Here’s the conventional wisdom around strategic planning:
Step 1: develop your three-year strategic plan
Step 2: develop a one-year operations plan (and budget)
Step 3: review results annually, and make adjustments to the next year’s operations plan and budget as needed.
The problem with doing it like that is your operations almost always become disconnected (at least a little) from your strategy. How many times have you come up on the end of your three-year strategic plan and realized the work you’re doing in year 3 has drifted in a different direction? It’s not necessarily a bad direction—the shifts you made might have been the right ones. The point is, you’re not really sure. What’s missing here as an overarching system of execution that keeps your strategy and your operations more tightly connected.
Here are the most common ways organizations try to create that system:
Strategic conversations. This is the most basic attempt at creating a system of execution. You build into your management team meeting cadence longer meetings that are focused on specific strategic issues, to keep you from being consumed every week by the tactical fires that need to be put out. Maybe it’s once a month, for two hours, and it only deals with one key strategic question that needs to be answered. This will help you prevent your operations from drifting away from the strategy.
KPIs. The next level up in creating a system of execution is to pull together a set of metrics that are below the 3-year targets but above the nitty gritty operational targets staff are focused on. You may be successful hitting your operational targets, but if it’s not moving the higher level KPIs, then you may need to adjust. This keeps you connected to the longer-term strategy.
Priorities. The more advanced systems revolve around setting annual and quarterly organizational priorities or “rocks” that are based on a model for how the organization will hit the three-year targets. These usually include KPIs as well, including leading indicators that will tell you if you’re off track before it’s too late to adjust. Operations planning still happens, but it always connects up to these priorities, and the quarterly cadence enables much more agility and flexibility in how you will hit your long-term targets.
However you do it, make sure you are building that bridge between strategy and operations in order to prevent that undisciplined drift. We help clients build that third, priority-based system, so if you want help with that, let us know.