Folks that don’t work with us on strategy believe that target setting for next year is strategic planning. While you DO need to set targets when strategic planning, target setting is a poor substitute for the full monte.

This is strategy season, so our clients are pulling together their thoughts for next year. We use a two-cycle approach to this. The first cycle of strategic planning, and on five-year intervals after that, we do a complete overhaul. This may be necessary in an off year due to a crisis or major change in the business environment such as a regulatory shift or entrance of a new threatening player. We recommend conducting an off-site workshop, prior to that, you should assess the business to set the agenda for the workshop. Once offsite, confirm or revise the mission and vision, set a long-range growth target for earnings including interim targets for each year, identify initiatives required to hit the target and work through the initiatives one-by-one establishing value propositions and budgets for each one.

In an overhaul year, the strategy may not be finished until late in the year due to the depth of analysis required to adequately specify the initiatives, targets, etc. So the overhaul year is the year before the strategy runs out.

The second cycle is used in off years between the five-year overhauls. Assess the business prior to the off-site in order to set the agenda. Once offsite, quickly confirm mission and vision making any minor adjustments necessary. Review progress against strategic initiatives and adjust targets and initiatives as required to course correct for variances from plan, whether positive or negative.

The strategic planning process, whether five-year or an interim planning year needs to be complete prior to the beginning of the next performance cycle. The goal is to arrive at the next performance cycle with all the ducks in a row and primed for high-performance and productivity against targets.

If you have not done a thorough process like this, start with a stub planning year. Waking up in October and realizing you should do a five-year cycle, places too much pressure to put a serious plan in place in two months when the team is probably very busy wrapping up the current year. Rather, assess the business and conduct a quick cycle interim year planning cycle. Initiative ONE for the following year then becomes doing the full five-year cycle. This allows the team time to be thorough and detailed in their initiative planning efforts. These initiatives, after all, are where the value is created; advancing the business’ capabilities one year’s worth for each year that passes.

Set YOUR Plan in Motion

Here are the activities for a successful strategic planning cycle:

1. Assess the value and performance of the business

2. Conduct strategic planning workshop:

a. Confirm/revise mission and vision – A great resource for mission and vision work is the book Good to Great by James Collins;

b. Establish long-range goals;

c. Spread targets across five-year timeline;

d. Identify initiatives to enhance business capabilities and build value; and

e. Conduct deep initiative planning including budgets and value targets