7 Steps to a Successful Strategic Plan

by Pablo Dominguez, Hilary Gosher

Cross functional alignment for the 2020 planning process is one of the most critical aspects of successful planning. Imagine a dinner party where guests are asked to contribute a dish to the meal. If the host doesn’t provide guidance, all guests could show up with dessert – which may make for a fun party if everyone has a sweet tooth – although it wouldn’t be nutritious or necessarily satisfying. A good plan would have led to a full meal with appetizers, main dish, salad, and of course dessert. 

The same can be said about strategic planning. Alignment on a joint strategy, vision, and key initiatives is essential to the execution of your financial and other growth objectives for 2020. By having broad participation and alignment in the planning process, you can be certain that each team knows its part in the success of the company.

Here’s a high-level overview: In May or early June, the executive team begins meeting to discuss core strategic questions, such as what’s the market and competitive landscape, how you can win, what products to build and sell, what markets to operate in, and what customers to target. In parallel, the CEO and CFO engage with your Board of Directors to get feedback on these strategies. As the company vision solidifies, planning starts to include functional leaders who build plans to execute this strategy across all activities like headcount growth, new initiatives, training, and operations. Once there is aligment across leaders on the core strategy and functional plans, you roll it out to the whole company to excite everyone about the opportunity and the next phase of growth. When 2020 begins, you track each initiative with OKRs and KPIs to hold teams accountable and detect areas where you may need to course-correct.

Onsite recommends Seven Strategic Planning Steps:
1. Timing of Strategic Planning & Operating Cadence

When should you begin planning? A few companies make strategic planning part of their monthly forecasting process – continually evolving their expectations and adjusting resources as they go. This process is time consuming and requires considerable resources. For most companies a strong annual process that includes all relevant stakeholders will suffice. 

Regardless of your growth stage, it is never too soon to think about strategy. Best-in-class companies begin next year’s planning process in month five of the current FY, with monthly meetings that become more frequent as you approach year-end. There are a few reasons for this timing: first, waiting through the first five months allows you time to evaluate the existing strategic plan and make adjustments as the year unfolds. Second, strategy takes time, requiring research and market input – by starting seven months before the next year, you have time to gather and absorb all the research. Finally, strategic plans cascade to functional plans and resource models; if you assume that it takes at least a quarter (2-3 months) to create a functional plan and this needs to be in place prior to the start of the year, you will need to have a refined (if not final) strategy in place by the 9th or 10th month of your FY. 

A crucial aspect of successful strategic planning is to identify an owner to drive the process. In scale-up companies this is usually the CFO and a capable team member (unless a strong strategy/corporate development function exists). The CEO is intimately engaged in strategic decision-making, but day-to-day project management is owned by the CFO and the FP&A team. Because strategic planning is a process with lots of dependencies, a senior project manager ensures that leaders are held accountable for deliverables and deadlines.

2. Understand Your Addressable Market & the Competitive Landscape 

Strategy is built on an understanding of your market dynamics and the opportunities available to you. Market and competitive analysis is undertaken prior to strategic planning so that when the strategic planning team meets to align company vision and strategy, it is able to answer the following questions:

  • Who are your key competitors by product/solution and market? What’s the size of the remaining white space in these areas?
  • What is changing in the competitive, regulatory or technology landscape that impacts your competitive differentiation and ability to win?  
  • Where is your current growth coming from (product, region, vertical, team, etc.)?
  • Do you expect the same level of growth from these areas in the new FY or is change likely, and why?
  • Where are you winning and losing, why, and to whom?
  • Are there macro or microeconomic factors that will impact your growth expectations? (Note: in 2020, this is something to consider, as analysts predict a potential slowdown in the global economy).  
3. Align on Your Company Vision & Strategy

Whether this is your first strategic plan, or if you’re updating your prior plan, true strategic planning always starts by answering the questions: “Where to Play?” followed by “How to Win?” 

“Where to Play” requires re-examining key strategic questions: 

  • What is your company’s mission and purpose?
  • What problem are you solving and for whom are you solving it? 
  • What markets do you currently compete in, and which new markets are you going to enter?
    • Do you focus on specific verticals?
  • What solutions do you need for new and/or existing customers?
  • At what pace do you plan to expand? 

“How to Win” requires a review of the capabilities required to implement your strategy:  

  • Are you going to grow organically or inorganically? 
  • From a product perspective, what are you going to build, decommission, partner, or buy?  
  • What are the risks associated with each strategic choice? 
  • What are realistic and stretch growth targets in existing products and markets? 
  • Do you have the right team in place to succeed?

The market research you undertake in Step 2 – an understanding of competitive, customer and economic dynamics – is a precursor to answer, “Where to Play”. Many companies work with an outside facilitator during one or two offsite sessions, to develop alignment on “Where to Play”.  This lays the foundation for identifying the “How to Win” capabilities needed to execute the vision. 

4. Build Your Organization to Support Company Strategy

“How to Win” and execute efficiently starts with organizational design. Organizational structure supports implementation of a company’s strategy. As you plan for any changes to your 2020 strategy, think about the following two organizational questions:

Do changes in your strategy require you to change how your company is structured? 

Scale-up companies typically structure based on functional areas (e.g., sales, marketing, product) but as they grow, other structures may prove more effective, such as business units by solution or geography, specialist go-to-market teams, cross-functional or matrix reporting. There is no perfect structure.  Every company goes through various changes in their journey along the “S” curve. Whatever structure you align on for your current journey should be able to live through 12-24 months of growth.  However, once you’ve selected a structure, it’s important that you maintain organizational consistency for a time; there is nothing worse for execution than constant “ping pong” changes in organizational structures. 

Do you have the right talent to execute the strategy?  

The capability of your leaders and teams correlates directly with your ability to achieve your goals.  An M&A growth strategy will require a strong corporate development team. A global expansion strategy will require product changes (language, local billing, currency); sales and marketing leaders who have managed across borders; knowledge of how to expand internationally; and a finance team that can manage different tax, treasury, hedging and corporate domiciles.  As your company evolves its strategy, it needs to evaluate the talent on hand and determine if additional resources are needed.

  • Changes to key executive and leadership roles are difficult.  It’s not always obvious to see that an existing leader is out of their depth until they miss a target or cause disruption across the organization.  Ask yourself this question: Is the team I have now the team that I will need in 6 months to get where I am going?  If not, then make changes earlier rather than later.
  • Hiring quickly to scale is also difficult in competitive markets or when you need to increase the size of a specific team. See Onsite’s blog about Building a Talent Brand to assist you with this.  Early planning is key to ensuring that there is no drag on activities as a result of lack of key resources.
5. Develop Functional Plans & Budgets That Consider Interdependencies

Once the Executive Team has defined a corporate strategy, each functional team builds a plan and budget for 2020 that supports the company’s goals. A few questions for each functional leader to keep in mind:

  • What are the key initiatives that my function needs to execute in 2020 to achieve the overall strategy? In what priority? 
  • What requires scaling existing capabilities vs. building new capabilities?  For the latter, can we build an MVP (minimum viable product) to test the idea before scaling?
  • How much additional headcount will I need, and in what type of roles?  Do we need specialists?  
    • Where will new team members be located?  Do we need more office space and regional support?
  • What non-headcount investment is needed to support your functional goals? (e.g., tools, software, training)
  • What is the budget and revenue impact of the 2020 initiatives?
  • What are the key dependencies with other functions? (e.g., product release dates impact hiring and training new sales people, and branding/campaign initiatives for marketing)
  • Are any teams overly burdened by dependencies from each function, and how will those teams prioritize the initiatives? (e.g., HR finding more office space vs. developing training programs)

As your organization moves into this phase of the planning process, you will need to increase your meeting cadence and the number of people involved. Accounting for dependencies is one of the most important parts of the planning process. Starting in Month 9, we recommend scheduling bi-weekly meetings with functional leaders (e.g., Product, Engineering, Marketing, Sales, etc.) to discuss and align on any interdependencies.  The case study below illustrates “functional dependency” questions as an example of what to consider during the planning process:

Case Study: Company Rocketship plans to launch a new product in 2020

  • Are detailed product requirements available so that Engineering understands what is required to build the product?
  • Have beta customers been identified and spoken to? What is the ideal beta customer? Has customer success been engaged to validate the appropriateness of the customer selection if you’re targeting existing customers?
  • When is GA (General Availability), so that Marketing can provide messaging to sales and customers?
  • Who decides pricing and product bundling?
  • Have the Sales and Marketing teams mapped out the white space or initial customers to target? 
  • Is Marketing ready and able to provide additional leads?
  • Is Sales trained and appropriately incentivized to sell the product?
  • Does the new product require specific Implementation and Customer Support?
  • Are new legal contracts or addendums required?
  • Is Finance able to bill the product and are systems prepared for the new product?
  • Are the teams (including HR Recruiting) prepared to hire and onboard any new resources that are required to execute the plan?
  • Do you have seating arrangements for new resources; does IT have laptops and equipment for new hires? 

It's easy to fall into the trap of building a 2020 plan in a silo and failing to consider the impact on other functional areas.  Clear communication and engagement from all departments in the strategic planning process is vital for a smooth and effective strategy rollout.  

For Insight Partners' portfolio companies, please leverage Onsite’s strategic planning template in our GO Community as you build our your plans for next year.

6. Establish a Processes for Managing Strategic Planning, Investments & Ongoing KPI Tracking

To ensure success, all major initiatives need a project plan, owners, and documented next steps and deliverables. Functional leaders should review progress on a bi-weekly basis and use metrics to track output and outcomes. Any new investments should be justified by an expected ROI and prioritized, not only within a function, but across the company. The company should invest in those initiatives that have the highest ROI across the business, rather than one initiative per function. 

The overall company plan with budgets, dependencies, dates and timelines is owned by the CFO and FP&A team. They are responsible for collecting the data that shows progress against goals and ensuring that all parties are engaged. 

As we all know, circumstances change throughout the year which will require course correction.  If you’re tracking effectively, it will be easier to pivot because you’ll have early warning signals. Metrics and accountability are as important as the strategic planning process itself so you can get a sense of how well you are executing on your plan.  Be prepared to meet as a team, adjust your strategy, and re-prioritize your initiatives to ensure you hit your goals.

7. Board & Company-Wide Communication and Launch

It’s essential to keep the Board of Directors appraised of your evolving strategic plans and any interdependencies. During the strategic planning process, you must carefully manage the Board’s expectations.  One tactic is to brief each Director before Board meetings to get each comfortable with your plans and growth targets. This way, there are no surprises on the day of the Board meeting. Your Board ultimately signs off on your plan and supports your budget and resourcing requirements. Alignment begins at the top and cascades to the rest of the company.

Once revisions and Board input are finalized, company leadership will enter 2020 aligned around the strategy and how you’ll get there.  The kick off to the new year is a great opportunity to excite the broader team about the journey ahead and how each person can make a meaningful contribution to the company. 

Energizing your company requires effective communication, mid-level management buy-in to the plan, all-hands meetings, and internal marketing to ensure that everyone is aligned behind the opportunity. Be transparent through regular updates that share progress against goals and discuss both key wins and challenges. All of this will keep your entire organization aligned and excited about accelerating your current growth.

We also suggest that you leverage OKRs – Objectives & Key Results – as they are an effective mechanism to cascade responsibility and tasks into your organization. Our Insight blog provides further details on how to leverage OKRs within your organization.

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Going back to our dinner.  If you follow Onsite’s 7 Steps to a Successful Strategic Plan, you should be ready for a feast.  Each guest will prepare the right course and for the right number of people.  There will be a carefully planned menu that considers nutrition, taste, texture and smell alongside hors d’oeuvres, starters, entrees, desserts, and wine.  The outcome:  satisfied guests and a successful evening.  

Like a feast, strategic planning is worthwhile if done right.
 

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