5 Ways Your Strategic Planning Process Could Fail
Common reasons why companies can’t complete their strategies
As a Product Manager for a product that helps companies bridge strategy and execution, I’ve had multiple candid conversations with CEOs and COOs around their ability to execute against their strategies. While over 50% of the time companies spend on strategic planning is wasted, I’ve noticed 5 common pitfalls that ruin those perfect strategies:
1. You don’t reduce your strategy to 3–5 top priorities
Only 55% of middle managers can name any of their company’s top priorities. When you have too many priorities, it becomes difficult for different employees and divisions to focus on what’s most important. In turn, this often causes misalignment and an unengaged workforce.
Narrowing your number of top company priorities to 3–5 ensures everyone in the company — from executives all the way down — is clear on what to focus on. Having a handful of priorities is useful in and of itself because it’s easier to communicate and easier for people to remember.
2. You don’t identify what success looks like (hint: it should be measurable).
Companies often set a strategy but don’t quantitatively define what success, or achieving that strategy, looks like. Yet, different department heads don’t always speak the same language. Defining what success means — for instance, increasing NPS by 10 points — and making it transparent across the company decreases the chance of misunderstanding and creates a clear and unambiguous battle cry.
Without these quantitative definitions of success, employees don’t want to commit to the company strategy because they don’t know what drives it. Success should be defined with measurable key results (think OKRs!) and progress metrics that employees can focus on.
3. There isn’t clear accountability and ownership of initiatives.
A lot of the time, employees don’t know which key results and initiatives they are responsible for working on. This happens when there is a lack of transparency across the company and no one can see what others are working on. In turn, employees become disengaged and unmotivated because they don’t feel accountable for their own goals. As a result, initiatives don’t get finished and progress can’t get measured.
Instead, what you need to do is get people committed to first step initiatives by the first quarter of the new year. We could all take a page from Apple’s book, where the secret to developing great products is having clear owners for each step of their new product development process.
4. You don’t resource your strategic priorities.
So, you’ve set your vision for 2017…now what? It’s great you’ve created your strategy, but don’t forget that if your priorities aren’t resourced, nothing really changes and you can’t make progress on activities that matter.
While it’s obvious you want your strategy to be executed, you need to give it the opportunity to be executed by resourcing your priorities. That includes budgeting, staffing and monitoring progress on initiatives throughout the year. Additionally, before the new year and continually throughout, you should eliminate activities and behaviors that don’t support the new strategy.
5. You don’t spend the time to ensure that your groups are aligned.
According to an article in HBR, when asked to identify the single greatest challenge to executing their company’s strategy, 30% of managers cite failure to coordinate across units, making that a close second to failure to align. Often, there’s misalignment because executives don’t involve the business unit early on, and there’s a lack of communication across the company.
For example, horizontal misalignment occurs when strategies come into conflict. Take a common objective of improving profitability. A supply chain executive might think to decrease the company’s COGS by employing a fast following strategy. On the flip side, the R&D executive believing in first mover advantage might promote a more aggressive new product development schedule. There’s horizontal misalignment with two completely different, non-collaborative solutions to the top strategy.
Another common issue is vertical misalignment, when a company can end up either over indexing on one priority or having conflicting strategies. For example, a supply chain executive seeking to lower production costs may over emphasize on lowering inventory costs, which gets translated to having plants ship more, which translates to speed. Focusing only on speed may forget about quality. While the plans might improve speed at the cost of quality, it could ultimately lead to increased production costs to manage the lowering quality.
I hope these indicators help you as begin your strategic planning. While it’s great to create your vision for the new year, it’s important to understand — and avoid — these common pitfalls if you’re going to execute effectively.
Ping me if you’d like to discuss and share how your company approaches strategy and execution. Originally published at blog.betterworks.com on November 15, 2016.