NAWBO-LA PEAK LEADERSHIP ACADEMY Strategic Planning Workbook NAWBO-LA PEAK LEADERSHIP ACADEMY Strategic Planning Workbook Management Systems Consulting Corporation 10990 Wilshire Blvd., Suite 1420 Los Angeles, CA 90024 (310) 477-0444 www.mgtsystems.com © Copyright Management Systems Consulting Corporation, 1989; Revised 2007. These materials are not to be reproduced in any form without the prior consent of Management Systems Consulting Corporation, 10990 Wilshire Blvd., Suite 1420, Los Angeles, CA 90024, (310) 477-0444. www.mgtsystems.com. NAWBO-LA PEAK LEADERSHIP ACADEMY Strategic Planning Workbook TABLE OF CONTENTS INTRODUCTION .......................................................................................... 2 MANAGEMENT SYSTEMS’ STRATEGIC PLANNING PROCESSSM ...................... 3 STEP #1: COMPLETE THE ENVIRONMENTAL SCAN ...................................... 4 STEP #2: COMPLETE THE ORGANIZATIONAL ASSESSMENT ........................ 6 STEP #3: CREATE YOUR PLAN .................................................................. 14 STEP 3A: BUSINESS DEFINITION/CONCEPT: WHO AM I? ................................ 15 STEP 3B: STRATEGIC MISSION STATEMENT: WHERE DO I WANT TO BE? .......... 18 STEP 3C: CORE STRATEGY OF YOUR BUSINESS: HOW WILL I COMPETE? .......... 22 STEP #4: FINALIZING YOUR PLAN ........................................................... 46 STEP #5: PLAN IMPLEMENTATION AND MONITORING ............................. 48 © Management Systems Consulting Corporation, 2007 All rights reserved. NAWBO-LA PEAK LEADERSHIP ACADEMY Strategic Planning Workbook INTRODUCTION Over the past 27 years, Management Systems Consulting Corporation has helped hundreds of companies like yours improve their effectiveness and build the foundation for long-term success through developing effective business plans. The Management Systems approach to strategic planning has been applied in many companies and business units, including Starbucks, Countrywide Financial Corporation, Amgen, Neutrogena, and Baskin Robbins.1 This “workbook” is intended to help you develop a plan to promote the success of your business, building upon the information you collected in completing the Environmental Scan and Organizational Assessment (that is, by completing the Planning Survey, Growing Pains Survey, and Organizational Effectiveness Survey). The diagram on the next page presents an overview of Management Systems’ Strategic Planning ProcessSM that is used throughout the remainder of this workbook. See Growing Pains by Eric G. Flamholtz and Yvonne Randle (Jossey-Bass, 2000) for more information on this process. 1 2 © Management Systems Consulting Corporation, 2007 All rights reserved. NAWBO-LA PEAK LEADERSHIP ACADEMY Strategic Planning Workbook MANAGEMENT SYSTEMS’ STRATEGIC PLANNING PROCESSSM Step 1: Environmental Scan Step 2: Organizational Assessment • • • • • • • • • Market Analysis Competitive Analysis Trend Analysis Markets Products/Services Resources Operational Systems Management Systems Culture Step 3: Create Your Business Plan • • • • • • Business Definition/Concept Strategic Mission Core Strategy Key Results Areas Objectives Goals Step 4: Develop Your Budget Step 5: Implement and Monitor Your Plan • Quarterly Review and Update 3 © Management Systems Consulting Corporation, 2007 All rights reserved. NAWBO-LA PEAK LEADERSHIP ACADEMY Strategic Planning Workbook STEP #1: COMPLETE THE ENVIRONMENTAL SCAN The first step in developing your business plan is to identify the opportunities and threats presented by your market to your business. This involves: • Identifying your Target Market (Customers) and your strengths and limitations with respect to meeting market needs • Identifying the strengths and limitations of Your Competitors • Identifying Key Market Trends and the threats and opportunities they present for your business • Developing strategies to promote success by maximizing opportunities and minimizing threat identified through your analysis In completing this step, you will draw upon the information you collected using the “Planning Survey” – specifically the Competitor Analysis (Section 1.1), Trend Analysis (Section 1.2), and Market Analysis (Section 3.1). Completing Your Environmental Scan Begin by reviewing the information you recorded in Sections 1.1, 1.2, and 3.1 of your planning survey. In the worksheet on the next page: • Identify the most significant findings from your “Environmental Scan.” These findings might relate to: o Specific strengths or limitations possessed by your competitors; o Significant opportunities or threats presented by specific trends; and/or o Significant opportunities or threats to your business created by your customers’ needs/changing needs and the extent to which your products/services meet these needs. • For each key finding, identify one or more strategies for maximizing the opportunity or minimizing the threat. That is, identify what you might do or do differently to promote the long-term success of your business. You might consider involving other members of your team in this analysis/discussion. 4 © Management Systems Consulting Corporation, 2007 All rights reserved. NAWBO-LA PEAK LEADERSHIP ACADEMY Strategic Planning Workbook ENVIRONMENTAL SCAN – ANALYSIS OF RESULTS Key Finding Strategies to Promote Success: Maximizing Opportunities and Minimizing Threats 5 © Management Systems Consulting Corporation, 2007 All rights reserved. NAWBO-LA PEAK LEADERSHIP ACADEMY Strategic Planning Workbook STEP #2: COMPLETE THE ORGANIZATIONAL ASSESSMENT To understand your company’s capabilities, you need to complete an “Organizational Assessment.” This involves identifying your company’s strengths and limitations at each level in a framework called the “Pyramid of Organizational Development” shown below. The Pyramid of Organizational Development CORPORATE CULTURE Values Beliefs Norms MANAGEMENT SYSTEMS Planning Organization Management Development Control OPERATIONAL SYSTEMS Accounting: Production: Marketing: ? Billing ? Payroll ? Shipping ? Selling Personnel: ? Hiring ? Compensation RESOURCE MANAGEMENT Financial Resources Technological and Physical Resources Human Resources PRODUCTS & SERVICES Develop Products (Services) MARKETS Define Market Segments and Niche © Copyright Management Systems Consulting Corporation 1986, revised 2004. All Rights Reserved. Management Systems’ work and research with companies over the past 27 years suggests that an organization’s success over the long-term depends, to a great extent, on its ability to successfully design and manage these six dimensions. (See "Organizational Success and Failure: An Empirical Test of a Holistic Model" by Eric G. Flamholtz, European Management Journal, October 2000). Completing the organizational assessment, then, involves systematically assessing the extent to which you have the systems and processes in place to support your current and anticipated growth. 6 © Management Systems Consulting Corporation, 2007 All rights reserved. NAWBO-LA PEAK LEADERSHIP ACADEMY Strategic Planning Workbook The levels in the Pyramid are defined below, along with the keys to success at each level. Pyramid Level Markets: Definition: The customers that a company is targeting. Keys to Success at This Level: Products/ Services: Clear definition/identification of who the target customer is. Clear understanding of customer needs and how these needs are changing. Development of a market niche (i.e., a place in the market where the company has a sustainable competitive advantage). Definition: What the company offers its customers in order to meet their needs. Keys to Success at This Level: Resources: Ability to offer products/services that meet the needs of the company’s chosen customer base (i.e., market). Having systems in place to adapt products/services to changing customer needs. Definition: The amount and quality of people, equipment, facilities, and dollars available to support the company’s continued operations and growth. Keys to Success at This Level: Identification of what resources are required to support the company’s operations and growth. Having enough of the “right” resources to support continued operations and growth. Having systems in place to acquire and effectively manage company resources. 7 © Management Systems Consulting Corporation, 2007 All rights reserved. NAWBO-LA PEAK LEADERSHIP ACADEMY Strategic Planning Workbook Pyramid Level Operational Systems: Definition: The day-to-day systems (e.g., production, accounting, sales, marketing, human resource management, research and development, communication, information systems, etc.) that are needed to support effective and efficient operations. Keys to Success at This Level: Management Systems: Ability to effectively design, implement, and continuously refine the systems needed to support current day-to-day operations and company growth. Definition: The systems needed to support long-term growth. There are four Management Systems: Strategic Planning System – including operational planning, scheduling, budgeting, and contingency planning. Organizational Structure – how people are organized, who reports to whom, and how activities are coordinated. Management Development System – the processes that are used to develop the company’s management capabilities. Performance Management Systems – the set of processes and mechanisms (including performance appraisal) used to motivate employees to achieve organizational goals. Keys to Success at This Level: Company Culture: Ability to effectively design, implement, and continuously refine (based on growth) the planning, structure, management development, and performance management systems needed to support effective operations and company growth. Definition: The values, beliefs and norms that govern the behavior of people in the company. Keys to Success at This Level: Clear definition of the company’s culture. Having systems in place to promote and reinforce behavior consistent with the company’s culture. 8 © Management Systems Consulting Corporation, 2007 All rights reserved. NAWBO-LA PEAK LEADERSHIP ACADEMY Strategic Planning Workbook To complete this step, you will: • Analyze your Growing Pains and Organizational Effectiveness Survey Results. • Review and analyze the information you collected using the “Planning Survey” – specifically the Products/Services Analysis (Section 3.2), Resources and Operational Systems Analysis (Section 3.3), Management Systems Analysis (Section 3.4), and Culture Analysis (Section 3.5). Growing Pains Survey Results Analysis Review your Growing Pains results. • In the first column of the table on page 11, identify the aspects of your company’s infrastructure that might be contributing to these results. • In the second column, identify what you might do or do differently to address the issues identified in the first column and, in turn, improve your company’s effectiveness. Organizational Effectiveness Survey Results Analysis Review your Organizational Effectiveness Survey results. • In the first column of the table on page 12, identify your company’s most significant strengths, as suggested by these results. • In the second column of the table on page 12, identify you company’s most significant limitations (or opportunities to improve), as suggested by these results. • In the third column of the table on page 12, identify what you might do to maximize your company’s strengths (to create a competitive advantage) and minimize your company’s limitations to support long-term growth and success. 9 © Management Systems Consulting Corporation, 2007 All rights reserved. NAWBO-LA PEAK LEADERSHIP ACADEMY Strategic Planning Workbook Planning Survey Results Analysis Begin by reviewing the information you recorded in Sections 3.2, 3.3, 3.4, and 3.5 of your planning survey. In the worksheet on page 13: • Identify the most significant findings from the planning survey as they related to your “Organizational Assessment.” Specifically, what are the key strengths and limitations (or opportunities to improve) suggested by Planning Survey results? • For each key finding, identify one or more strategies for maximizing the strength or minimizing the limitation. That is, identify what you might do or do differently to promote the long-term success of your business. 10 © Management Systems Consulting Corporation, 2007 All rights reserved. NAWBO-LA PEAK LEADERSHIP ACADEMY Strategic Planning Workbook ORGANIZATIONAL ASSESSMENT – GROWING PAINS RESULTS ANALYSIS Infrastructure “Problems” The Might Be Contributing to Results Strategies to Promote Success: Addressing Growing Pains “Problems” 11 © Management Systems Consulting Corporation, 2007 All rights reserved. NAWBO-LA PEAK LEADERSHIP ACADEMY Strategic Planning Workbook ORGANIZATIONAL ASSESSMENT – ORGANIZATIONAL EFFECTIVENESS SURVEY RESULTS ANALYSIS Most Significant Strengths Most Significant Limitations (Opportunities to Improve) Strategies to Promote Success: Maximizing Strengths and Minimizing Limitations 12 © Management Systems Consulting Corporation, 2007 All rights reserved. NAWBO-LA PEAK LEADERSHIP ACADEMY Strategic Planning Workbook ORGANIZATIONAL ASSESSMENT – PLANNING SURVEY RESULTS ANALYSIS Key Finding Strategies to Promote Success: Maximizing Strengths and Minimizing Limitations 13 © Management Systems Consulting Corporation, 2007 All rights reserved. NAWBO-LA PEAK LEADERSHIP ACADEMY Strategic Planning Workbook STEP #3: CREATE YOUR PLAN You are now ready to begin creating your business plan. The Business Plan consists of four components: Your Business Definition/Concept The Strategic Mission Statement Core Strategy Key Result Areas (KRAs) Objectives Goals These components form a hierarchy that is shown below. In brief, in developing your plan, you will move from a broad definition of who you are (as a business) and what you want to become, to more specific strategies and tactics that will help you get there. Business Definition/Concept Strategic Mission Statement Core Strategy Key Result Areas Objectives Goals 14 © Management Systems Consulting Corporation, 2007 All rights reserved. NAWBO-LA PEAK LEADERSHIP ACADEMY Strategic Planning Workbook STEP 3A: BUSINESS DEFINITION/CONCEPT: WHO AM I? The Business Definition/Concept addresses the question, “What business are we in?” This is a deceptively simply question, yet one of the most critical strategic decisions that a company can make. Addressing this question provides the focus for the business and its employees. It provides the boundaries in which your business will operate. If the Business Definition/Concept is too broad or too narrow, it is of no strategic value and can actually create problems for the company or, in some cases, an entire industry. Example: In the latter part of the nineteenth century and into the early twentieth century, those in the railroad industry would have answered the question, “What business are you in?” with the obvious answer, “We are in the railroad business.” This was true, but it not “right.” New forms of transportation (i.e., cars, trucks, buses, and airplanes) were being developed that were changing the face of the railroads’ true business which was “transportation.” Failing to recognize that they were really in the transportation business eventually eroded the entire industry’s strength. Quick Hints to Develop Your Business Definition/Concept: • The statement should address the following sub-questions: o Who are your customers (present and potential)? o What are their needs? o How do they buy? o What is value to them? • A lesson learned from the railroads is that in developing the Business Definition/Concept for your company, you need to understand the environment in which you operate (see the results of your Environmental Scan), as well as your company’s internal capabilities (see the results of your Organizational Assessment). • Avoid making the Business Definition/Concept too broad or too narrow. The statement should be broad enough to allow you to take advantage of opportunities presented by your market, but not so broad that it appears you are trying to “be everything to everybody.” • Try to state your Business Definition/Concept in one to three sentences. 15 © Management Systems Consulting Corporation, 2007 All rights reserved. NAWBO-LA PEAK LEADERSHIP ACADEMY Strategic Planning Workbook Sample Business Definition/Concept Statements (Based on real companies, but all have been genericized) • Premier Products, Inc. develops and distributes competitively priced, highly functional, customer-driven products which are used to treat ( ) medical conditions. • Techlink is in the business of partnering with the management of Fortune 1000 and high growth companies ($100M to $10B) to build and implement information technology business solutions for sustainable business advantage. • ABC Senior Programs is dedicated to excelling at understanding and meeting the service and housing needs of older adults. • AtHome Lending, using a branch delivery system, provides a broad range of home loan solutions to homeowners to support consumers’ personal financial goals. Creating Your Business Concept/Definition In developing the Business Definition/Concept for your company, begin by answering the questions below. Be sure to refer back to the Environmental Scan and Organizational Assessment you completed in Steps 1 and 2. 1. Who are your target customer(s)? • You may define who they are in any way that makes sense to you. • Be sure to include potential customers. 2. What customer needs are you trying to satisfy through providing your products/services? 3. How do you or will you provide your products/services to these customers? 4. What do your target customers consider to be of value in the products/services you offer? 16 © Management Systems Consulting Corporation, 2007 All rights reserved. NAWBO-LA PEAK LEADERSHIP ACADEMY Strategic Planning Workbook Using the information you recorded on the previous page, write a Business Definition/Concept statement for your company in the space below. BUSINESS DEFINITION/CONCEPT FOR ____________ We are in business of 17 © Management Systems Consulting Corporation, 2007 All rights reserved. NAWBO-LA PEAK LEADERSHIP ACADEMY Strategic Planning Workbook STEP 3B: STRATEGIC MISSION STATEMENT: WHERE DO I WANT TO BE? A Strategic Mission Statement is a broad statement of what a company wants to achieve during the planning period (typically 3-5 years). The Strategic Mission is important because it provides an overall sense of direction for employees – it lets them know where you are going and when you expect to get there. In brief, developing a Strategic Mission Statement involves answering the question, “What do I want my business to be or become over the 3-5 years?” The Strategic Mission Statement must include specific targets (e.g., revenue, market share, profitability, expansion, reputation, etc.) against which performance can be assessed and a date (3-5 years out) by which these targets should be reached. In this workbook, you will focus you on developing a 3-year Strategic Mission Statement. Quick Hints to Develop Your Strategic Mission Statement: • Use the results of your Environmental Scan and Organizational Assessment to identify significant opportunities you want to pursue and/or major internal issues you want to address. • Identify the most significant measures of success for your business. These will typically include financial targets (e.g., revenues/sales, profitability, etc.). However, be sure to also think about other “big picture” things (e.g., improving your brand recognition, attracting different types of people, improving key internal systems, etc.) that you would like to accomplish over the next 3 years. • Avoid including EVERYTHING that you want to accomplish in your Strategic Mission Statement. Instead, focus on the most critical determinants of success. • Be sure that you can measure progress against the targets you include in the Strategic Mission Statement. If, for example, you include something like, “become the leading…” be sure that you know how you will assess whether you have, in fact, become the “leader.” • The “due date” for the achievement of your Strategic Mission should be whatever your fiscal year-end is, three years from now. For example, if your fiscal year-end is March 31, the due date for your Strategic Mission Statement would be: 3/31/this year + 3 years. • Try to present your Strategic Mission Statement in three to five sentences. Avoid writing a book! 18 © Management Systems Consulting Corporation, 2007 All rights reserved. NAWBO-LA PEAK LEADERSHIP ACADEMY Strategic Planning Workbook Sample Strategic Mission Statements • By December 31, 200X, Premier Products will be recognized as an industry leader, achieving minimum revenues of $27 to $33 million, while maintaining our expense and margin targets. Each year, we will grow a minimum of 15 percent in revenues. These targets will be achieved without compromising our values. • By December 31, 200X, Techlink will achieve $20 million in revenues and maintain a profit margin of 10%. We will increase our brand awareness by 10% and be positioned for realizing value. In the process, we will build and maintain an entrepreneurially-oriented culture that provides a positive and challenging work environment. • By December 31, 200X, ABC Senior Programs will be providing quality services and housing to at least 4,000 older adults in the Western United States by way of Senior Communities, Nursing Facilities, Assisted Living, Affordable Housing, and home and community-based services. We will have improved and expanded existing programs, new developments, acquisitions, and affiliations. ABC Senior Programs will have developed and fully implemented the infrastructure needed to support this growth. • By FYE 200x, AtHome Lending will be one of the lowest cost manufacturers of home loan permanent financing, while providing a positive customer experience. We will deploy a product and channel mix that reduces fluctuations in profitability throughout the interest rate cycle and garner X% share of the U.S. mortgage market. 19 © Management Systems Consulting Corporation, 2007 All rights reserved. NAWBO-LA PEAK LEADERSHIP ACADEMY Strategic Planning Workbook Creating Your Strategic Mission Statement To develop the Strategic Mission Statement for your company, begin by answering the questions below. Be sure to refer back to the Environmental Scan and Organizational Assessment you completed in Steps 1 and 2. 1. Identify the date by which you want to realize your Strategic Mission. This date should be the end of your fiscal year, three years out. In brief, the due date should be “X/30 or 31/current year + 3.” 2. Identify the total revenues or sales you would like to achieve by the due date identified in question #1. 3. Identify a profit target (e.g., profit margin, $ profit, etc.) to be achieved by the due date identified in question #1. 4. Identify significant opportunities you want to pursue and what you want to achieve with respect to these opportunities by the due date identified in question #1. 5. Identify any significant changes that you want to make to internal operations and/or significant internal issues you want to address and what you want to achieve in these areas by the due date identified in question #1. 6. Identify any other “Big Picture” things you want to achieve by the due date identified in question #1. 20 © Management Systems Consulting Corporation, 2007 All rights reserved. NAWBO-LA PEAK LEADERSHIP ACADEMY Strategic Planning Workbook Using the information you recorded on the previous page, write a Strategic Mission Statement for your company in the space below. STRATEGIC MISSION STATEMENT FOR ______________ By _________________, we will 21 © Management Systems Consulting Corporation, 2007 All rights reserved. NAWBO-LA PEAK LEADERSHIP ACADEMY Strategic Planning Workbook STEP 3C: CORE STRATEGY OF YOUR BUSINESS: HOW WILL I COMPETE? Your Core Strategy defines how you will compete to “win the game” in your market. A Core Strategy should reflect the factors that differentiate or will differentiate you from those with whom you compete for customers. These factors should be truly unique. If, for example, everyone you compete with has a strong sales force (or selling capability), this is not a differentiating factor. If, however, your company has a reputation for providing a high level of customer service and none of your competitors have a similar reputation, this would be a factor that truly differentiates you. Factors that might differentiate your business from others can include: The types, range, or quality of the products/services you provide. The resources you have and/or use to support your business. Your approach to marketing, sales, etc. Your skills or experience. The reputation you have in the market. Your company’s culture. Quick Hints for Developing Your Core Strategy • Refer back to the Competitor Analysis you completed earlier (as part of your Environmental Scan). Use these results to identify what you do that is truly different from others and/or what you might do to “win” against these key competitors. • If you cannot think of something that differentiates you today, think about one or more strengths that you might turn into competitive advantages in the future. In thinking about your Core Strategy, try to answer the question: “Why should/would a customer choose to purchase from my company, versus from one of my competitors?” • Be sure that your statement is “real.” That is, be sure that it reflects your current capabilities and/or capabilities that you can realistically develop. • State your Core Strategy in one or two sentences. 22 © Management Systems Consulting Corporation, 2007 All rights reserved. NAWBO-LA PEAK LEADERSHIP ACADEMY Strategic Planning Workbook Sample Core Strategies • Premier Products Be an extremely customer- and values-driven company, with a focus on providing innovative, competitively priced products. Use our state-of-the art technology to improve productivity, without compromising our unique values. • TechLink Solutions guaranteed to go live. • ABC Senior Programs Leverage existing and continue to build new strong relationships with our residents, our employees, and the communities in which we operate to support our growth. • AtHome Lending Re-engineer our mortgage process with a focus on speed, the customer experience, and self-service options, supported by metrics-driven marketing. Creating Your Core Strategy To develop your Core Strategy, answer the following question: • What factors truly differentiate your company from your competitors? Using your responses to the question above, craft a one to two sentence statement that defines how you will compete to “win the game.” Core Strategy for ______________ 23 © Management Systems Consulting Corporation, 2007 All rights reserved. NAWBO-LA PEAK LEADERSHIP ACADEMY Strategic Planning Workbook STEP 3D: KEY RESULT AREAS, OBJECTIVES, AND GOALS: HOW WILL I GET THERE? You have now identified “what business you are in” (Business Definition/Concept) “where you want to be” (Strategic Mission Statement) and have developed your competitive (Core) strategy. The next step is to develop your plan for moving from where you are to where you want to be – that is, what you will do to make your Strategic Mission a reality. In this phase of the planning process, you will focus on three components: Key Result Areas (KRAs) Objectives Goals Key Result Areas Key Result Areas are areas of a company’s operation in which performance has a critical impact on the achievement of the overall Strategic Mission. In a very real sense, Key Result Areas or “KRAs” are critical success factors. Since research (referred to earlier in this workbook) suggests that organizations who successfully manage the six levels in the Pyramid of Organizational Development dramatically increase their probability of long-term success, we recommend that you use these six levels – Markets, Products/Services, Resources, Operational Systems, Management Systems, and Company Culture – plus “Financial Results” as the 7 Key Result Areas in your plan. Doing so minimizes the possibility that a critical factor that contributes to long-term success will be ignored. In your plan, these Key Result Areas will be numbered and presented as follows: 1.0 Markets 2.0 Products/Services 3.0 Resources 4.0 Operational Systems 5.0 Management Systems 6.0 Company Culture 7.0 Financial Results Developing Objectives Objectives are broad statements of what a company wants to achieve in the long run (that is, by the Strategic Mission’s due date). In a sense, Objectives reflect the strategy that the company is adopting with respect to each Key Result Area (KRA). Each KRA will have one or more Objectives. Objectives should be stated as results to be achieved (versus actions to be taken) and should be linked to the KRA that they support. 24 © Management Systems Consulting Corporation, 2007 All rights reserved. NAWBO-LA PEAK LEADERSHIP ACADEMY Strategic Planning Workbook Developing Goals Goals are specific, measurable results that you want to or need to attain by a specified due date to make progress in achieving a specific Objective. Goals are the component of the plan that builds in accountability and helps you “see” very clearly the progress you are making in achieving desired results. Goals should be SMART: • Specific – Define a specific outcome • Measurable – Targets against which progress can be assessed • Accountable – someone on the team has responsibility for each Goal – and Actionable – action can be taken on the Goal • Realistic – a high probability that the Goal can be achieved by its due date – and Results-Oriented – results to be achieved, versus action to be taken • Time-Dated – Specific due date Organizing KRAs, Objectives, and Goals We suggest that you organize your plan using the following numbering system: X.0 – Key Result Area X.X – Objective X.X.X – Goal This numbering system helps those who are responsible for specific Goals very clearly see how what they are working to achieve “fits” in the context of your overall company plan. A sample page from a strategic plan, using this numbering system is presented on the next page. 25 © Management Systems Consulting Corporation, 2007 All rights reserved. NAWBO-LA PEAK LEADERSHIP ACADEMY Strategic Planning Workbook SAMPLE PLANNING PAGE KEY RESULT AREA: Objective 1.1 1.0 Markets Grow active buyer base at a rate consistent with overall sales growth per year. Goals Who When Status 1.1.1 Increase our active buyer base by 50% from 10/1/0X to 9/30/0X through existing strategies. BH 10/1/0X Pending 1.1.2 Increase active buyer base by 40% from 10/1/0X to 9/30/0X through new strategies. LM 10/31/0X 1.1.3 Identify and evaluate at least 2 new vehicles for growth beyond FY ‘0X. BH 9/30/0X 1.1.4 Develop and document plan to attract new customers in FY ‘0X through existing strategies. BH 6/1/0X 1.1.5 Identify new prospecting strategies to test during FY ‘0X. AF 4/30/0X 26 © Management Systems Consulting Corporation, 2007 All rights reserved. NAWBO-LA PEAK LEADERSHIP ACADEMY Strategic Planning Workbook Quick Hints for Developing Objectives and Goals • Develop all Objectives first. Then, develop Goals to support each Objective. • When developing Objectives, think 3 years out. • When developing Goals, think 12 (or, perhaps 18) months out only. It is impossible and impractical to develop SMART Goals for the entire planning period (that is, three years). Trying to do so will lead to an enormous plan, with most of the Goals that are due in year 2 and year 3 needing to be changed frequently. • To develop both Objectives and Goals, refer back to the “Strategies to Promote Success” you developed as an output of your Environmental Scan and Organizational Assessment. Convert these strategies into Objectives. Initially, don’t worry about organizing Objectives by KRA. You can do this later; but, be sure that Objectives read as results to be achieved. • Once you have developed all Objectives, sort them by KRA. • Use the “Strategies to Promote Success” sections of the Environmental Scan and Organizational Assessment as input to develop Goals. When developing Goals to support the achievement of each Objective, it sometimes helps to begin by answering the question, “What will be different (or what will have changed) in my company relative to this Objective by the end of this fiscal year?” You can also simply address the question, “What do we want to achieve relative to this Objective?” Using whatever method you find most helpful, focus on generating ideas for what you want to achieve first. Then, go back and make these ideas SMART – by ensuring that they are measurable, that someone on your team has been assigned responsibility for achieving each Goal, and be identifying the date by which the Goal should be achieved. • When setting due dates for Goals: o Be sure that not every Goal is due on the last day of your fiscal year. There must be some things that you need to accomplish during the year! o Adopt a standard of either using the first (X/1/0x) or last day of the month (X/30/0x or X/31/0x). o If the due date for a Goal is recurring (e.g., “Address all customer requests within 2 days of their receipt,” “Maintain 95% customer satisfaction ratings,” etc.), avoid using “on-going” as the due date. Instead, specify the frequency with which you will assess performance (e.g., measured monthly, quarterly, etc.). 27 © Management Systems Consulting Corporation, 2007 All rights reserved. NAWBO-LA PEAK LEADERSHIP ACADEMY Strategic Planning Workbook Quick Hints for Developing Objectives and Goals (cont’d) • To minimize the possibility of overwhelming you and your team, try to limit the number of Goals you set for each Objective to those that are most important to your success. This is especially important if you and your team have never developed a formal comprehensive written strategic plan for your business. If this is your first attempt at formal strategic planning, a good rule of thumb is to have no more than 3 to 5 Goals per Objective. Sample Key Result Areas, Objectives, and Goals Key Result Area 1.0: Markets Objective 1.1 Increase our market share year over year. Goal 1.1.1 Achieve 10% market share in market segment Y by 12/31/0x. (Bob) Key Result Area 2.0: Products/Services Objective 2.1 Develop and successfully launch highly functional, innovative, competitively priced products based on specific customer needs. Goal 2.1.1 Achieve quality levels (built to spec) of 95% or better on product X by 6/30/0x. (Carol) Key Result Area 3.0: Resources Objective 3.1 Be fully staffed with people who possess the skills to help grow the business. Goal 3.1.1 Successfully recruit and hire 3 new sales associates with a minimum of three years experience in our own or a related industry by 3/31/0x. (Jerry) Key Result Area 4.0: Operational Systems Objective 4.1 Continuously improve our forecasting systems to improve our ability to react to actual sales trends. Goal 4.1.1 Achieve a 95% unit accuracy rate on existing product forecasts by 9/30/0x. (Beth) 28 © Management Systems Consulting Corporation, 2007 All rights reserved. NAWBO-LA PEAK LEADERSHIP ACADEMY Strategic Planning Workbook Sample Key Result Areas, Objectives, and Goals (cont’d) Key Result Area 5.0: Management Systems Objective 5.1 Develop and effectively implement strategic planning processes that are consistent with our culture and support our growth. Goal 5.1.1 Have action plans developed for all Goals (no later than 120 days before their due date). (All managers) Key Result Area 6.0: Company Culture Objective 6.1 Effectively manage our company’s culture to support our Strategic Mission. Goal 6.1.1 Develop a formal (written) statement of our company’s culture and communicate it to all employees by 6/30/0x. (Juan) Key Result Area 7.0: Financial Results Objective 7.1 Achieve acceptable revenue growth. Goal 7.1.1 Achieve $10 million in revenues by 12/31/0x. (Catherine) 29 © Management Systems Consulting Corporation, 2007 All rights reserved. NAWBO-LA PEAK LEADERSHIP ACADEMY Strategic Planning Workbook Developing Your Objectives and Goals Begin by reviewing the “Strategies to Promote Success” identified as a part of your Environmental Scan and your Organizational Assessment. Developing Objectives Using this information as input, in the space below, develop Objectives that reflect what your company needs to do or achieve over the next three years to maximize opportunities/strengths, minimize threats, and overcome internal limitations/weaknesses. Note: Objectives frequently begin with statements like, “To achieve…,” “To improve…,” “To develop and implement…,” “To increase…,” “To maximize…,” etc. Think RESULTS! Feel free to use another sheet of paper or to generate your ideas on a flip chart (if you are working with a team). DRAFT OBJECTIVES 30 © Management Systems Consulting Corporation, 2007 All rights reserved. NAWBO-LA PEAK LEADERSHIP ACADEMY Strategic Planning Workbook Take the Objectives you developed on the previous page and categorize them by the following Key Result Areas: 1.0 Markets. 2.0 Products/Services 3.0 Resources 4.0 Operational Systems 5.0 Management Systems 6.0 Company Culture 7.0 Financial Results Record these Objectives within the appropriate KRA on the plan pages that begin on page 34 of this workbook. For each KRA, identify any additional Objectives that reflect, broadly, what you want to achieve over the next 3 years. Creating Goals To develop Goals, work on each Objective individually. You may start with any Objective that makes sense. (Be sure to keep Environmental Scan and Organizational Assessment results in mind). For each Objective (in turn): • Identify what you want to achieve by the end of your next fiscal year (no more than 18 months from now) to support the Objective. Initially, keep your ideas broad and record them on a separate piece of paper (or a flip chart if you are working with a team). At this stage, you are looking for concepts, versus making the Goals SMART. • Once you have generated all ideas – and they don’t have to be many – for what you want to or need to achieve in the coming 12 months, convert the ideas into one or more SMART Goals. To do this: o Make the Goal results-oriented (to the extent possible). In some cases (particularly if it focuses on developing new systems), the Goal will tend to read more like a “To Do” (e.g., “To develop and implement X system”) versus something to be achieved. To make these types of Goals more specific and measurable, try to specify the criteria that need to be met for completing the Goal (e.g., “To develop and implement a new computer system that meets the following specifications:”). o Establish a “measurement” (or target) for the Goal. One “test” for whether the Goal is, in fact, measurable is to ask yourself the question, “Would two independent parties assessing performance against this Goal at its due date give it the same rating?” If the answer is, “Yes,” chances are that the Goal is measurable enough. If there is a significant chance that performance would differ between the two parties, the Goal is probably not as clear or as measurable as it needs to be. 31 © Management Systems Consulting Corporation, 2007 All rights reserved. NAWBO-LA PEAK LEADERSHIP ACADEMY Strategic Planning Workbook o Specify the date by which the Goal needs to be achieved – using a month, day, and the year. o Identify who on your team will be responsible for achieving the Goal. This person does not need to “do it all.” However, this person will be responsible for driving toward and reporting on results. You can use initials, first names, etc. to identify the responsible party, but use a consistent approach throughout your plan. • Record the Goal, its due date, and person responsible under the Objective on the planning pages that begin on page 44 of this workbook. • Feel free to go beyond the number of Objectives and Goals provided in these worksheets under each KRA, if needed. After you have completed the development of your Objectives and Goals, review all of them one more time. During this review, ask yourself whether it is reasonable to assume that all Goals can be completed by their due dates, given what you know about current and anticipated resources. If you feel that due dates or the targets you have established in your Goals are unrealistic, change them. You want your plan to be as realistic as possible. 32 © Management Systems Consulting Corporation, 2007 All rights reserved. NAWBO-LA PEAK LEADERSHIP ACADEMY Strategic Planning Workbook KEY RESULT AREAS, OBJECTIVES, AND GOALS 33 © Management Systems Consulting Corporation, 2007 All rights reserved. NAWBO-LA PEAK LEADERSHIP ACADEMY Strategic Planning Workbook KRA 1.0 Markets Objective 1.1 Goals Priority Who When Status Goals Priority Who When Status 1.1.1 1.1.2 1.1.3 Objective 1.2 1.2.1 1.2.2 1.2.3 34 © Management Systems Consulting Corporation, 2007 All rights reserved. NAWBO-LA PEAK LEADERSHIP ACADEMY Strategic Planning Workbook Objective 1.3 Goals Priority Who When Status Goals Priority Who When Status 1.3.1 1.3.2 1.3.3 Objective 1.4 1.4.1 1.4.2 1.4.3 35 © Management Systems Consulting Corporation, 2007 All rights reserved. NAWBO-LA PEAK LEADERSHIP ACADEMY Strategic Planning Workbook KRA 2.0 Product/Services Objective 2.1 Goals Priority Who When Status Goals Priority Who When Status 2.1.1 2.1.2 2.1.3 Objective 2.2 2.2.1 2.2.2 2.2.3 36 © Management Systems Consulting Corporation, 2007 All rights reserved. NAWBO-LA PEAK LEADERSHIP ACADEMY Strategic Planning Workbook Objective 2.3 Goals Priority Who When Status Goals Priority Who When Status 2.3.1 2.3.2 2.3.3 Objective 2.4 2.4.1 2.4.2 2.4.3 37 © Management Systems Consulting Corporation, 2007 All rights reserved. NAWBO-LA PEAK LEADERSHIP ACADEMY Strategic Planning Workbook KRA 3.0 Resources Objective 3.1 Goals Priority Who When Status Goals Priority Who When Status 3.1.1 3.1.2 3.1.3 Objective 3.2 3.2.1 3.2.2 3.2.3 38 © Management Systems Consulting Corporation, 2007 All rights reserved. NAWBO-LA PEAK LEADERSHIP ACADEMY Strategic Planning Workbook Objective 3.3 Goals Priority Who When Status Goals Priority Who When Status 3.3.1 3.3.2 3.3.3 Objective 3.4 3.4.1 3.4.2 3.4.3 39 © Management Systems Consulting Corporation, 2007 All rights reserved. NAWBO-LA PEAK LEADERSHIP ACADEMY Strategic Planning Workbook KRA 4.0 Operational Systems Objective 4.1 Goals Priority Who When Status Goals Priority Who When Status 4.1.1 4.1.2 4.1.3 Objective 4.2 4.2.1 4.2.2 4.2.3 40 © Management Systems Consulting Corporation, 2007 All rights reserved. NAWBO-LA PEAK LEADERSHIP ACADEMY Strategic Planning Workbook Objective 4.3 Goals Priority Who When Status Goals Priority Who When Status 4.3.1 4.3.2 4.3.3 Objective 4.4 4.4.1 4.4.2 4.4.3 41 © Management Systems Consulting Corporation, 2007 All rights reserved. NAWBO-LA PEAK LEADERSHIP ACADEMY Strategic Planning Workbook KRA 5.0 Management Systems Objective 5.1 Goals Priority Who When Status Goals Priority Who When Status 5.1.1 5.1.2 5.1.3 Objective 5.2 5.2.1 5.2.2 5.2.3 42 © Management Systems Consulting Corporation, 2007 All rights reserved. NAWBO-LA PEAK LEADERSHIP ACADEMY Strategic Planning Workbook Objective 5.3 Goals Priority Who When Status Goals Priority Who When Status 5.3.1 5.3.2 5.3.3 Objective 5.4 5.4.1 5.4.2 5.4.3 43 © Management Systems Consulting Corporation, 2007 All rights reserved. NAWBO-LA PEAK LEADERSHIP ACADEMY Strategic Planning Workbook KRA 6.0 Company Culture Objective 6.1 Goals Priority Who When Status Goals Priority Who When Status 6.1.1 6.1.2 6.1.3 Objective 6.2 6.2.1 6.2.2 6.2.3 44 © Management Systems Consulting Corporation, 2007 All rights reserved. NAWBO-LA PEAK LEADERSHIP ACADEMY Strategic Planning Workbook KRA 7.0 Financial Results Objective 7.1 Goals Priority Who When Status Goals Priority Who When Status 7.1.1 7.1.2 7.1.3 Objective 7.2 7.2.1 7.2.2 7.2.3 45 © Management Systems Consulting Corporation, 2007 All rights reserved. NAWBO-LA PEAK LEADERSHIP ACADEMY Strategic Planning Workbook STEP #4: FINALIZING YOUR PLAN To finalize your plan: Review and finalize the Business Definition/Concept you developed on page 17 of this workbook. Record the final version of the Business Definition/Concept in the appropriate space on the next page. Review and finalize the Strategic Mission Statement you developed on page 21 of this workbook. Record the final version of the Strategic Mission in the appropriate space on the next page. Review and finalize the Core Strategy you developed on page 23 of this workbook. Record the final version of the Core Strategy in the appropriate space on the next page. Remove the next page from this workbook – this will be the start of your plan. Remove pages 33 to 45 of this workbook and put this information behind the information that is recorded on the following page. Review/refine your company’s budget to ensure that it is aligned with your strategic plan. If you do not already have a company budget, develop one. If desired, create a title page for your plan. Put your plan – including your Business Definition/Concept, Strategic Mission Statement, Core Strategy, Objectives, and Goals – and your budget in a binder so that you can refer to it often. Store the electronic version of your plan – the pages identified above – in a place where you can periodically access and update it. Congratulations! Your strategic plan is complete! 46 © Management Systems Consulting Corporation, 2007 All rights reserved. Strategic Planning Workbook Business Foundation For ________________ Business Definition/Concept Strategic Mission Core Strategy 47 © Management Systems Consulting Corporation, 2007 All rights reserved. Strategic Planning Workbook STEP #5: PLAN IMPLEMENTATION AND MONITORING You have now completed your Business Plan. Be sure that you have a printout of your entire plan and that you keep it in a place where you can refer to and use it often. Plan Implementation Successful plan implementation depends, to a great extent, on ensuring that your own and your team’s time is being invested in ways consistent with your Goals. The best way to make this happen is to adopt and learn how to use a formal time management system. There are a variety of systems available, ranging from paper and pencil systems (e.g., Day Timers, Franklin-Covey, etc.) to PDAs (including Palm Pilots, Compaq IPAQ, etc.) You should choose a system that will be effective for you. If you have never used a time management system before, you will probably want to start with a simple (probably paper and pencil) system. The key is to find something that will work for you and then learn how to use it effectively. Plan Monitoring Plan monitoring provides you with the opportunity to assess how you (and your team, if appropriate) are performing relative to your Goals and to make adjustments, as needed, to increase your probability of success. We recommend that you (and your team, if appropriate) schedule a half- to full-day meeting at least once a quarter. The purpose of these meeting is to: Review progress being made against Goals. Celebrate successes with respect to achieving Goals. Identify any problems or anticipated problems with respect to achieving Goals and develop plans to address these problems. Discuss and work to resolve any other issues that might affect company performance. These include new opportunities or threats presented by the market and changes to the company’s internal operations. The output of the meeting will be an updated plan that includes documentation of progress against Goals, changes to Goals, and new Goals. In addition, many teams prepare minutes that include more detail about the discussion that has taken place. 48 © Management Systems Consulting Corporation, 2007 All rights reserved. Strategic Planning Workbook Note: The rest of this section describes how to manage the plan monitoring process when a team is involved. If you are the sole owner of the plan, the above information should provide you with what you need. In preparation for these quarterly review/implementing meetings, each team member should document the progress being made and any problems he or she is facing with respect to his or her Goals (that is, those Goals for which he or she is responsible). This information should be recorded in the “Status” column of the plan. This formal update should be completed no later than 2 weeks before the scheduled meeting. There are any number of ways to collect and summarize this information, but it typically works best to have a single person responsible for collecting all input and recording it in the plan document – versus having every individual record his or her updates directly into the plan. Team members should also be prepared to discuss strategies for overcoming problems in achieving their Goals and should be asked to submit any issues that they feel require the entire team’s input. One team member should be given responsibility for preparing the meeting’s agenda which should be circulated, along with the updated plan, at least one week before the scheduled meeting. All team members should be asked to review the agenda and the plan before the meeting. During their review of the plan, they should identify any questions or concerns that they have about progress being made and be prepared to share this information with the larger team during the meeting. 49 © Management Systems Consulting Corporation, 2007 All rights reserved.