The Essential in Strategic Planning

Strategic Planning is really two different things: Strategic Thinking and Execution Planning.

Strategic Thinking should be happening all year long. Execution Planning happens annually and quarterly.

Strategic Thinking is working through several key areas that define who you are as a business and result in a strategy, hopefully a very simple one-phrase strategy. For example, the Southwest Airlines strategy is Wheels Up. Planes in the air make money and planes on the ground don't. If you examine everything they do and you'll see it all aligns with this one phrase. To turn their airplanes around quicker than anyone else they don't use assigned seating, so their customers are pushing each other down the aisle to get the plane loaded. They also manage their labor relations such that their pilots are willing to help the baggage handlers and their flight attendants are willing to help those that clean the planes, all to get those plans in the air. They also only use one airplane, the 737, so every flight crew and every ground crew can work on every airplane. Simplicity means the planes just fly. What's your one-phrase?

Here are the other Strategic Thinking areas to work on in your weekly strategy meeting:

- Which words do you or will you own on the web?

- Who is your core customer?

- What is your brand promise?

- What is your catalytic mechanism?

- What actions will you take to differentiate?

- What is your x-factor?

- What is your profit/X?

- What is your BHAG?

Here are the steps for Execution Planning Annually:

- Ask everyone in the company to complete the Start, Stop, Keep exercise. SurveyMonkey is a great tool for this, so it can be anonymous. Just ask 3 questions. What should we start doing? What should we stop doing? What should we keep doing? Circulate the answers to the senior team that will be making the decisions.

- Ask middle managers and senior executives to complete a SWOT analysis. Strengths and Weaknesses are inherent in the organization and will not change. For example, a strength or weakness could be the city your headquarters is located in. We recognize it as such not to change it, but to notice a constraint around the rest of our planning. Opportunities and Threats should be external and actionable. "The economy" should not appear on either list. "Wearable computing" probably should.

- Senior executives need to also ask themselves, what is the most important area for the business to focus on in the next 12-18 months. Is it product development? Is it operations efficiency? Is it inventory turns? Is it cash flow? Is it revenue? Is it customer service? Is it marketing? Is it the quality of our sales force? This is the last of our preparatory questions and each executive needs to spent the prep time in order for the planning meeting itself to be effective.

- Set aside 2 full days, and know who's facilitating. Is it the CEO (highly recommend: NOT)? Is it someone else on the executive team? Is it someone else in the company? Is it a board member? Is it a professional that comes highly recommended by a peer CEO?

- Go off-side for the 2-day. Arrive the night before and have dinner together. Connecting personally is an important part of your team-building work. Generally speaking, trust falls or zip lines are not.

- Without getting too detailed, here is a sample agenda for the meeting:

- What have we learned over the past 12 months?

- How was our performance vs goals and how did we do accomplishing our priorities?

- What progress have we made on our Strategic Thinking this year? Go deeper now on 1-2 areas (predetermined what they will be).

- Review the organizational structure and test for alignment. Adjustments need to be made every year in a growing company.

- Evaluate all staff for A, B or C performance (2x2 matrix where vertical axis is alignment on core values and horizontal axis is productivity). Make action plans for C's (exit from the company or reassign to a more appropriate role), B's (coach/warn), and A's (especially addressing those that are a flight risk)

- Learn together. Watch an educational video together and discuss or listen to an audio book-summary and discuss or have someone report on a book and discuss or have everyone read the same book and discuss.

- Set financial goals for the year, as well as any other key performance indicators (KPIs) such as customer satisfaction.

- Decide what the #1 area is for the company to focus on this year. How would you measure progress in that area? Close rate? Transactions per hour? Revenue per employee? Whatever you choose becomes your critical number to be displayed prominently around the company so everyone can be working to move it in the desirable direction.

- Choose 3-5 annual initiatives that will move that number. Perhaps each department has a role. Make sure each initiative has a person accountable.

- Move the conversation from annual to Q1. Many companies get tripped up trying to plan out Q2, Q3 and Q4 during annual planning. Things will change in Q1, so don't get into Q2 conversations at this stage, just plan out Q1. Decide on KPIs, likely all the same categories as the annual, but with different targets.

- What's your critical number goal for the quarter?

- What 3-5 rocks (key priorities) will move that critical number? Make sure each has a person's name attached as accountable.

- Choose a theme for the quarter, something everyone can relate to. Create a theme team that will bring in visuals or music or something tactile to bring the them alive.

- Now set individual priorities. Given what we just decided as the company priorities, what does each leadership team member need to do. Write it down, with attached KPIs. Share them with each other.

Challenge each other. Ask questions like, "Are you sure you can do that much? Last quarter you overextended yourself," or "What about XYZ? Could you add that?" or "What about ABC? I think that's more important than DEF. Replace it?" You want your whole executive team thinking about what we want our CEO doing this quarter, what we want our head of sales doing this quarter, what we want our head of operations doing this quarter, etc. Be a team!

- Review your meeting rhythms. When will the quarterly planning sessions happen? When's next year's annual going to be? Get them on people's calendars now so vacations and business needs can be planned around them. When will we have our normal monthly meeting. Do we need any format changes? What about the weekly meeting? Are we getting the most of it? Are we missing any best practices? Is our daily huddle working for us? Any changes needed there?

The plan is now in place.