Only 29% of strategists agree their organizations change plans fast enough to respond to disruption. Gartner’s latest research shows companies that do this have a common attribute: Their business and function leaders are highly engaged in the strategy planning process.
While functional leaders should never develop strategic plans in a vacuum, today’s disrupted conditions make it especially critical for functional strategic plans to account for a variety of scenarios and be able to change with pivots in enterprise strategy.
“The key is to abide by some key principles of any strategic planning process — whether at the enterprise, business-unit or functional levels,”
says Marc Kelly, VP at Gartner.
“And eliminate everything that isn’t necessary and sufficient to communicate an effective strategy.”
Commit to being strategic-minded
View your function’s cost architecture through the lens of business value, and view cost optimization as a continuous discipline focused on directing resources (time, capabilities and budget) to differentiating growth initiatives, such as digitalization.
Be clear on the best budgeting approach(es) for your function’s needs, considering what type of purpose-driven budgeting best supports your strategy execution.
Then take a methodical step-by-step approach
Step 1: Outline expectations
Outline for your function the responsibilities, process timelines and expected outcomes for each participant, especially in cases where the planning and budgeting processes cross functions. Identify which stakeholder(s) will ultimately sign off on your strategy and budget plans.
Step 2: Verify the business context
- Enterprise mission, which defines your organization’s reason for being and the goals it will continually pursue.
- Example: One electric-car maker’s mission “to accelerate the world’s transition to sustainable energy” reflects its absolute commitment to moving toward sustainable practices and reminds employees of the company’s broader purpose.
- Enterprise vision, which embodies the organization’s abstract but realistic aspirations, including underlying values, principles and beliefs that support its decision-making processes.
- Example: One aerospace company’s vision “to be the premier international defense, aerospace and security company” is realistic and more alluring than the status quo. It’s directional and focused.
Make sure your function’s employees know how the mission and vision apply to their specific work. Be clear what impact business priorities, challenges and pivots will have on your function’s imperatives, opportunities, risks and priorities.
Step 3: Set goals and objectives
- Goals: Individual or combined undertakings that, when achieved, drive differentiated value in the longer term.
- Example: Become the largest supplier of renewable electricity in Europe.
- Objectives: Discrete and measurable steps that describe how you will achieve a specific goal (see step 4 for the actions required for this).
- Example: Increase wind capacity by 200% overall in three years, with 10 new wind farms across five regions in Europe.
Once clear on the enterprise plan, you can evaluate the current state of your functional activities, identify the future state, and set goals and objectives accordingly.
Step 4: Assess your capabilities
Step 5: Develop an action plan
Action plans are subject to change once surprise events occur, so be prepared to respond with an adaptive strategy to respond to change as and when you can handle it.
Step 6: Set measures and metrics
- A measure is an observable business outcome (for example, employee engagement). Measures allow you to evaluate the efficacy of your action plans. Agree on them in advance to avoid reporting biases.
- A metric describes the actual data collected to quantify the measure (say, the percentage of “satisfied” employees according to an annual survey).
Make sure measures and metrics are complete enough to account for a range of variables. For example, don’t only use customer satisfaction to measure engagement. Also track critical factors, such as discretionary effort and intent to stay.
Step 7: Put your strategy on one — yes, one — page
Capture an overview on a single page that communicates how you are adding value today and demonstrates how you plan to impact the business over the next year. Include a statement of strategy, a before-and-after description of the state of your function, one or two critical assumptions underpinning the strategy, and five to seven initiatives required to meet the functional objectives established to support business goals.
Step 8: Drive the plan home
You must develop a clear and consistent message that drives buy-in and commitment among functional leadership and engagement and motivation among the workforce, with all stakeholders clear on how your priorities are changing and why.
Step 9: Prepare to respond to change
- Monitor triggers to track the effectiveness of the strategic plan.
- Cancel underperforming projects quickly.
- Track and validate assumptions periodically.
Lastly, make sure you have an agreed-upon action plan for specific steps to take or decisions to make to increase the chances of success when monitoring triggers an alarm.