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Strategic Planning: Eight Steps To Implementation

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Operational Excellence Consulting
Operational Excellence Consulting

[To download this presentation, visit: https://www.oeconsulting.com.sg/training-presentations] Organizations need strategic planning because the world changes constantly. It is foolhardy and unrealistic to assume that economic conditions, consumer needs and expectations, competition in the marketplace, or a host of other factors will remain the same for two, three or five years into the future. Insights from strategy consultants such as McKinsey and Gartner have revealed that although strategic planning is a basic business practice, many organisations are struggling to make it work--the results often fail to meet expectations. Moreover, our research and experience have found that most strategic planning processes are poorly conceptualised and poorly executed; the process is often not very creative, and it is tactical rather than strategic in nature; and the so-called strategic plan rarely impacts the day-to-day decisions made in the organization. To be successful, a strategic planning process should provide a template against which all such decisions can be evaluated. What this guide will focus is not so much on "strategy tools," but a step-by-step systematic approach to strategic planning. The strategic planning process presented consists of eight sequential steps to guide organizational leaders and key stakeholders to plan and create its future. The Eight Steps of Strategic Planning include: - Step 1: Plan the Planning Process - Step 2: Define Shared Values and Mission - Step 3: Analyze the Current Organizational Profile - Step 4: Create an Inspiring Vision - Step 5: Compare Current to Envisioned Organization - Step 6: Develop Strategies, Objectives and Plans - Step 7: Execute Action Plans - Step 8: Monitor Results and Make Improvements This comprehensive Strategic Planning PPT training presentation provides a model for transforming organizations and contains seven ingredients that are necessary for such transformations; that is, the strategic planning: - Is future focused - Is leadership driven, not leader driven - Provides for a high level of organizational involvement - Produces a plan that is widely understood and accepted - Produces a plan that is comprehensive and detailed - Is a model that can be rigorously applied - Provides the energizing force to drive the transformation As a process guide, the steps presented offer a unique and powerful approach to strategic planning. The steps and/or sub-steps may be adapted to suit the specific needs and desires of the organization. LEARNING OBJECTIVES 1. Acquire knowledge on the key concepts and principles of strategic planning 2. Describe the eight-step strategic planning process and the key frameworks and tools 3. Define the key factors for successful strategic planning CONTENTS 1. Key Concepts and Principles of Strategic Planning 2. Strategic Planning Process: The Eight-step Strategic Planning Model 3. Key Strategy Frameworks and Tools 4. Strategic Planning Best Practices

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© Operational Excellence Consulting STRATEGIC PLANNING Eight Steps To Implementation © Operational Excellence Consulting. All rights reserved.
© Operational Excellence Consulting LEARNING OBJECTIVES 2 Acquire knowledge on the key concepts and principles of strategic planning Define the factors for successful strategic planning Describe the strategic planning process and the key frameworks and tools NOTE: This is a PARTIAL PREVIEW. To download the complete presentation, please visit: https://www.oeconsulting.com.sg
© Operational Excellence Consulting CONTENTS 3 KEY CONCEPTS & PRINCIPLES OF STRATEGIC PLANNING 01 STRATEGIC PLANNING PROCESS 02 STRATEGIC PLANNING BEST PRACTICES 04 KEY STRATEGY FRAMEWORKS & TOOLS 03
© Operational Excellence Consulting “ The essence of strategy is choosing what not to do.” MICHAEL E. PORTER 4
© Operational Excellence Consulting © Operational Excellence Consulting. All rights reserved. ● Most strategic planning processes are poorly conceptualized and poorly executed ● Process is not creative; it is tactical rather than strategic in nature ● The strategic plan rarely impacts the day-to-day decisions in the organization 5 THE REALITY OF MOST STRATEGIC PLANNING PROCESSES
© Operational Excellence Consulting 6 ALTHOUGH STRATEGIC PLANNING IS A BASIC BUSINESS PRACTICE, MANY ORGANIZATIONS ARE STRUGGLING TO MAKE IT WORK Source: Gartner, 2016 Strategic planning is often a disappointment to all involved. The objective sounds simple enough: Define the organization’s strategy and make resource allocation decisions to pursue it. The problem is, the results often fail to meet expectations. Gartner, Inc. “ ”
© Operational Excellence Consulting WHAT IS STRATEGIC PLANNING? 7 Forecasting the future? A reorganization plan? A visioning workshop? Only for top management? Yearly weekend retreat? Long-range planning? A budget exercise? Management review?
© Operational Excellence Consulting 8 DEFINITION OF STRATEGIC PLANNING STRATEGIC PLANNING The process by which the guiding members of an organization envision its future and develop the necessary procedures and operations to achieve that future. Source: Goodstein, Nolan & Pfeiffer, “Applied Strategic Planning,” 1992
© Operational Excellence Consulting STRATEGIC PLANNING – THE BIG PICTURE 9 Vision (“Where are we going?”) Mission (“What are we doing to get there?”) Core Values (“What are our beliefs, principles and philosophy?”) Current State (“Where are we now?”)
© Operational Excellence Consulting STRATEGY VS. STRATEGIC PLANNING 10 STRATEGY § Strategy defines the long-term direction of the enterprise § It articulates what the enterprise will do to compete and succeed in its chosen markets or, for the public sector, what the agency will do to achieve its mission § Strategic planning defines how the enterprise will realize its strategic ambitions in the midterm § A well-done strategic plan turns an enterprise strategy into a clear roadmap of initiatives, actions and investments required to execute the strategy and meet business goals STRATEGIC PLANNING Source: Gartner, 2016
© Operational Excellence Consulting STRATEGIC PLANNING – THE IMPORTANCE OF FOCUSING ON CUSTOMER EXPERIENCE 11 “Profitable growth is priority number one; the key question is, how do we attract the customer of the future?” “Customers’ expectations of us are changing; how do we keep up?” “Technology and our customers’ adoption of it is changing so quickly; we need to know how it will affect us in the future.”
© Operational Excellence Consulting 12 A STRATEGIC PLANNING PROCESS SHOULD PROVIDE THE CRITERIA FOR MAKING DAY-TO-DAY ORGANIZATIONAL DECISIONS All too often, strategic planning is seen as a top-management exercise that has little or nothing to do with the actual running of the organization.
© Operational Excellence Consulting STRATEGIC PLANNING NEEDS TO TAKE INTO CONSIDERATION ECONOMIC CHALLENGES & BUSINESS RISKS 13 Vision (“Where are we going?”) Mission (“What are we doing to get there?”) Core Values (“What are our beliefs, principles and philosophy?”) Current State (“Where are we now?”) Economic Challenges & Business Risks
© Operational Excellence Consulting 4 ENVIRONMENTS SHOULD BE SCANNED ON A REGULAR BASIS 14 Internal Competitive Industry Macro
© Operational Excellence Consulting THE ORGANIZATIONAL CULTURE NEEDS TO BE UNDERSTOOD AND CONFRONTED IN THE STRATEGIC PLANNING PROCESS 15 If the values scan identifies incongruous values in segments of the organization, these need to be addressed as soon as they are discovered, not held until the final implementation phase.
© Operational Excellence Consulting 16 MAKE SURE THE PLANNING PROCESS IS CONTINUOUS & ITERATIVE Source: McKinsey & Co., 2018 Messy, fast-changing strategic uncertainties abound in today’s business environment. The yearly planning cycle and the linear world of three- to five-year plans are a poor fit with these dynamic realities. Instead, you need a rolling plan that you can update as needed. McKinsey & Co. “ ”
© Operational Excellence Consulting 5 CHARACTERISTICS OF AN EFFECTIVE STRATEGIC PLAN 17 A Central Vision Your strategic plan should communicate to every employee and stakeholder the big picture and the central vision for the business. Clear Values Values impact everything that companies do. Your strategic plan should clearly spell out what the company’s values are to encourage buy-in. Long-term Thinking Strategic plans should prioritize outcomes and objectives for the long- term rather than focusing on the present. Accountability While it may not be spelt out in the strategic plan itself, it is still important to dictate who is responsible for updating and executing the plan. Built-in Measurement Whether you decide to use KPIs, Balanced Scorecard system, or other metrics, measurement and analysis are vital for evaluating the success of the strategic plan.
© Operational Excellence Consulting THE COMBINATION OF SYSTEMS THINKING & DESIGN THINKING MINDSETS IS A POWERFUL APPROACH TO STRATEGIC BUSINESS MODELING 18 Stakeholders management Requirements engineering Interaction of components Integration, verification and validation SYSTEMS THINKING DESIGN THINKING Radical collaboration Interaction with the user and usability Radically new products, services and business models Conception Understanding the problem Analysis of customer needs Problem solution Ecosystem design Source: Lewrick et al., 2018
© Operational Excellence Consulting THE 8-STEP STRATEGIC PLANNING PROCESS MODEL 19 1 2 3 4 5 6 7 8 Plan the planning process Define shared values and mission Analyze the current organizational profile Create an inspiring vision Compare current to envisioned organization Develop strategies, objectives and plans Execute Action Plans Monitor results and make improvements Strategic Planning Process
© Operational Excellence Consulting STRATEGIC PLANNING PROCESS – STEP OVERVIEW (1 TO 4) 20 1 2 3 4 Plan the planning process Define shared values and mission Analyze the current organizational profile Create an inspiring vision 1.1 Determine organization’s readiness for strategic planning 1.2 CEO commitment 1.3 Identify members of planning team 1.4 Educate planning team and organization 1.5 Involve other stakeholders 1.6 Set clear expectations 2.1 Conduct a values scan 2.2 Shape the organizational culture 2.3 Formulate the organization’s mission statement 3.1 Analyze the macro environment 3.2 Analyze the industry environment 3.3 Analyze the competitive environment 3.4 Analyze the internal environment 4.1 Envision the organization’s future state 4.2 Innovate strategic business model
© Operational Excellence Consulting STRATEGIC PLANNING PROCESS – STEP OVERVIEW (5 TO 8) 21 5 6 7 8 Compare current to envisioned organization Develop strategies, objectives and plans Execute Action Plans Monitor results and make improvements 5.1 Assess organizational performance 5.2 Analyze the gap 6.1 Formulate strategies and goals 6.2 Develop annual objectives and plans 6.3 Cascade goals throughout the organization 6.4 Develop and integrate action plans 6.5 Develop contingency plans 7.1 Execute the action plans 7.2 Assign accountability 7.3. Acknowledge, recognize and celebrate 8.1 Conduct weekly or monthly self-review 8.2 Conduct quarterly or biannual review 8.3 Conduct annual review
© Operational Excellence Consulting 22 ● For Strategic Planning to be effective, it requires a considerable expenditure of time and energy from the organization ● The planning team needs to devote time to the actual process; others who are not directly involved needs to be kept informed; data will need to be collected and analyzed, etc. ● Is your organization is ready for this level of activity? If not, the most sophisticated techniques employed in the planning process are doomed to fail. ● A variety of factors need to be considered in determining planning readiness. This include the organization’s fiscal viability, the vitality of its products and services, its culture, how thinly its resources are spread, etc. STEP 1 – PLAN THE PLANNING PROCESS Step 1.1 – Determine organizational readiness for strategic planning
© Operational Excellence Consulting “ You’ve got to think about big things while you are doing small things, so that all the small things go in the right direction.” ALVIN TOFFLER 23 Author and futurist
© Operational Excellence Consulting STEP 2 – DEFINE SHARED VALUES & MISSION 24 ● The development of the mission statement follows the definition of the organizational shared values. The mission statement must be congruent with the desired organizational values of the planning team developed during the values scan. ● Develop the organization’s mission statement. The primary questions to address are: ● Why should the organization exist? ● What function should the organization perform? (What products or services should it offer?) ● For whom should the organization perform this function? ● How should the organization go about fulfilling this function? (see the next slide) Step 2.3 – Formulate the organization’s mission statement
© Operational Excellence Consulting FOUR BASIC ELEMENTS OF THE ORGANIZATIONAL MISSION 25 WHAT? (Customers’ Needs, Products or Services) WHO? (Customer or Client Groups) HOW? (Activities, Technologies, Methods of Sale) WHY?
© Operational Excellence Consulting THE VRIO FRAMEWORK IS A USEFUL INTERNAL ANALYSIS TOOL TO DISCOVER SOURCES FOR SUSTAINABLE COMPETITIVE ADVANTAGE 26 VRIO Framework Value Rarity Imitability Organization V O I R “Is the firm able to exploit an opportunity or neutralize an external threat with the resource/capability?” “Is control of the resource/capability in the hands of a relative few?” “Is it difficult to imitate, and will there be significant cost disadvantage to a firm trying to obtain, develop, or duplicate the resource/capability?” “Is the firm organized, ready, and able to exploit the resource/capability?" "Is the firm organized to capture value?”
© Operational Excellence Consulting PESTLE ANALYSIS EXAMINES THE EFFECT THAT EVENTS OR MACRO INFLUENCES MAY HAVE ON THE PERFORMANCE OF A BUSINESS 27 P E S T L E Political Economic Social Technological Legal Environmental § Government policy § Political stability § Trade policy and restrictions § Corruption § Fiscal policy § Tax policy § Labor laws § Economic growth § Inflation § Exchange rates § Interest rates § Inflation rates § Disposable income § Unemployment rates § Population growth rate § Demographics § Age distribution § Career attitudes § Safety emphasis § Health consciousness § Lifestyle attitudes § Cultural barriers § Technology incentives § Level of innovation § Automation § R&D activity § Technological change § Technological awareness § Discrimination laws § Antitrust laws § Employment laws § Consumer protection laws § Copyright and patent laws § Health and safety laws § Environmental policies § Climate change § Pollution and green house gas emissions levels § Increased focus on sustainability § Pressures from NGO’s PESTLE Analysis
© Operational Excellence Consulting EXAMPLE – PORTER’S FIVE FORCES ANALYSIS FOR A NATIONAL RAILWAY COMPANY 28 Porter’s Five Forces Analysis Source: Based on van Assen et al., 2009 1. New Entrants § New local railway companies on profit segments 2. Substitutes § Road transportation § Water freight § Air freight 5. Existing competitors 3. Buyers § Interest group pressure 4. Suppliers § Higher fuel prices § Increased labor costs
© Operational Excellence Consulting THE BCG MATRIX CAN HELP TO IDENTIFY THE PROFIT & GROWTH POTENTIAL OF EACH BUSINESS UNIT AS A COMPANY 29 The BCG Growth/Share Matrix Market Growth Divest Market Share Milk Analyze Invest High Low Small Large ? Source: Adapted from BCG
© Operational Excellence Consulting THE MCKINSEY-GE MATRIX CAN BE USED TO IDENTIFY A POTENTIAL STRATEGIC DIRECTION FOR A PORTFOLIO OF BUSINESSES 30 Source: Adapted from McKinsey/GE McKinsey-GE Matrix Low Medium High Low Medium High Market Attractiveness Business Unit Strength Build Hold Manage Grow Build Selectively Protect Build Selectively Limited Expansion Harvest
© Operational Excellence Consulting THE ANSOFF GROWTH MATRIX IDENTIFIES FOUR GENERIC COMPETITIVE STRATEGIES 31 Market Market Penetration Sell more of the same products and services in existing markets. This growth vector indicates growth through increase of market share for the present product-markets. Product Product Development Sell new products and services into existing markets. This growth vector means growth by developing new products to replace or complement existing products. Market Development Sell more of the same products and services in new markets. Diversification Sell new products and services into new markets. New Existing Existing New Ansoff’s Matrix
© Operational Excellence Consulting THE BUINSESS MODEL CANVAS IS A TOOL TO ALIGN ACTIVITIES TO CREATE VALUE FOR CUSTOMERS 32 KP KA VP CR CS KR CH C$ R$ Business Model Canvas Source: Adapted from Strategyzer
© Operational Excellence Consulting THE 7-S FRAMEWORK CAN BEST BE USED FOR ASSESSING THE IMPACT OF THE PROPOSED STRATEGY OF THE ORGANIZATION Staff Skills Style Shared Values Systems Structure Strategy Strategy - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Structure - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Systems - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Shared Values - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Style - - - - - - - - - - - - - - - - - - - - Skills - - - - - - - - - - Staff Example: Sammy’s supermarket chain Sammy’s is moving away from its traditional middle- of-the-road retail model towards an upscale, fresh, full-service, convenience- oriented grocery and fresh market. An initial decision to hire specialists may have consequences reaching far beyond the scope of the strategy at it was proposed. Need for specialists: e.g. butcher, bread, baker, food display specialists Potential conflict: (older) specialist vs. (younger) temporary employees Source: Adapted from van Assen et al., 2009
© Operational Excellence Consulting STRATEGIC PLANNING BEST PRACTICES 34 Leadership Commitment The strategic planning process should be driven by the organization’s senior executives, not driven by a leader or the head of the planning department. Involve the Right People The key strategy conversation should take place among corporate decision makers, business unit leaders, and people with expertise essential to the discussion. Strategic Thinking To create a strategic plan, your team needs time to think big. Do whatever it takes to allow that time for big-picture thinking (including taking your team off-site). Use a Facilitator Hire an outside facilitator, someone who doesn’t have any stake in your success. Encourage active participation, but don’t let any one person dominate the session.
© Operational Excellence Consulting STRATEGIC PLANNING BEST PRACTICES 35 Fact-based Management Gather data to analyze the internal and external environment. Fact-based decision-making helps to identify opportunities and areas of improvement. Create an Inspiring Vision Creating a vision that inspires will activate the organization. Teams and individuals will be motivated and energized to make the transformation. Environmental Monitoring Environmental monitoring should be performed not just in the situational analysis stage but regularly throughout the strategic planning cycle. Plans Must Be Actionable To have any chance at implementation, the plan must clearly articulate goals, action steps, responsibilities, accountability, and specific deadlines.
© Operational Excellence Consulting Operational Excellence Consulting is a management training and consulting firm that assists organizations in improving business performance and effectiveness. Based in Singapore, the firm’s mission is to create business value for organizations through innovative design and operational excellence management training and consulting solutions. For more information, please visit www.oeconsulting.com.sg ABOUT OPERATIONAL EXCELLENCE CONSULTING 36

More Related Content

Strategic Planning: Eight Steps To Implementation

  • 1. © Operational Excellence Consulting STRATEGIC PLANNING Eight Steps To Implementation © Operational Excellence Consulting. All rights reserved.
  • 2. © Operational Excellence Consulting LEARNING OBJECTIVES 2 Acquire knowledge on the key concepts and principles of strategic planning Define the factors for successful strategic planning Describe the strategic planning process and the key frameworks and tools NOTE: This is a PARTIAL PREVIEW. To download the complete presentation, please visit: https://www.oeconsulting.com.sg
  • 3. © Operational Excellence Consulting CONTENTS 3 KEY CONCEPTS & PRINCIPLES OF STRATEGIC PLANNING 01 STRATEGIC PLANNING PROCESS 02 STRATEGIC PLANNING BEST PRACTICES 04 KEY STRATEGY FRAMEWORKS & TOOLS 03
  • 4. © Operational Excellence Consulting “ The essence of strategy is choosing what not to do.” MICHAEL E. PORTER 4
  • 5. © Operational Excellence Consulting © Operational Excellence Consulting. All rights reserved. ● Most strategic planning processes are poorly conceptualized and poorly executed ● Process is not creative; it is tactical rather than strategic in nature ● The strategic plan rarely impacts the day-to-day decisions in the organization 5 THE REALITY OF MOST STRATEGIC PLANNING PROCESSES
  • 6. © Operational Excellence Consulting 6 ALTHOUGH STRATEGIC PLANNING IS A BASIC BUSINESS PRACTICE, MANY ORGANIZATIONS ARE STRUGGLING TO MAKE IT WORK Source: Gartner, 2016 Strategic planning is often a disappointment to all involved. The objective sounds simple enough: Define the organization’s strategy and make resource allocation decisions to pursue it. The problem is, the results often fail to meet expectations. Gartner, Inc. “ ”
  • 7. © Operational Excellence Consulting WHAT IS STRATEGIC PLANNING? 7 Forecasting the future? A reorganization plan? A visioning workshop? Only for top management? Yearly weekend retreat? Long-range planning? A budget exercise? Management review?
  • 8. © Operational Excellence Consulting 8 DEFINITION OF STRATEGIC PLANNING STRATEGIC PLANNING The process by which the guiding members of an organization envision its future and develop the necessary procedures and operations to achieve that future. Source: Goodstein, Nolan & Pfeiffer, “Applied Strategic Planning,” 1992
  • 9. © Operational Excellence Consulting STRATEGIC PLANNING – THE BIG PICTURE 9 Vision (“Where are we going?”) Mission (“What are we doing to get there?”) Core Values (“What are our beliefs, principles and philosophy?”) Current State (“Where are we now?”)
  • 10. © Operational Excellence Consulting STRATEGY VS. STRATEGIC PLANNING 10 STRATEGY § Strategy defines the long-term direction of the enterprise § It articulates what the enterprise will do to compete and succeed in its chosen markets or, for the public sector, what the agency will do to achieve its mission § Strategic planning defines how the enterprise will realize its strategic ambitions in the midterm § A well-done strategic plan turns an enterprise strategy into a clear roadmap of initiatives, actions and investments required to execute the strategy and meet business goals STRATEGIC PLANNING Source: Gartner, 2016
  • 11. © Operational Excellence Consulting STRATEGIC PLANNING – THE IMPORTANCE OF FOCUSING ON CUSTOMER EXPERIENCE 11 “Profitable growth is priority number one; the key question is, how do we attract the customer of the future?” “Customers’ expectations of us are changing; how do we keep up?” “Technology and our customers’ adoption of it is changing so quickly; we need to know how it will affect us in the future.”
  • 12. © Operational Excellence Consulting 12 A STRATEGIC PLANNING PROCESS SHOULD PROVIDE THE CRITERIA FOR MAKING DAY-TO-DAY ORGANIZATIONAL DECISIONS All too often, strategic planning is seen as a top-management exercise that has little or nothing to do with the actual running of the organization.
  • 13. © Operational Excellence Consulting STRATEGIC PLANNING NEEDS TO TAKE INTO CONSIDERATION ECONOMIC CHALLENGES & BUSINESS RISKS 13 Vision (“Where are we going?”) Mission (“What are we doing to get there?”) Core Values (“What are our beliefs, principles and philosophy?”) Current State (“Where are we now?”) Economic Challenges & Business Risks
  • 14. © Operational Excellence Consulting 4 ENVIRONMENTS SHOULD BE SCANNED ON A REGULAR BASIS 14 Internal Competitive Industry Macro
  • 15. © Operational Excellence Consulting THE ORGANIZATIONAL CULTURE NEEDS TO BE UNDERSTOOD AND CONFRONTED IN THE STRATEGIC PLANNING PROCESS 15 If the values scan identifies incongruous values in segments of the organization, these need to be addressed as soon as they are discovered, not held until the final implementation phase.
  • 16. © Operational Excellence Consulting 16 MAKE SURE THE PLANNING PROCESS IS CONTINUOUS & ITERATIVE Source: McKinsey & Co., 2018 Messy, fast-changing strategic uncertainties abound in today’s business environment. The yearly planning cycle and the linear world of three- to five-year plans are a poor fit with these dynamic realities. Instead, you need a rolling plan that you can update as needed. McKinsey & Co. “ ”
  • 17. © Operational Excellence Consulting 5 CHARACTERISTICS OF AN EFFECTIVE STRATEGIC PLAN 17 A Central Vision Your strategic plan should communicate to every employee and stakeholder the big picture and the central vision for the business. Clear Values Values impact everything that companies do. Your strategic plan should clearly spell out what the company’s values are to encourage buy-in. Long-term Thinking Strategic plans should prioritize outcomes and objectives for the long- term rather than focusing on the present. Accountability While it may not be spelt out in the strategic plan itself, it is still important to dictate who is responsible for updating and executing the plan. Built-in Measurement Whether you decide to use KPIs, Balanced Scorecard system, or other metrics, measurement and analysis are vital for evaluating the success of the strategic plan.
  • 18. © Operational Excellence Consulting THE COMBINATION OF SYSTEMS THINKING & DESIGN THINKING MINDSETS IS A POWERFUL APPROACH TO STRATEGIC BUSINESS MODELING 18 Stakeholders management Requirements engineering Interaction of components Integration, verification and validation SYSTEMS THINKING DESIGN THINKING Radical collaboration Interaction with the user and usability Radically new products, services and business models Conception Understanding the problem Analysis of customer needs Problem solution Ecosystem design Source: Lewrick et al., 2018
  • 19. © Operational Excellence Consulting THE 8-STEP STRATEGIC PLANNING PROCESS MODEL 19 1 2 3 4 5 6 7 8 Plan the planning process Define shared values and mission Analyze the current organizational profile Create an inspiring vision Compare current to envisioned organization Develop strategies, objectives and plans Execute Action Plans Monitor results and make improvements Strategic Planning Process
  • 20. © Operational Excellence Consulting STRATEGIC PLANNING PROCESS – STEP OVERVIEW (1 TO 4) 20 1 2 3 4 Plan the planning process Define shared values and mission Analyze the current organizational profile Create an inspiring vision 1.1 Determine organization’s readiness for strategic planning 1.2 CEO commitment 1.3 Identify members of planning team 1.4 Educate planning team and organization 1.5 Involve other stakeholders 1.6 Set clear expectations 2.1 Conduct a values scan 2.2 Shape the organizational culture 2.3 Formulate the organization’s mission statement 3.1 Analyze the macro environment 3.2 Analyze the industry environment 3.3 Analyze the competitive environment 3.4 Analyze the internal environment 4.1 Envision the organization’s future state 4.2 Innovate strategic business model
  • 21. © Operational Excellence Consulting STRATEGIC PLANNING PROCESS – STEP OVERVIEW (5 TO 8) 21 5 6 7 8 Compare current to envisioned organization Develop strategies, objectives and plans Execute Action Plans Monitor results and make improvements 5.1 Assess organizational performance 5.2 Analyze the gap 6.1 Formulate strategies and goals 6.2 Develop annual objectives and plans 6.3 Cascade goals throughout the organization 6.4 Develop and integrate action plans 6.5 Develop contingency plans 7.1 Execute the action plans 7.2 Assign accountability 7.3. Acknowledge, recognize and celebrate 8.1 Conduct weekly or monthly self-review 8.2 Conduct quarterly or biannual review 8.3 Conduct annual review
  • 22. © Operational Excellence Consulting 22 ● For Strategic Planning to be effective, it requires a considerable expenditure of time and energy from the organization ● The planning team needs to devote time to the actual process; others who are not directly involved needs to be kept informed; data will need to be collected and analyzed, etc. ● Is your organization is ready for this level of activity? If not, the most sophisticated techniques employed in the planning process are doomed to fail. ● A variety of factors need to be considered in determining planning readiness. This include the organization’s fiscal viability, the vitality of its products and services, its culture, how thinly its resources are spread, etc. STEP 1 – PLAN THE PLANNING PROCESS Step 1.1 – Determine organizational readiness for strategic planning
  • 23. © Operational Excellence Consulting “ You’ve got to think about big things while you are doing small things, so that all the small things go in the right direction.” ALVIN TOFFLER 23 Author and futurist
  • 24. © Operational Excellence Consulting STEP 2 – DEFINE SHARED VALUES & MISSION 24 ● The development of the mission statement follows the definition of the organizational shared values. The mission statement must be congruent with the desired organizational values of the planning team developed during the values scan. ● Develop the organization’s mission statement. The primary questions to address are: ● Why should the organization exist? ● What function should the organization perform? (What products or services should it offer?) ● For whom should the organization perform this function? ● How should the organization go about fulfilling this function? (see the next slide) Step 2.3 – Formulate the organization’s mission statement
  • 25. © Operational Excellence Consulting FOUR BASIC ELEMENTS OF THE ORGANIZATIONAL MISSION 25 WHAT? (Customers’ Needs, Products or Services) WHO? (Customer or Client Groups) HOW? (Activities, Technologies, Methods of Sale) WHY?
  • 26. © Operational Excellence Consulting THE VRIO FRAMEWORK IS A USEFUL INTERNAL ANALYSIS TOOL TO DISCOVER SOURCES FOR SUSTAINABLE COMPETITIVE ADVANTAGE 26 VRIO Framework Value Rarity Imitability Organization V O I R “Is the firm able to exploit an opportunity or neutralize an external threat with the resource/capability?” “Is control of the resource/capability in the hands of a relative few?” “Is it difficult to imitate, and will there be significant cost disadvantage to a firm trying to obtain, develop, or duplicate the resource/capability?” “Is the firm organized, ready, and able to exploit the resource/capability?" "Is the firm organized to capture value?”
  • 27. © Operational Excellence Consulting PESTLE ANALYSIS EXAMINES THE EFFECT THAT EVENTS OR MACRO INFLUENCES MAY HAVE ON THE PERFORMANCE OF A BUSINESS 27 P E S T L E Political Economic Social Technological Legal Environmental § Government policy § Political stability § Trade policy and restrictions § Corruption § Fiscal policy § Tax policy § Labor laws § Economic growth § Inflation § Exchange rates § Interest rates § Inflation rates § Disposable income § Unemployment rates § Population growth rate § Demographics § Age distribution § Career attitudes § Safety emphasis § Health consciousness § Lifestyle attitudes § Cultural barriers § Technology incentives § Level of innovation § Automation § R&D activity § Technological change § Technological awareness § Discrimination laws § Antitrust laws § Employment laws § Consumer protection laws § Copyright and patent laws § Health and safety laws § Environmental policies § Climate change § Pollution and green house gas emissions levels § Increased focus on sustainability § Pressures from NGO’s PESTLE Analysis
  • 28. © Operational Excellence Consulting EXAMPLE – PORTER’S FIVE FORCES ANALYSIS FOR A NATIONAL RAILWAY COMPANY 28 Porter’s Five Forces Analysis Source: Based on van Assen et al., 2009 1. New Entrants § New local railway companies on profit segments 2. Substitutes § Road transportation § Water freight § Air freight 5. Existing competitors 3. Buyers § Interest group pressure 4. Suppliers § Higher fuel prices § Increased labor costs
  • 29. © Operational Excellence Consulting THE BCG MATRIX CAN HELP TO IDENTIFY THE PROFIT & GROWTH POTENTIAL OF EACH BUSINESS UNIT AS A COMPANY 29 The BCG Growth/Share Matrix Market Growth Divest Market Share Milk Analyze Invest High Low Small Large ? Source: Adapted from BCG
  • 30. © Operational Excellence Consulting THE MCKINSEY-GE MATRIX CAN BE USED TO IDENTIFY A POTENTIAL STRATEGIC DIRECTION FOR A PORTFOLIO OF BUSINESSES 30 Source: Adapted from McKinsey/GE McKinsey-GE Matrix Low Medium High Low Medium High Market Attractiveness Business Unit Strength Build Hold Manage Grow Build Selectively Protect Build Selectively Limited Expansion Harvest
  • 31. © Operational Excellence Consulting THE ANSOFF GROWTH MATRIX IDENTIFIES FOUR GENERIC COMPETITIVE STRATEGIES 31 Market Market Penetration Sell more of the same products and services in existing markets. This growth vector indicates growth through increase of market share for the present product-markets. Product Product Development Sell new products and services into existing markets. This growth vector means growth by developing new products to replace or complement existing products. Market Development Sell more of the same products and services in new markets. Diversification Sell new products and services into new markets. New Existing Existing New Ansoff’s Matrix
  • 32. © Operational Excellence Consulting THE BUINSESS MODEL CANVAS IS A TOOL TO ALIGN ACTIVITIES TO CREATE VALUE FOR CUSTOMERS 32 KP KA VP CR CS KR CH C$ R$ Business Model Canvas Source: Adapted from Strategyzer
  • 33. © Operational Excellence Consulting THE 7-S FRAMEWORK CAN BEST BE USED FOR ASSESSING THE IMPACT OF THE PROPOSED STRATEGY OF THE ORGANIZATION Staff Skills Style Shared Values Systems Structure Strategy Strategy - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Structure - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Systems - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Shared Values - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Style - - - - - - - - - - - - - - - - - - - - Skills - - - - - - - - - - Staff Example: Sammy’s supermarket chain Sammy’s is moving away from its traditional middle- of-the-road retail model towards an upscale, fresh, full-service, convenience- oriented grocery and fresh market. An initial decision to hire specialists may have consequences reaching far beyond the scope of the strategy at it was proposed. Need for specialists: e.g. butcher, bread, baker, food display specialists Potential conflict: (older) specialist vs. (younger) temporary employees Source: Adapted from van Assen et al., 2009
  • 34. © Operational Excellence Consulting STRATEGIC PLANNING BEST PRACTICES 34 Leadership Commitment The strategic planning process should be driven by the organization’s senior executives, not driven by a leader or the head of the planning department. Involve the Right People The key strategy conversation should take place among corporate decision makers, business unit leaders, and people with expertise essential to the discussion. Strategic Thinking To create a strategic plan, your team needs time to think big. Do whatever it takes to allow that time for big-picture thinking (including taking your team off-site). Use a Facilitator Hire an outside facilitator, someone who doesn’t have any stake in your success. Encourage active participation, but don’t let any one person dominate the session.
  • 35. © Operational Excellence Consulting STRATEGIC PLANNING BEST PRACTICES 35 Fact-based Management Gather data to analyze the internal and external environment. Fact-based decision-making helps to identify opportunities and areas of improvement. Create an Inspiring Vision Creating a vision that inspires will activate the organization. Teams and individuals will be motivated and energized to make the transformation. Environmental Monitoring Environmental monitoring should be performed not just in the situational analysis stage but regularly throughout the strategic planning cycle. Plans Must Be Actionable To have any chance at implementation, the plan must clearly articulate goals, action steps, responsibilities, accountability, and specific deadlines.
  • 36. © Operational Excellence Consulting Operational Excellence Consulting is a management training and consulting firm that assists organizations in improving business performance and effectiveness. Based in Singapore, the firm’s mission is to create business value for organizations through innovative design and operational excellence management training and consulting solutions. For more information, please visit www.oeconsulting.com.sg ABOUT OPERATIONAL EXCELLENCE CONSULTING 36