in your organization. Everyone is on the same page, aligned with your organization’s vision, mission, and goals.
- Gives you a clear picture of how marketplace developments may impact your business in the future.
- Enables you to develop a clear implementation plan that keeps everyone on track and accountable for deliverables.
- Focuses your organization’s resources so you spend time and money on what’s important.
- Creates a living document that your team regularly evaluates and revises to accommodate changing internal and external dynamics.
Chapter 2
Step 1:
Market Positioning
Market positioning establishes the identity of your brand or products in customers’ minds relative to your competitors. Your ability to influence customer perceptions depends on solid research: developing an effective positioning strategy, analyzing customer insights, measuring current and future market demand, and examining market trends.
Positioning Strategies
Positioning strategies define your brand or products in several different ways:
- Price – linking your brand to competitive pricing
- Quality – connecting your brand to consistently high product quality
- Product Benefit – attaching your brand to the positive impact your product has on customers
- Product Use – tying your brand to a specific product application
- Competition – portraying your brand as better than your competitors
An effective positioning strategy explains who you are (Core Values), how you differ from your competitors, and what prevailing conditions and opportunities exist in the marketplace. To help paint this picture, tools such as the SWOT analysis (strengths, weaknesses, opportunities, and threats) and PEST analysis (political, economic, social, and technological) can provide valuable insights.
From there, you develop a positioning statement – one that aligns with your organization’s Core Values, clarifies your business focus, and offers unique value in the marketplace.
Customer Insights
To further inform your market positioning, customer insights shed light on how target audiences respond to your products. Qualitative and quantitative customer feedback helps you identify trends in consumer behavior and preferences. With these insights, you can establish where you are and where you want to be in the marketplace.
Current and Future Demand
Your positioning strategy won’t gel without an accurate measure of current and future market demand. Demand forecasting combines historical sales and market share data, environmental factors (inflation, interest, and unemployment rates), and other industry dynamics to predict total sales and revenue for a specific time period. You can use these calculations to formulate your marketing, pricing, and purchasing strategies.
Trends
Trend analysis is also a powerful tool in strategic planning. While competitive analysis defines the current business environment, trend analysis sheds light on how those perceptions may evolve over time. This enhances your business forecasting, giving you the power to capitalize on shifting market dynamics.
Chapter 3
Step 2:
Strategic Planning
Once you define your market positioning, it’s time to develop a strategic plan, prioritizing long-term and short-term goals to achieve your business objectives. The long-term view focuses on 10-year goals supported by SMART goals (specific, measurable, achievable, relevant, and time-based goals) that demonstrate real progress in two- or three-year increments. The short-term view breaks SMART goals into even smaller increments – annual goals defined by 3 to 7 priorities.
This goal-setting process makes aspirations more manageable and progress more achievable. But the plan won’t be successful without proper research, as well as a realistic budget and project timeline.
Conduct Research
The research you conduct during market positioning will guide your goal-setting process. But internal audiences are important, too. Stakeholder surveys, both formal and informal, can pinpoint challenges, identify opportunities, and help build broad support for your strategic plan among key groups within your organization. Employees are far more likely to be engaged in achieving success if they feel they’ve had a voice in the planning process.
Budgeting
You won’t make progress on your goals if you don’t have a budget to support your strategic plan. Your budget should align with short- and long-term goals, spanning one-year, three-year, and five-year time periods, depending on the structure of your plan. By fully integrating budgeting into your planning process, you can better predict goal completion times, helping to manage both progress and expectations.
Set a Timeline
As you develop your strategic plan, incorporating a high-level project roadmap will help everyone in your organization visualize the timeline for this complex initiative. This timeline provides an overview of plan goals, breaking them down into project deliverables and key milestones. Ultimately, it makes your strategic plan more actionable and understandable.
Chapter 4
Step 3:
Executing the Strategy
Remember the one-year goals you set during strategic planning? To execute them effectively, you break your short-term goals into even more manageable chunks – three to seven SMART quarterly goals. Each of these goals represents what’s what’s most important to the company right now with one person accountable for each.
By repeating this process every quarter, you set the stage for success. Employees understand how their contributions impact the whole plan and the overall growth of your company. Plan execution becomes more manageable, helping employees stay focused and energized. Teams meet regularly to report on the last quarter’s progress, make sure they stay on track, resolve issues before they become bigger problems, and plot priorities for the next quarter.
The long-term success of strategic plan execution depends on other important factors:
- Frequent, two-way communication to encourage feedback, resolve issues, celebrate successes, and foster a collaborative spirit
- Matching in-house resources with achieving important goals
- Effective goal tracking, where individual goals align with the team and company goals, and everyone updates their progress regularly
- Reporting that ties progress back to the larger business strategy
- Performance management that aligns with strategic plan execution – rewarding employee performance towards achieving goals defined in your strategic plan
Chapter 5
Step 4:
Revising the Strategy
No strategic business plan should be set in stone. Your business and the marketplace change constantly. Competitors can launch new products, the economy may shift or you may achieve milestones ahead of schedule. Whatever the case, you should adapt your strategic plan to respond to these developments.
If you’re executing your business plan effectively, your teams already meet weekly for real-time performance accountability to the plan as well as to review progress and set priorities for the next quarter.
As a next step, your leadership team should conduct a more in-depth plan review once a year. It’s the perfect opportunity to make sure everyone is still aligned with the organization’s vision, core values, Core Focus™, marketing strategy, and longer-term business goals. It’s also a time to measure progress against key performance indicators (KPIs) and decide if course corrections are needed due to performance results, internal issues, or marketplace shifts.
Evaluation Process
Whatever evaluation methods you use to review your strategy, make sure the tools and standards remain consistent. During this process, your leadership team should address several important questions:
- Do our vision, core values, long-term goals, and business strategy remain relevant? If not, what needs to change to stay on track?
- Do our KPIs still accurately measure progress toward our goals? If not, what needs to change?
- How much progress did we make toward achieving our 1-year, 3-year, and 10-year goals?
- Did we meet our annual goals on budget and within our set timeline?
- In areas of success, what went right? What lessons can we apply to achieve new goals in areas where we fell short; what went wrong? What issues do we need to address?
- What lessons did we learn?
- To continue our progress, what goals should we focus on over the next quarter, the next year?
- Do we have an adequate budget to continue to execute our strategic plan?
- Once you revise your strategic plan and map out goals for the upcoming year, be sure to communicate these changes regularly throughout your organization to keep employees energized and engaged.
SWOT Analysis
A SWOT analysis evaluates your organization’s competitive position. It organizes your Strengths, Weaknesses, Opportunities, and Threats into a matrix – with one quadrant for each element to give you a snapshot of your positioning. While this tool fits well in the market positioning phase of the strategic planning process, it can provide valuable insights at any stage, particularly as you review and evaluate progress.
For best results, conduct your SWOT analysis with employees who represent a diverse cross-section of your organization and reevaluate regularly to monitor for changes.
Internal Factors
Strengths
What does your organization do well that gives you a specific advantage? What differentiates you from your competitors? What unique value do you provide to customers? Strengths can relate to customers, capabilities, company culture, technology, financials, branding, and many other categories. Here are just a few examples: outstanding customer support, strong brand recognition, ownership of key patents, leadership in innovation, team-based culture, high-profit margins, strong market share, clear value proposition, and unique product features.
Weaknesses
Where does your organization fall behind? How can your business improve? Weaknesses relate to the same categories as strengths and can include: slow to change, inconsistent revenue growth, high staff turnover, low level of repeat business, poor product quality, low brand awareness, and unstable supplier relationships.
External Factors
Opportunities
How can you turn your strengths into opportunities? Can you use market trends, social trends, or other external factors to your advantage? If, for example, your organization thrives in a team-based culture, you could leverage that capability to streamline processes and reduce costs. Favorable trade regulations could allow you to sell your products in new geographic markets. Lifestyle trends could uncover a new use for an existing product.
Threats
What external developments have the potential to harm your business? Do your weaknesses result in greater exposure to these threats? Threats come in many forms, including competitive pressures, supply chain issues, labor shortages, weather events, and global pandemics, to name a few.
PEST Analysis
The PEST analysis helps you assess Political, Economic, Social, and Technological factors that may impact how your company operates or the demand for your products. Similar to a SWOT analysis, PEST identifies opportunities and potential challenges to help you adapt your business and maintain a competitive advantage.
But it focuses purely on external environmental factors, here are examples of each:
Political
Changes in government policies, regulation and deregulation trends, tax policy, foreign trade policies, political climate issues, or international relations.
Economic
Economic growth and recession, interest rates, monetary exchange rates, inflation rates, costs of living, labor costs, consumer spending, and supply and demand issues
Social
Lifestyle trends, cultural attitudes, demographics, population growth or decline, employment trends, and safety trends
Technological
Technology and communications infrastructure, technology legislation, changes to digital or mobile technology, consumer access to technology, competitor technologies, emerging technologies, automation, intellectual property regulation
A PEST analysis provides you with an objective look at the world in which your business operates. It gives you a better understanding of the countries where you operate and sell your products. It can help you make decisions about new projects or ventures. Working in conjunction with a SWOT analysis, it can uncover valuable insights as you develop and revise your strategic business plan over time.
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EOS Glossary
Terms to Help you Navigate EOS
EOS® is a language onto itself. Here are a few EOS terms from our glossary that will help you navigate the Entrepreneurial Operating System® for the first time – or at least help clarify a term that you’ve heard before but are unclear about:
Entrepreneurial Operating System® (EOS®): A proven set of simple, practical tools that improves how people in an organization meet, solve problems, plan, prioritize, follow processes, communicate, measure, structure, clarify roles, lead, and manage.
The EOS Model®: Every business is comprised of Six Key Components™ as depicted by the EOS Model. Those six components are: Vision, People, Data, Issues, Process, Traction®. These must be managed and strengthened to create a healthy, well-run business.
Vision Component™: Getting everyone in the organization 100% on the same page with where your company is going and how you’re going to get there.
People Component™: Getting the right people in the right seats.
Data Component™: Using a handful of numbers that give everyone an exact pulse on where things are and when they are off track.
Issues Component™: Strengthening your organization’s ability to identify issues, discuss them, solve them, and make them go away forever.
Process Component™: “Systemizing” your business by identifying and documenting the core processes that define the way to run your business.
Traction® Component: Bringing discipline and accountability into the organization.
Integrator: The leader of a company’s leadership team. Integrators beat the drum, break the ties, harmoniously integrate other major functions in the organization, and accept ultimate accountability for achieving results.
Scorecard: An EOS Tool used to track a handful of numbers that give you a pulse on your business.
Accountability Chart™: Different from an organizational chart, an Accountability Chart defines the right structure for your company and clearly identifies who is accountable for what.
Rocks: The three to seven most important things you must get done in the next 90 days. Employees will typically have one to three individual Rocks each quarter while leadership team members will typically have three to seven individual Rocks.
Measurables: When companies use EOS, everyone “has a number” that is considered their measurable – something they do to contribute value to the organization that is measured on a consistent basis.
V/TO™ (Vision/Traction Organizer™): A two-page document that helps your leadership team define, document, agree on, and share the company vision.
10-Year Target™: A long-range, energizing goal for the organization, ranging from five years to 20 years out.
Core Focus™: Your core focus defines what you are as a company to help you avoid “shiny stuff” and keep you focused on the areas where your business excels. It comes from the intersection of knowing “Why” your company exists and “What” you do in the world.
Core Values: A timeless set of guiding principles that define your culture and the behaviors you expect from each other. They help you determine who fits your culture and who doesn’t and they help you attract like-minded people to your team.
Marketing Strategy: The definition of your ideal customer and the most appealing message to attract them to your business. It should provide a laser-like focus for your sales and marketing efforts.
3-Year Picture™: A definition of what your company will look like, feel like, and be like in three years. The 3-Year Picture creates a powerful image of the future and helps everyone work towards the same vision.
1-Year Plan: Defines your objectives for the year by identifying and crystallizing your revenue target, profit target, and measurables, along with your top three to seven goals for the year.
SMART: Stands for Specific, Measurable, Attainable, Realistic, and Timely. Making goals and Rocks SMART is essential for creating crystal clear communication and for setting the right expectations between you and your team so everyone knows what “done” looks like.
IDS™: Also known as the Issues Solving Track™, IDS is the process your team uses to identify, discuss, and solve issues on an ongoing basis.
Level 10 Meetings®: A weekly meeting with a specific agenda designed to help you stay focused on what’s important, solve issues effectively, and keep your team connected.
People Analyzer™: A simple tool that pulls your core values and Accountability Chart together to help your organization identify if they have the right people in the right seats.
Visionary: Often the company founder, a visionary is a strategic thinker who always sees the big picture and is tuned into the future of your industry. Visionaries are usually great with big relationships and the culture of the organization.
Organizational Checkup®: A 20-question survey that helps measure a company’s strength in the Six Key Components.
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