Strategy planning involves setting organizational direction, defining goals, and establishing actionable steps to achieve competitive advantage. Leaders must assess current capabilities, identify market opportunities, align resources with objectives, and communicate vision across teams. This process gives teams a clear basis for focused execution.
Strategy planning involves setting organizational direction, defining goals, and establishing actionable steps to achieve competitive advantage. Leaders must assess current capabilities, identify market opportunities, align resources with objectives, and communicate vision across teams. This process supports focused execution and measurable results. Learn the essential framework and proven tactics that transform strategic thinking into organizational success.
Free 20-Minute Operations Review
Dealing with a specific operational bottleneck? Kamyar Shah works with founders and CEOs to identify the root cause and build a fix.
Whether you lead a small team, a department, a division, or an entire organization, you will want to acquire some key skills when it comes to strategy. Having a formal understanding of strategy and how to use various methodologies will have a direct impact on the success of your team and organization.
The following are some of the high-level considerations that should be given to strategy planning within your organization.
Strategy: It’s Everyone’s Job
Astrategyis typically let by the senior leaders within an organization. Larger companies may even have a senior executive with a role focused on Strategic Management. Others may reserve strategy responsibilities to a Senior Leader who has other responsibilities.
Regardless, any organization should work to develop a culture of strategic accountability for all leaders. This commitment and focus should originate with the leader of the organization.
Annual Planning Cycle
Competence with the various methods and models of strategy will not matter without a rigid planning process around strategy activities that considers:
- Frequency: The frequency and rhythm of your strategy planning will be largely dependent on your business cycle. At a minimum, an organization should be reviewing strategy on a quarterly basis. A best practice is to use one of these sessions for deeper planning and use the other quarters as tune-ups.
- Attendees: It is tempting to invite a lot of people to strategy meetings so that no one feels left out and all departments feel represented. For your quarterly meetings, you will want to avoid this temptation. For leadership meetings, be mindful of including the individuals who can offer the most value to the process (hint: it is not always the people with the biggest titles). As an organization develops its strategy “muscle,” various layers of strategy meetings will make sure all leaders are included in strategy planning. Those layers also make sure all voices are heard.
- Duration: Choosing the duration of your meetings will be influenced by your organization’s culture, budget, and business challenges. A few planning days a year can be a small share of a leader’s time for one of the most important activities a leader can do. The 7 P’s of planning, “Prior Proper Planning Prevents P..s Poor Performance,” come from a British Army adage that applies equally well to a company’s strategy planning.
- Ubiquity: Strategy planning and discussions should be ubiquitous in your organization. This means that you should be able to find strategy discussions occurring in weekly staff meetings, as part of yearly goal setting, and as part of yearly reviews. In addition, the best companies communicate broadly and deeply strategic plans and the organizations progress against these goals.
- Point Person: Depending on the size of the organization, strategy may be one person’s whole job or a portion of someone’s job. Regardless, you will want one person who has the responsibility for leading the annual planning cycle. This person will communicate the organization’s approach to all leaders and employees. This person will also be responsible for outlining a strong agenda with input received from key members of the leadership. They will also be responsible for facilitating interactive strategy planning meetings.
Strategy Methods and Models
Hundreds of books and resources are available on various methods and models that are used in strategic planning. The list that follows is a sample of methods and models that should be considered for use by an organization. It is recommended that a broad mix of individuals (departments and levels) be a consultant when using any of these methods or models.
- SWOT Analysis (Strengths, Weaknesses, Opportunities, Threats): This method is the most familiar to leaders as it is commonly used and most easily understood. On an annual basis, companies should be reviewing their business, the competitors in their industry and the landscape in which they operate to evaluate their and their competitors
- Strengths: What sets you apart from your competition and how should you be using this to your strategic advantage
- Weaknesses: What areas are you not strong in and how or should you address these as a strategic issue
- Opportunities: What possibilities exist for you to capitalize on with the right investment of time and resources
- Threats: What are glaring issues that you must address immediately
- VRIO Analysis (Value, Rare, Inimitable, Organized): This model shows where an organization’s unique characteristics come from and how its capabilities can position it against the competition
- Value: How can you use any of your resources or capabilities as a competitive advantage
- Rare: What resources or capabilities do you have that are rare and which give you a competitive edge (patents, physical resources, or unique capabilities should be reviewed)
- Inimitable: What do you have that is difficult to replicate
- Organized: This is where a company identifies resources or capabilities that it can invest in to give it a competitive advantage
- Porters’ Five Forces: Is a tool used for understanding the forces that shape competition within an industry. It can be useful in guiding strategy adjustments to suit the competitive environment. Porter’s Five Forces was developed by Harvard Business Scholl professor Michael Porter. The five areas that are reviewed by companies to analyze an industry’s attractiveness are:
- Rivalry Amount Competitors: Do competitors “play nice” or is it cutthroat
- The threat of New Entrants: What barriers keep out new competitors? What should you be working on to make it hard to do business in your space?
- The threat of Substitutes: A substitute is not always as a similar-looking business model. Taxi companies did not anticipate that customers would be so eager to try Uber, Lyft, and other ride-sharing platforms
- Bargaining Power of Customers/Consumers: Access to information has given customers and consumers new use in dealing with you, how do you use this in your strategic decisions
- Bargaining Power of Suppliers: How do you strategically approach your relationships with suppliers
- PESTEL Analysis (Political, Economic, Social, Technological. Environmental. Legal): A PESTEL analysis helps an organization think. About what may. Be occurring in the various spheres of influence. Which will impact the strategy of an organization.
- Political: What is happening in the geographies and industries where a company operates, and how this affects the organization’s short-term and long-term strategy. Who in your organization is watching policy changes closely in the markets and industries in which you are involved?
- Economic: Factors from currency exchange rates to labor wage differentials that can drive where the fractional-chief-operating-officer/”>business is conducted. How much disposable income your customers have should be known and it should be understood how they spend this disposable income.
- Social: How does the thinking of individuals and groups influence a company’s approach to its products or services, such as growing concern about “green” efforts? How do shifting demographics in your customer base influence your organization?
- Technological: Companies must keep learning how changes in technology will affect their business, including how they design products and position services. Every company should understand Artificial Intelligence, because its impact on product design will be far-reaching. Services are provided and employees impacted.
- Environmental: All companies have an impact on the environment at large. You will want to think strategically about how your product or service engages with the environment. The same applies to the tactical efforts that affect your top line, your bottom line, and how customers and employees perceive the company.
- Legal: The legal landscape may have an impact on how a company strategically positions itself based on policies surrounding things like labor laws, health, and safety, free trade, etc.
- TECOP Analysis (Technical, Environmental, Commercial, Operational, Political): It looks internally at key capabilities and externally at key influences on success to identify risks to address.
- Technical: What is happening with technology that can impact your product or services and those of your competitors
- Environmental: All companies have an impact on the environment at large. You will want to think strategically about how your product or service engages with the environment. The same applies to the tactical efforts that affect your top line, your bottom line, and how customers and employees perceive the company.
- Commercial: Sometimes this is referred to as cultural. This is about understanding your demographics (internal and external) and the attitudes and behaviors of those you impact
- Operational: Also known as Organizational, these are your structures, guidelines, policies, procedures, etc. that will impact your strategic choices
- Political: What is happening in the geographies and industries where a company operates, and how this affects the organization’s short-term and long-term strategy. Who in your organization is watching policy changes closely in the markets and industries in which you are involved?
- VUCA Analysis (Volatility, Uncertainty, Complexity, Ambiguity): A VUCA Analysis requires a company to think abstractly and broadly to consider out-of-the-box factors which may impact them in the future
- Volatility: Factors change quickly and identifying what should be monitored and analyzed regularly will help your strategic planning
- Uncertainty: Having the ability to assess risks and model accordingly will help in choosing the right strategic path
- Complexity: Understanding how the strategic plans execute on will interact with the broader business and social climate
- Ambiguity: While data is critical to setting any strategy you will never have all the information you would like
Strategy Skills
A strategy is a learned skill. Companies often overlook the benefit that can be derived by investing in strategy skill development for their key leadership. It is important to invest time in each of the following to build a culture of strategy within your leadership ranks
- Training: Formal training efforts should be in place for key members of your leadership team (both existing and upcoming leaders). This training can be anything from strategy webinars to full-day training sessions, to actual accreditation.
- Associations: The value of membership in strategy associations (such as ASP: Association for Strategic Planning and SMS: Strategic Management Society) should be broadly communicated. Membership in associations tied to a person’s own discipline also helps that person stay familiar with trends and concepts that affect a company’s strategy.
- Books: It is beneficial to recommend reading on a strategy to your key leaders.. Some of the top titles that will get your leaders thinking differently and more strategically:
- Measure What Matters: How Google, Bono, and the Gates Foundation Rock the World with OKRs by John Doerr
- Deep Dive: The Proven Method for Building Strategy, Focusing Your Resources, and Taking Smart Action by Rich Harwath
- Elevate: The Three Disciplines of Advanced Strategic Thinking by Rich Horwath
- American Icon: Alan Mulally and the Fight to Save Ford Motor Company by Bryce G. Hoffman
- The Attackers Advantage: Turning Uncertainty into Breakthrough Opportunities by Ram Charan
- Good to Great: Why Some Companies Make the Leap…And Others Don’t by Jim Collins
- Blue Ocean Strategy: How to Create Uncontested Market Space and Make the Competition Irrelevant by W. Chan Kim and Renee Mauborgne
Improving your Strategy Planning is a multi-year effort that once fully deployed will transform your organization and the results you achieve.
