A strategic plan is a comprehensive corporate map, with well-written parameters and directions, to organize the work of all employees during the planning period.
A well-developed strategic plan enables a company to envelop its creative nucleus with a cohesive market strategy and operational excellence. If done well, it has the power to choreograph all efforts for the planning period, which is the window of time that the strategic plan is intended to influence. It is also the most optimal way to create incremental momentum that a rapid growth company requires every year – a method to infuse new energy and a battle plan to rally the whole company. So, what does a good plan imply?
Let us consider the two options for planning results below. The preferred option drives sustainable growth. The second option indicates a poor strategic plan. It is critical for us to start this discussion with our eyes wide open to align that our goal is NOT to end up at the second, suboptimal option – it is a common mistake that gives the strategic planning exercise a poor reputation.
Strategic planning is a centralized exercise to: 1) reassess the corporate strategy, including the company’s market position and sweet spot, and formalize the product and commercial trade-offs necessary to win; and 2) translate the strategy into underlying initiatives that dictate the entire company’s investment plan, based on well-allocated resources, and revenue plan, developed based on leading operational metrics.
Strategic planning can be a waste of organizational resources for a fast growth company, if the primary output is a budget allocation for another year of business-as-usual execution, which implies deploying unsustainable linear growth tactics for growth and functional empire-building where department heads are focused on building their teams in a silo. Financial budgeting is not strategic planning.
I credit legacy industries on their ability to develop leaders; but, strategic planning is a lesson best not borrowed from them. A fast-growth company is different and will need to reassess its strategy a lot more often and follow that by modifying underlying initiatives. Larger companies use strategic planning as more of a budgeting exercise because strategy and operations evolve a lot less frequently.
For a fast-growth company, strategic planning should be focused on 1) the market, not internal dynamics, and 2) strategy and operations, not financial targets. A strong strategic plan is analogous to a well-laid battle plan. It should articulate which castle the army wants to take and how; it should not focus on spoils of war. However, even the best plans are only as good as the discipline and leadership of the commanders and the soldiers’ ability to fight as planned. If the commanders lose discipline at the first sign of trouble or if the soldiers are far less skilled than the plan requires, the battle is lost before it starts. Strategic planning has to be a highly objective and introspective exercise.
So, what does it take to develop a strategic plan that helps a company win the market, while being operationally viable? The following core principles will address that.
Strategic Plan: Core Principles
Planning Outcome: Most important output of a planning exercise is the development of a cohesive and comprehensive strategy and underlying initiatives to achieve that strategy.
Planning Team: A small, objective and analytical team can lead and execute most planning components at a rapid-growth company.
Planning Approach: Small- and mid-sized fast-growth companies must deploy a streamlined, company-first planning approach that is focused on strategy and operations.
Effective Forecasting Through Planning: Strategic initiatives and operational targets identified during planning directly drive expense and revenue forecasts. Working backwards from aspirational financial targets to develop a strategic plan is an exercise fraught with confirmation biases.