Whether you are planning your first strategic business plan or refreshing one that has been recently done, make sure to include the six key elements used by all business strategists:
1. Environmental & Competitive Analysis: Most planning sessions begin with an environmental analysis. This is an overall sweep of the global, national, and local economies to understand the macro operating environment. What are the emerging trends that will impact the organization? What are the threats or opportunities? Are there new markets, products, or technologies that are important to consider? What about government policies and regulations? How about the demographic trends? Where are we in the business cycle? The environmental analysis looks externally to not only understand the operating environment, but also the industry and competitive landscape. How do competitors compare with our organization? What is the point of difference? What is our competitive edge? These are just some of the key questions that all business strategists will want to understand before they decide on a strategic direction.
2. Internal Analysis: All good strategic plans are also predicated on a deep understanding of organizational strengths and weaknesses. What resources are available? What are the firm’s core competencies? Where are the internal weaknesses and how can they be addressed. Good strategic plans will focus on the core strengths and attempt to leverage them against the competition.
3. Strategic Options Analysis: Strategic planning requires that leaders make choices among available options. Generally, there is no one easy answer since several options may have both advantages and disadvantages; however, by conducting a detailed analysis and comparing the advantages and disadvantages of each of several options, a better choice can be made.
4. Grand Strategy: All good strategic plans must be able to answer the simple question – “What is the overarching strategic direction?” This is often framed in the context of the “grand strategy.” Examples of grand strategies might include concentrated growth in selected markets, diversification either horizontally or vertically, or leading innovation. The power of defining a grand strategy is a framework to measure whether all other supporting strategies and tactics align with the overall strategic direction. It provides focus for limited resources and also makes it easier to communicate strategic intent.
5. Supporting Strategies & Tactics: Supporting strategies and tactics are the methods and activities that can bring the grand strategy to life and reach the strategic goals. Focusing on a few supporting strategies with corresponding tactics for each of them will also help to leverage finite resources. High performing organizations all focus on the “critical few” actions that maximize the potential of their strengths and resources which results in a competitive edge.
6. Metrics: Finally, there must be a core group of metrics that measure progress towards strategic outcomes. Many organizations have implemented the concepts of the “Balanced Scorecard” based on the research of Kaplan and Norton. They define metrics in four categories: Financial, customer, internal, and the learning and growth perspective. The metrics need to answer the question, “How well is the plan working?” Measuring progress is the only way to keep things on track and taking appropriate corrective actions as necessary.
So, if you are writing a strategic plan, make sure that you include these six key elements. They will not guarantee success; however, if you use them well, your chances of writing and executing your plan successfully improve dramatically.