Developing a successful strategic plan for a business is more art than science, but does include a number of important elements:

• Core values and shared vision
• Assumptions about the external environment
• Goals
• Strategies
• Implementation plans
• Resources requirements

Core Values and Shared Vision

Establishing core values and shared vision may be the most difficult part of the planning process but they are set early in a company's formation and rarely changed. Core values are meant to be enduring principles that shape the long-term vision of the company. For example, PFC ENERGY, a leading strategic advisory firm in global energy, captures their values by asking and answering a question:

• What sort of behavior do we expect and reward?
  
  
  • Intellectual excellence, passion and integrity
  • Personal initiative and innovation
  • Fairness, respect and tolerance

The values do not need to be justified - they just are. Shared vision is a brief statement that captures the heart of the company and defines why it exists. This is the company's long-term mission and does not need to be overly specific. Again using PFC as an example, the company asks:

• Who do we want to be?
  
  
  • The world's most outstanding energy thinkers - combining knowledge, experience, judgment and confidence, we are as valuable to our clients as they are to us.

Core values and shared vision provide the bedrock on which to build a company. Even as continuous change batters the company and its competitive environment, much as an earthquake might shake a building, well-defined core values and shared vision will endure, as will a well-built structure.

Assumptions About The External Environment

Companies need to plan in the context of the world around them and make assumptions about:

• Market demand
• Competitive products and pricing
• The impact of new technology
• Regulatory environment

Since these factors are constantly changing, the company needs to set some assumptions before the planning process begins to be sure all managers are working with the same set of base assumptions.

Goals

Goals must be measurable and achievable, but should always be a stretch for the company. These goals might include:

• Revenue growth of set percentages in specific years
• Increasing business in a new market by a specific amount
• Implementing a new business system by the end of the year

Overall company goals must be translated to specific divisional or product line goals so each area knows exactly what it is expected to accomplish. Managers, like athletes, should never have any questions about where the goal is located.

Strategies

Strategy is defined as "a plan of action". To succeed, strategies must:

• Relate to specific goals
• Be measurable

Strategies are business-specific, but some examples are:

• Increasing revenues through new product introductions
• Expanding business in a new market by adding dedicated sales people
• Cutting costs through outsourcing

Implementation Plans

Every strategy must have a clear, detailed implementation plan, or set of tactics, to succeed. For example, it is not enough to just say that a new product will be introduced. The implementation plan needs to clarify the product specifications, price, targeted completion date, and individual in charge of the project. Notice we said "individual" not "team" responsible for the assignment. One person needs to be accountable for implementing the agreed-upon plan of action.

Resource Allocation

Whether the resources required to accomplish goals are financial capital, infrastructure, or personnel-related, the company needs to build their costs into the plan. If stated goals cannot be implemented with existing assets, the company must either spend to acquire additional resources or revise the plan to one constrained by its means.

Common Mistakes

If strategic planning is so straightforward, why is it so difficult? Our experience reveals six common mistakes:

1. No agreement on core values and shared vision. Executives often assume managers understand the organization's core values and shared vision, but these need to be reiterated often in order to be truly embraced. If a manager disagrees with the stated values and vision, he or she is in the wrong company.
   
   
2. No clear goals. Managers and employees need to understand where the company is going. These goals should be clear to everyone.
   
   
3. No apparent strategy. Managers and staff alike need to understand the plan of action that has been formulated to achieve the goals.
   
   
4. No implementation plan. Goals are just words on paper. Specific people need to be held responsible for implementing plans to achieve the company strategy.
   
   
5. No quarterly follow-through. Management needs to examine the plan quarterly to monitor how actual performance relates to the plan. If the company is off-target, management needs to determine why it is not achieving goals and what can be changed to improve performance.
   
   
6. No clear priorities for resource allocation. If managers are given goals without the necessary resources to accomplish them, plans will not be successful.

Bottom Line

Planning is an on-going process, not a once-a-year event. A successful strategic plan aligns managers and employees across the company and provides them with personal objectives that contribute to the success of the organization.