The Basics of Strategic Planning and Strategy Execution

Effective strategic planning and strategy execution are key to driving business success and growth. Unfortunately, leaders tend to focus more on the planning process and less on doing or executing.

Strategic planning is the process of articulating the vision of what the organization wants to be, defining its strategy, setting strategic initiatives, making decisions on allocating its resources to pursue this strategy, and aligning the organization to ensure that employees and other stakeholders collaborate toward common objectives.

The focus is on the future direction and performance of the organization. Through strategic planning exercises, organizations tend to produce 3-5 year rigid strategic plans documenting the organization’s strategic goals as well as action plans to achieve those goals.

Rigid strategic plans work best in a stable environment. However, times have changed. Today’s business environment is awash with substantial volatility, uncertainty, complexity and ambiguity. The abnormal is now normal and uncertainty is now certain.

As a result, enormous doubt has been cast on the effectiveness of strategic planning in the current environment, leading some to claim that strategic planning is dead.

I don’t buy this view. Strategic planning is not dead.

Yes, the environment is constantly evolving, and the organization needs to be flexible, adaptive and responsive. But, how can you address and navigate the future without a well laid plan and strategy?

In their book Sun Tzu: The Art of War for Managers, Gerald A. Michaelson and Steven Michaelson cite that:

A common mistake is to consider planning as only a mental process, an idea in our head that simply looks at the past and adjusts for the future. If your plan is not in writing, you do not have a plan at all. Instead, you have only a dream, a vision, or perhaps even a nightmare.

This is not about producing long strategy documents that very few read. Rather, it is about a producing a simple written plan that is easy to understand, such as a strategy map.

Strategy maps helps leaders define and communicate the strategy of the organization by creating a visual representation of the key business objectives on a single page. Strategy maps also outline the strategic aims and priorities of the organization and help to ensure everyone is working towards common goals.

The organization’s plan must not be rigid in nature, but flexible enough to accommodate changes in the environment or business requirements.

As a football fanatic and an avid Arsenal FC fan, I have experienced a fair share of exciting and disappointing matches. But, over the past few years, I have come to appreciate the fact that rigidity does not win matches.

Within the same match, I have watched Arsenal quickly switch from a 4-3-3 formation to a 4-2-3-1 and make substitutions depending on the realities of the match. Even though the manager had a 90 minutes’ game plan before kick-off, he also had other plans that allowed for flexibility in formations to adapt to reality.

The same approach should be adopted in business. Rather than stick to rigid planning systems that convey a message that obedience to the plan is key to business success and growth, leaders need to implement plans that allow the assessment of business performance under different scenarios.

Defining strategy and tactics

Put simply, strategy is about doing the right thing. It is about how an organization will move forward and figuring out how to advance its interests. In war terms, it is seeking victory before the battle.

On the other hand, tactics is doing things right. It is the implementation. The battle or action of the war.

However, often times there is confusion on whether strategy determines tactics or it is tactics that determine strategy.

Seeing that strategy definition is part of the planning process, and tactics is about implementation, it is safe to conclude that strategy always comes before tactics.

It is therefore important for leaders to understand that for tactics to effectively support the strategy by doing things right, the strategy itself must be right first. You must be doing the right thing. A bad strategy underpinned by good tactics can be a fast route to failure.

To do the right thing, leaders need to primarily stop focusing more on or reacting to competitors. Great strategies do not arise from reacting to competitors.

Instead, they are a product of intense discussion and deliberation that take into consideration the organization’s internal strengths and weaknesses including external threats and opportunities.

The focus should be on identifying unfulfilled customer needs or Jobs to Be Done, then devising solutions to meet those needs and ultimately assessing competitive realities to determine the viability of your strategy.

Oftentimes, the decision sequence is wrong. Leaders initially focus on profit requirements, and the decision on the needs of the market is secondary. First, you must satisfy the needs of the market. Then, and only then, can you profit from your actions.

Separating planning from execution

Innovation, profitability, and growth all depend on having strategy and execution fit together seamlessly. However, spending too much time in planning can breed indecisiveness and error.

The important thing is to get started. Unfortunately, many of us are good at thinking and bad at doing. With the right strategy, the battle is only half won. The strategy succeeds only with informed and intelligent execution of tactics.

Issues arise when planning is separated from execution. Majority of good strategies fail due to poor execution. Well thought-out plans are not followed through properly because of limited resources, managerial talent or operational skills. In some cases, it is because people are focusing on the wrong things, products or services.

To avoid poor execution of good strategies, leaders must have the ability to clearly define and communicate the strategy to employees in a format that is easy to comprehend. This is necessary for ensuring that everyone has an idea of what the key priorities of the organization are and their role in accomplishing these.

It is also important to measure, track and report on the progress of the strategy against the critical success factors of the business. This is essential for determining what is working and what is not working and make immediate adjustments to prevent further deterioration.

I welcome your thoughts and comments.

CFOs and Strategic Decision Making

These days there is an increasing number of articles, reports, podcasts, vblogs, eBooks etc. being churned out on the evolving role of the CFO. Though these publications and postings are worded differently, they all share one common message – Today’s and future CFO should be less of a number cruncher and more of a strategic advisor. In other words, spend more time partnering the with business helping create, preserve and sustain value.

One of the forces behind this call for change in the CFOs role is the onslaught of new technologies on the market. These new tools are helping finance chiefs to automate and streamline certain areas of their work, in turn improving the amount of time spent partnering with the business versus closing the books.

However, Are CFOs contributing enough around the strategy discussion table to merit the strategic advisor badge? Are they helping their companies execute effectively? Execution is the key factor of success yet statistics reveal that between 70%-90% of companies are failing to execute their strategy. How then is this possible if the CEO and the Board have smart, intelligent CFOs in their corner to advise them on strategic issues of the business? Have CFOs just become glorified accountants (since the majority of them are CPA, CMA, CA, ACCA, or CIMA designated) who lack a deeper understanding of the business and its value drivers?

I believe no matter how much we scream and shout about this new evolving, expansive and collaborative role of the CFO, if the results continue unconvincing then we should get off our high horses. We cannot afford to remain on this path of sameness, repeatedly claim that finance teams have a bird’s eye view of the organization and are better placed to influence results yet strategic failures continue to soar.

In today’s information age, it is much easier for finance executives to succumb to the misguided belief that the keys to strategic success is investing in more data and new technology. On the contrary, people drive strategic success. I am not against data and analytics. However, how you apply both to your business will determine whether you will succeed or not.

Unfortunately, many finance teams are still suffering from information overload and struggling to make sense of the data they are presented with. Rather than spend a greater proportion of their time increasing business acumen and providing meaningful analysis for their businesses, more time is being spent on gathering, cleansing and aggregating data from multiple sources. As a result, effective finance business partnering is faltering.

If the CFO is to meaningfully contribute around the strategy discussion table (s)he needs to improve finance’s approach to performance analysis. A bottom-up approach to data analytics will not help you reap the fruits you want. This is where most CFOs are getting it wrong. They embark on a data collection agenda without first identifying and defining the problem to be solved. Data management and analytics efforts should be tied back to strategy and the key drivers of the business.

Start by asking the right key performance questions. For example; Which components of our strategic decision making are currently not being supported by digital technologies? What is the worst that can happen to us should we fail to embrace data analytics? What is the best way to align internal and external data sources to strengthen analytics and insights? Which business functions or areas would benefit from digital technologies and newer analytical capabilities to support strategic decision making?

Asking more of these questions will help you recognize areas of the business that are problematic which in turn helps you to focus your analysis in these areas, identify critical drivers of value and provide fresh insights that support strategic decision making. The organization is then able to develop new capabilities and competences needed in relation to changing circumstances, environmental factors and trends and ultimately execute its strategy effectively.

What decision makers want from finance are real-time, reliable and actionable insights that help them make better decisions. In fact, valuable strategic decision support goes beyond calculating the profit and loss and then presenting the financial statements to C-Suite members and the board. The CFO has to be able to tell the full story behind the numbers, know how the organization arrived at those results and provide actionable recommendations from the analysis of the results.

The expectation now is for the CFO to wear many hats. IT, Procurement, Investor Relations, Risk Management, HR, Sustainability are now under the purview of the CFO in many organizations. However, I don’t think a CFO can be an expert in all of these areas at once. This therefore requires her/him to be surrounded by a great team since s(he) is only as good as the team that is behind him.

If the team performs well, the CFO performs well too. But for the team to perform well, training and development is important. Although the CFO remains accountable for overall performance of the function, when the finance team is talented and skilled (s)he will be confident enough to delegate certain tasks, free up enough time to partner with the business and contribute positively towards the achievement of strategic objectives.

Going forward, understanding the business across all lines, not just the financial aspects, and getting a holistic view of organizational performance will help CFOs play a crucial role in strategic decision support, close the gap between strategy formulation and execution and influence strategic performance.