Strategic planning

Strategic PlanningDR STUART HAZELL PhD MASM

GAICD

Overview Management Processes Strategic Focus Vision Mission The Strategic Plan Operational Plans Staff Action & Development Plans

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What Is Strategic Planning?

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Strategic Planning

Addresses the question “How does _____ achieve ______?”

Based on research and understanding of the market.Developed and implemented with intent & discipline.Owned and understood by everyone in the company.Dictates the actions and priorities of all the people

engaged in the business.

Essential part of a successful business.

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Why Is Effective Strategic

Planning important?

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Changing Performance Panbio Ltd 2002 - 2007

Earnings Profile

-$5,000-$4,000-$3,000-$2,000-$1,000

$0$1,000$2,000$3,000

Financial Year

EBIT

(A$

x1,0

00)

EBIT

EBIT before HA

2002 2003 2004 2005 2006 2007

Earnings Profile

-$5,000-$4,000-$3,000-$2,000-$1,000

$0$1,000$2,000$3,000

Financial Year

EBIT

(A$

x1,0

00)

EBIT

EBIT before HA

2002 2003 2004 2005 2006 2007

Earnings Profile

-$5,000-$4,000-$3,000-$2,000-$1,000

$0$1,000$2,000$3,000

Financial Year

EBIT

(A$

x1,0

00)

EBIT

EBIT before HA

2002 2003 2004 2005 2006 2007

Earnings Profile

-$5,000-$4,000-$3,000-$2,000-$1,000

$0$1,000$2,000$3,000

Financial Year

EBIT

(A$

x1,0

00)

EBIT

EBIT before HA

2002 2003 2004 2005 2006 2007

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Effective Strategic Planning Demands Effort

Realistic and grounded in research On the desktop with total buy-in Measured and reported on Reviewed regularly Linked directly to operational plans

(Internal looking)

Outward looking with a long horizon

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In Strategic Planning we start with a Vision and Mission

The Strategic Focus dictates the nature of the Vision and Mission

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Strategic FocusWhat are you trying to do?

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Vision“We shall not flag or fail. We shall go on to the end. We shall fight in France. We shall fight on the seas and oceans. We shall fight with growing strength in the air. We shall defend our island, whatever the cost may be. We shall fight on the beaches. We shall fight on the landing grounds. We shall fight in the fields and in the streets. We shall fight in the hills. We shall never surrender.”11

Client Company Vision

What is the vision of the Client Company?

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Mission

"I believe that this nation should commit itself to achieving the goal, before this decade is out, of landing a man on the moon and returning him safely to the Earth."

John F Kennedy

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Your MissionWhat is the mission of the Client

Company?

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What does this mean?• Need to define the Mission

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Strategic Planning

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Analysis

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Developing a Strategic Plan Know your industry and where it is going Know your business and where it wants to go

SWOT• Commit to looking from the outside in (research)• Don’t reinforce your bias and blind spots• Don’t believe your own PR• Aim to consult at least 2 authoritative sources regarding key internal

perceptions• Break the circle (don’t do it the same way every time)• The strongest voice is not always right

Where do you fit Barriers to entry and cost of entry Look at the gulf between where you are and where you

want to be (Gap Analysis)

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SWOT

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Strength

Weakness

Opportunity

Threat

Operational Issues Strategic Issues

Developing a Strategic Plan

A Strategic Plan is an Outward Looking Document

Linked to the actions those who will determine your success – your Stakeholders

From the Stakeholders you need to select your Strategic Partners

Note: Your Strategic Partner may not know you need them to be on your side!

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How do you identify Stakeholders? They have a claim They can influence your success

(positively and negatively)

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Customers Staff Shareholders Suppliers Tax office Bank

GovernmentDistributorsOpinion leadersCompetitorsPotential acquirerOther funding body

• Stakeholders

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How do you identify the Stakeholders you should address first? Power Legitimacy Urgency Saliency

PLUS

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Ref: Mitchell et al. Academy of Management Review 1997: 22; 853

POWER

LEGITIMACY

URGENCY

DefinitiveStakeholder

DangerousStakeholderDormant

Stakeholder

DiscretionaryStakeholder

DemandingStakeholder

Non-Stakeholder

DependentStakeholder

DominantStakeholder

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Developing a Strategic Plan Salient Stakeholders

Determine Your Success Can’t be ignored Are your Strategic Partners

• Have wants and needs that can and should be addressed

• Their wants and needs can be leveraged to address your wants and needs

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Wants & Needs Assessment

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Strategic Partner Strategy

Distributor

You

Profit

Product trainingValue for customers

Reliable supply

Marketing support

Technical support

Trading termsExclusivity

Price

Profit

Forecasts

Market intelligence

Improved sales of slow moving lines

New product ideas Revenue growth Trading terms

Price

Stock levels

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Distributor Strategic Issue being Addressed

Strategy

Pricing Revise pricing matrix to encourage and facilitate

Marketing and Sales training

Increase provision for product and sales training

To increase sales of slow moving product lines

Product range Increase product range to complement fast moving products

Revenue potential Use sales promotion incentives to drive stocking of pipeline

To increase the level of stock held by distributor

Trading terms Direct trading terms to encourage and facilitate

Exclusivity Offer first to launch rights To drive new product ideas from distributor Revenue potential Provided extended discount from

list price to idea generator

Strategic Partner Strategy - Distributor

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Strategic Plan

Remember, not doing something or stopping an activity can be as

an important outcome as planning a new action.

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Developing a Strategic PlanWhen you have the Strategic PlanSet:

Targets and timelines Accountability KPIs Review framework

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Process So Far Strategic Plan – Driven by Vision & Mission Grounded in solid intelligence and real work Developed by the CEO with support of staff

and approved by the Board (months) Owned by all the people in the company.

The Strategic Plan may redefine the Vision and Mission.

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When you have a Strategic Plan

Push it down

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Operational PlansThe operational plan is in essence

the actions that will improve the efficiency and performance of the business internally while serving the strategic objectives of the organisation.

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Operational Plans

Inward looking Realistic and grounded Competence based Short horizon On the desk top with total buy-in Measured and reported (weekly / monthly) Reviewed regularly Linked to individual goals of team members

• Must be linked to Strategic Plan

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Operational Plans

Critical Element Action Pricing Consolidate pricing to a common base.

Establish volume and value criteria for direct customers to enable the Sales Dept. the authority to negotiate pricing based on volume.

Introduce annual pricing review Forecasting Revise forecast monthly & report accuracy.

Include Sales, Operations & Planning meeting into forecasting procedure. Prioritise forecasting requirements by product. Develop accuracy targets that ensure sufficient stock to meet order fill rate

targets, while keeping inventory level acceptable.

Elements of a Marketing Operational Plan

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Sales and Marketing have carriage of the strategic plan with respectto driving the key goals related to the Strategic Partner - Distributor

Individual Goals and Employee Development

Short horizon Measure, review & report regularly (6 monthly) Critically assess competence Link training needs to company objectives first,

but look to personal development and succession planning also

Ensure staff understand linkage to their actions to overall vision and mission

• Individual goals linked to Operational Plan

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Performance LinkageVision

Mission

Strategic Plan

Unit Operational Plan Unit Operational Plan

Individual Performance Goals Individual Performance Goals

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Suggested ReadingGood to Great – Jim Collins (Harper

Business)Strategic Planning – George Steiner

(Free Press Paperbacks)Sure-Fire Steps to Small Business

Success – Graham Kenny (President Press)

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Conclusion Once a departmental operational plan has

been developed, individuals need to be held accountable.

Everyone needs to know who is going to do what and that all actions are a critical element of the whole.

The Strategic Plan and the Operational Plans form part of one document owned by the company.

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