What is strategy and strategic planning? The following are some questions to consider as your board and management go through the process of strategy and strategic planning. These questions are intended to help improve your current process, rather than replace it.
What are your definitions of strategy and strategic planning?
Strategy: What are your facts, assumptions, and scenarios about what a successful future looks like? There are four sets of questions to this:
#1 Who will be your future customers? You may be in different markets with different customers. Customer needs will change and there will be new unmet needs. What will be the customers’ ecosystem? (e.g. Technology trends, demographics, politics, regulation, etc.)
#2 Who will be your future competitors? What improved products and services will they be offering? Old competitors will likely disappear and new competitors emerge. (e.g. New ventures, entrants from adjacent markets). What will be the competitors’ ecosystem?
#3 What is the vision for the future company? How will customers and employees perceive the company? What will customers perceive as the competitively differentiated value proposition? What will be the customer experience? How will your company meet customer needs, and beat the competition? What will the people (e.g. board of directors, CEO, C-Suite, staff), processes, technology and capital look like?
#4 How will you measure the future value of success? What will drive value (e.g. what is driving growth in the number of customers)? What will be the financial results? These preceding two questions are directly influenced by the board and CEO. The ultimate value is what someone will pay for the company.
Strategic Planning: How do you make decisions regarding the strategy and the path to achieving the strategy, resulting in future value.
Once you have a draft strategy (i.e. endpoint), then you need to set out the path for going from today to the future. A path requires knowing where you are starting from. It is helpful to have some definition of: The current target customers, the current competitors, the current company vision and current value metrics.
There are six sets of questions around strategic planning:
#1 Who sets the strategy? In some companies this is driven by the board. Based on the future vision, decisions can be made as to: terminating/hiring CEOs and CEO succession. Some company boards expect the CEO to drive the strategy, with the board providing final approval.
#2 Who is accountable for achieving the measurable results? The CEO is often accountable for the traditional strategic plan. (The CEO also needs to know who is accountable for achieving the results from each component of the plan). The board of directors also have a plan, focused on achieving future value. The two most critical parts are the nomination of directors for election by the shareholders and the ongoing assessment of individual directors.
#3 Will the risks and challenges associated with the strategy and strategic plan warrant the strategy? A venture capital start-up will have a large probability of failing, but the occasional major success warrants taking the risk. A large established company may not pursue a strategy with a large chance of failure, unless there is no other alternative.
#4 Are the required changes achievable: Board, CEO, C-Suite, staff, processes, technology and capital?
#5 How will employees and stakeholders be engaged? If your future will be much different from today, you must engage employees and stakeholders. Major change is guaranteed to fail if your approach is to simply dictate to your employees.
#6 Which components of the strategy will be achieved by organic changes and which components will require acquisitions and divestitures?
We live in turbulent and disruptive time. The strategy and strategic plan may need to change because forecasts and assumptions are never perfect. Every board meeting must begin with a discussion about strategy and the strategic plan. The CEO must have a similar discussion every month with her executive committee.
To enable discussion with your board and management, download the following one-page slide.