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Is Your Organization’s Strategic Plan Putting Your Business Results at Risk?

Does your organization have a traditional style strategic plan? You know – something that looks like a three year “to do” list? If you’ve ever heard anyone in your organization proudly declare that the strategic plan is “done”, then you know that your organization has a “to do” list strategic plan and mindset.

If this describes your organization and your strategic plan then take it from me – you have a serious problem on your hands.

The problem with creating (and positioning) your strategic plan as a “to do” list is that, in a highly changeable and volatile external environment, that “to do” list could become irrelevant at a moment’s notice. I think that business leaders realize this and it probably explains why more and more organizations are less than enthusiastic about strategic planning. The fact is that most traditional strategic plans run the risk of being dead on arrival – making the time and effort invested in them seem like a huge waste.

Unfortunately, many organizations become invested in their strategic plan’s “to do” list just because of the amount of effort that went into creating it. I know that an organization is working with a “to do” list mindset when I see them focused on completing the list come hell or high water. Even when something important has changed in their business environment.  They carry on working away at the projects and activities outlined in the strategic plan instead of stopping to consider whether the things on the list are still the right things to do.

So – why does this happen?

In many cases, checking off the items on the “to do” list equals strategy execution and strategy execution is usually what business leaders and employees are focused on and rewarded for. If you aren’t checking off the stuff on the list in the strategic plan then it’s going to have an impact on an evaluation of your performance sometime down the road.

Now don’t get me wrong – solid strategy execution is critical if a company is going to maximize its business results. However, strategy execution only leads to success when you are focused on doing the right things. When something changes in the business environment, continuing to complete everything on the old “to do” list often doesn’t make sense. Sadly, even when doing so can result in focusing on doing the wrong things, many organizations just blindly carry on, completing everything that’s on the list.

In my experience, organizations often behave like this because there’s simply not enough information available in the strategic plan to help them make an informed course correction.

This factor is perhaps the biggest barrier to business results success so let’s take a closer look.

Most traditional strategic plans include mission and vision statements, core values, four or five strategic directions, lists of the objectives, goals, or tasks that support each strategic direction, and the usual list of the activities and projects planned for completion over the next three years. While it seems like there’s lots of information there, it’s what’s missing from the traditional strategic plan that actually causes the problem.

What’s missing is a clear model showing the thinking and critical choices the organization is making, and the objectives it must focus on relentlessly, to deliver value and achieve the desired end state described in the strategic plan.

That essential model must map out the key results drivers for the business and make it clear how they work together to produce a defined/desired outcome.

In other words, we need to see an organization’s current business model included as part of its strategic plan.

No matter what business your organization is in, you are operating with a business model. That is you’ve got some ideas about who your customer is and why they should do business with you. Based on this, you’ve made specific choices and set up your business to provide products or services to your customer in a certain way. You may have carefully thought through your revenue and cost models as well. All of this thinking and choices create/form your business model.

Sometimes an organization has a business model by design while others have a business model that they haven’t thought much about or never even considered articulating. Either way, at any point in time, every organization, including yours, has a business model.

It turns out that, in an environment of rapid and surprising change, being explicit about all the assumptions and choices in your current business model is critical if you’re ever going to stand a chance of being properly positioned to respond quickly and effectively to change.

It’s important to realize that, these days, strategy execution can no longer be just about completing a “to do” list. It needs involve more. It needs to be about implementing, testing, validating, and improving (or, sometimes, innovating) your business model. When this is what strategy execution is about for our organization, your strategic plan must evolve from a simple “to do” list to a plan for implementing, testing, validating, and improving your business model.

The new, more effective type of strategic plan must include, and revolve around, an organization’s business model.   

When your strategic plan makes your business model the centerpiece, you make all the current thinking and business choices that inform what your organization currently does transparent to everyone in your organization. Armed with all that information, insight, and understanding, your people now have something to work with when there’s a change in the business environment. When a change is detected, people can work together more effectively to assess the change, consider its impact on the business model, and then determine exactly what (if anything) needs to change about the business model. And, because your business model provides the foundation for what your organization does and focuses on, using a change in your business model to determine what you should start, stop or continue doing to implement the business model produces course corrections and actions that are optimally aligned with the revised business model.

So – the problem with most traditional strategic plans is that, while they are stuffed full of information, it’s not the kind of information that enables agility and success in today’s world.

The new approach to strategic plans puts an organization’s business model at the center and invests in making important business choices clear to everyone in the organization. This new type of strategic plan outlines current thinking on the essential drivers of desired business results and describes what the key business choices look like in. Making everyone in your organization an expert in your business model unlocks your organization’s ability to implement it more efficiently, even when there’s a change in the business model. Because it’s easier to re-align the activities and focus of the organization, your organization’s ability to achieve sustained business results is maximized.

Is your organization working with a traditional, “to do” list strategic plan? If so, it’s time for a change.

By making your business model the star of your strategic plan you will effectively transform this business document from a dust collecting relic to a powerful tool for ensuring the ongoing success of your business in today’s fast paced and evolving world.

 

The strategy map is a great tool that’s specifically designed to help you translate your business model into action. To learn more about strategy maps, why not explore the posts in the Strategy Maps section of this blog? 

3 Comments

  1. B. Ethridge
    Oct 7, 2016

    Sandy Richardson, for me two paragraphs tersely sums up this post: “It’s important to realize that, these days, strategy execution can no longer be just about completing a “to do” list. It needs involve more. It needs to be about implementing, testing, validating, and improving (or, sometimes, innovating) your business model. When this is what strategy execution is about for our organization, your strategic plan must evolve from a simple “to do” list to a plan for implementing, testing, validating, and improving your business model….The new, more effective type of strategic plan must include, and revolve around, an organization’s business model.”

  2. Mihai Ionescu
    Oct 8, 2016

    I wonder where did ”business model, the centerpiece of your business plan”, ”assumptions and choices in your current business model”, etc. cme from. You must have developed a fixation on Pigneur & Osterwalder. Too bad. Why not read ‘Playing to Win’ and ‘The Essential Advantage’ one more time. It might help better understand that the ‘9-boxes business model’ is a by-product of the process of defining the Strategic Positioning (based on the where-to-play & how-to-win Strategic Choices) that can help you build a sustainable Competitive Advantage and the Capabilities System required to support those Strategic Choices (towards achieving the Coherence Premium)?
    .

    • Sandy Richardson
      Oct 8, 2016

      Mihai:
      Where in my post did I refer to the Business Model Canvas? No where. So why are you concluding that I am promoting it as the only representation of a business model? In my post I describe a business model as: a clear model showing the thinking and critical choices the organization is making, and the objectives it must focus on relentlessly, to deliver value and achieve the desired end state described in the strategic plan – I think you and I are actually in agreement on this. I am not dogmatic about which approach an organization chooses to use to define their business model – use Play to Win or logic models if you like (however, as you will have seen at the end of my post, I still think that strategy maps are the best/most complete approach to developing and capturing the majority of of the elements we like to see in a solid business model).

      The reality is that most executive teams are not on the same page about their value proposition and why anyone should do business with their company, most employees cannot identify their organization’s target customer, and there’s no consensus across the organization about the key activities they need to focus on mastering and the capabilities required for the organization to be successful in their chosen markets. Taking the time to make, articulate, document, and share the foundational strategic choices an organization is making (i.e. the business model) in the widely used format that works best for the organization would be a huge improvement over the current situation we find ourselves in.

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