How to Measure the Success of a Strategic Plan
What Makes for a Successful Strategic Plan?
A few years ago, I showed up at the kickoff meeting of a strategic planning engagement I’d been hired to facilitate. One of the company owners pulled me aside before the beginning of the session and said, “Look, I don’t believe in these things. I’ve been through a bunch of them and they really don’t work.”
I said, “Okay, I hear you. But since I’m here, are you willing to go along with things to support your team who want this?” He agreed to do so.
Since then, this company has achieved 15% annual growth, enhanced their brand in their marketing, and launched a second division. If you asked that owner today how you measure the success of a strategic plan, he’ll say, “Revenue and market awareness.”
I wish every company leader had my client’s view of strategic planning. Oh, yes, I’m sure many think they have a plan. Heck, I engage with many of them. One once told me, “I have a plan: I plan each day to knock on as many doors as possible. They either buy or they don’t—that’s my plan.”
With all due respect to company leaders who think this way, hope and persistence are not what make strategic planning successful. In order to achieve focused growth, a strategic planning must include the following components.
Key Components to a Successful Strategic Planning
- Perspective: Tom Paterson once said that if you gain the proper perspective, the plan will almost write itself. Proper perspective simply answers the question, “Where do we currently stand?” It requires being honest about the good, the bad, and the ugly in your organization.
- Vision: This component gives the team and the entire company a visual picture of where we are heading, of what our final destination looks like. One of my favorite visions was from Henry Ford. He simply said, “A car in every garage.” This is a great example of a painted picture vision.
- Mission: This component answers the questions, “Why do we exist? Why do we come here every day?” We know we have the right vision if, as we are living it out, we can see how it’s bringing us closer to realizing our vision.
- Core strategies: These are, at the core, the “Big Idea” concepts for seizing competitive advantage. These are strategic, operational, and financial components. They are the planks of our overall strategic platform that will be unique identifiers for our business.
- Action plan: It doesn’t matter what you know—it only matters what you do with what you know. A plan is nothing if it’s not acted upon. The action plan should have objectives, deliverables, due dates, and responsible parties all identified.
- Scheduled reviews: Anything left to self-exist will fray over time. The same goes for any strategic plan. If you want to make strategic planning successful, it’s imperative that there be regularly scheduled plan reviews to ask the question, “How are we doing?”, and to make needed adjustments.
Why Strategic Plans Fail
There are a variety of reasons why strategic planning fails. If you want to make strategic planning successful, avoid these common mistakes:
- Planning for planning’s sake. If your heart’s not in it, then don’t do it.
- Not focusing on goals
- Writing a plan, then putting in on a shelf
- Not holding implementers accountable
- Ignoring company or marketplace facts and data
- Setting unrealistic goals
Do you see a theme here? They all have to do with proper measurement. If you don’t know how to measure the success of your strategic plan, it’s bound to fail. Let’s take a look at what measures of success you can analyze and rely on as you set your strategic plan in motion.
Measures of Success in Strategic Planning
Understand What Success Means to You
Some plans are doomed before they start, simply because the team creating the plan has not defined success clearly. I mentioned “perspective” and “vision” earlier. If perspective answers the question, “Where do we stand?”, then vision answers the question, “Where are we headed?”.
Years ago, when I took my kids on vacation, we didn’t answer the question, “Where are we headed?” by saying, “On vacation.” We’d answer, “Disney World”, or, “Gatlinburg”—we had a specific destination in mind. Planning is no different. The team needs to have a common understanding of the specific destination
Define Your Metrics and Measurements
So how then does that destination get defined? How do we define the success that is meaningful to the organization? We simply ask questions that can be answered quantitatively, such as:
- What is our revenue target?
- How many customers do we want?
- How many markets can we expand to?
- How many new products can we offer?
- What’s a realistic timeline?
These questions should be answered throughout the planning phase, and all answers should, in turn, answer the overall question, “Where are we headed?” Once these targets are defined, then they should be regularly discussed and assessed to determine strategic planning success.
Establish Key Performance Indicators
The answers to those questions can easily be the basis for developing key performance indicators (KPIs). KPIs are simply quantifiable measurements of performance over time.
Often, strategic planning fails because these key performance indicators are not defined and tracked. Some examples of key performance indicators that would be key to successful strategic planning are revenue growth, new revenue, new customers, operating margin, and number of product launches.
Conduct an Internal Analysis
In addition to the quantifiable metrics, qualitative analysis can also be helpful. Gather groups of employees, clients, partners, etc., and ask questions about the organization, such as:
- What do we do right?
- What do we do wrong?
- What are we missing?
- What constraints do we have?
- What resources do we need?
Review External Risk Factors
This same qualitative analysis can be applied to external factors. For example, have the team observe and assess the trends in the market, asking:
- What patterns do we see?
- What is the long-term trajectory of those trends?
- How can we see that trajectory making an impact on us?
- What do we have to do to adjust?
Although not exhaustive, I’m hoping these ideas are helpful as you start thinking about making strategic planning successful at your company. However, if you get stuck, I’d love to connect with you and discuss ways I may be able to help you move forward with a successful strategic planning approach. To contact me, just connect with me here and I’ll follow up soon.