Strategic Planning: Eight Steps To Implementation

1. STRATEGIC PLANNING Eight Steps To Implementation © Operational Excellence Consulting © Operational Excellence Consulting. All rights reserved.

2. NOTE: This is a PARTIAL PREVIEW. To download the complete presentation, please visit: https://www.oeconsulting.com.sg LEARNING OBJECTIVES Acquire knowledge on the key concepts and principles of strategic planning Describe the strategic planning process and the key frameworks and tools Define the factors for successful strategic planning 2 © Operational Excellence Consulting

3. CONTENTS 02 01 03 04 KEY CONCEPTS & PRINCIPLES OF STRATEGIC PLANNING STRATEGIC PLANNING PROCESS KEY STRATEGY FRAMEWORKS & TOOLS STRATEGIC PLANNING BEST PRACTICES 3 © Operational Excellence Consulting

4. “ The essence of strategy is choosing what not to do.” MICHAEL E. PORTER 4 © Operational Excellence Consulting

5. THE REALITY OF MOST STRATEGIC PLANNING PROCESSES Most strategic planning processes are poorly conceptualized and poorly executed ● Process is not creative; it is tactical rather than strategic in nature ● The strategic plan rarely impacts the day-to-day decisions in the organization ● 5 © Operational Excellence Consulting © Operational Excellence Consulting. All rights reserved.

6. ALTHOUGH STRATEGIC PLANNING IS A BASIC BUSINESS PRACTICE, MANY ORGANIZATIONS ARE STRUGGLING TO MAKE IT WORK “ Strategic planning is often a disappointment to all involved. The objective sounds simple enough: Define the organization’s strategy and make resource allocation decisions to pursue it. The problem is, the results often fail to meet expectations. ” Gartner, Inc. 6 Source: Gartner, 2016 © Operational Excellence Consulting

7. WHAT IS STRATEGIC PLANNING? Yearly weekend retreat? Forecasting the future? A reorganization plan? Only for top management? A visioning workshop? Long-range planning? A budget exercise? Management review? 7 © Operational Excellence Consulting

8. DEFINITION OF STRATEGIC PLANNING STRATEGIC PLANNING The process by which the guiding members of an organization envision its future and develop the necessary procedures and operations to achieve that future. Source: Goodstein, Nolan & Pfeiffer, “Applied Strategic Planning,” 1992 8 © Operational Excellence Consulting

9. STRATEGIC PLANNING –THE BIG PICTURE Vision (“Where are we going?”) Current State (“Where are we now?”) (“What are we doing to get there?”) Mission Core Values (“What are our beliefs, principles and philosophy?”) 9 © Operational Excellence Consulting

10. STRATEGY VS. STRATEGIC PLANNING STRATEGY STRATEGIC PLANNING § Strategy defines the long-term direction of the enterprise § Strategic planning defines how the enterprise will realize its strategic ambitions in the midterm § It articulates what the enterprise will do to compete and succeed in its chosen markets or, for the public sector, what the agency will do to achieve its mission § A well-done strategic plan turns an enterprise strategy into a clear roadmap of initiatives, actions and investments required to execute the strategy and meet business goals 10 Source: Gartner, 2016 © Operational Excellence Consulting

11. STRATEGIC PLANNING –THE IMPORTANCE OF FOCUSING ON CUSTOMER EXPERIENCE “Profitable growth is priority number one; the key question is, how do we attract the customer of the future?” “Technology and our customers’ adoption of it is changing so quickly; we need to know how it will affect us in the future.” “Customers’ expectations of us are changing; how do we keep up?” 11 © Operational Excellence Consulting

12. A STRATEGIC PLANNING PROCESS SHOULD PROVIDE THE CRITERIA FOR MAKING DAY-TO-DAY ORGANIZATIONAL DECISIONS All too often, strategic planning is seen as a top-management exercise that has little or nothing to do with the actual running of the organization. 12 © Operational Excellence Consulting

13. STRATEGIC PLANNING NEEDS TO TAKE INTO CONSIDERATION ECONOMIC CHALLENGES & BUSINESS RISKS Vision (“Where are we going?”) Current State (“Where are we now?”) Economic (“What are we doing to get there?”) Mission Challenges & Business Risks Core Values (“What are our beliefs, principles and philosophy?”) 13 © Operational Excellence Consulting

14. 4 ENVIRONMENTS SHOULD BE SCANNED ON A REGULAR BASIS Internal Competitive Industry Macro 14 © Operational Excellence Consulting

15. THE ORGANIZATIONAL CULTURE NEEDS TO BE UNDERSTOOD AND CONFRONTED IN THE STRATEGIC PLANNING PROCESS If the values scan identifies incongruous values in segments of the organization, these need to be addressed as soon as they are discovered, not held until the final implementation phase. 15 © Operational Excellence Consulting

16. MAKE SURE THE PLANNING PROCESS IS CONTINUOUS & ITERATIVE “ Messy, fast-changing strategic uncertainties abound in today’s business environment. The yearly planning cycle and the linear world of three- to five-year plans are a poor fit with these dynamic realities. Instead, you need a rolling plan that you can update as needed. ” McKinsey & Co. 16 Source: McKinsey & Co., 2018 © Operational Excellence Consulting

17. 5 CHARACTERISTICS OF AN EFFECTIVE STRATEGIC PLAN A Central Vision Clear Values Accountability Built-in Measurement Long-term Thinking Your strategic plan should communicate to every employee and stakeholder the big picture and the central vision for the business. While it may not be spelt out in the strategic plan itself, it is still important to dictate who is responsible for updating and executing the plan. Whether you decide to use KPIs, Balanced Scorecard system, or other metrics, measurement and analysis are vital for evaluating the success of the strategic plan. Strategic plans should prioritize outcomes and objectives for the long- term rather than focusing on the present. Values impact everything that companies do. Your strategic plan should clearly spell out what the company’s values are to encourage buy-in. 17 © Operational Excellence Consulting

18. THE COMBINATION OF SYSTEMS THINKING & DESIGN THINKING MINDSETS IS A POWERFUL APPROACH TO STRATEGIC BUSINESS MODELING Stakeholders management Radical collaboration Understanding the problem Requirements engineering Interaction with the user and usability Analysis of customer needs SYSTEMS THINKING DESIGN THINKING Radically new products, services and business models Interaction of components Problem solution Ecosystem design Integration, verification and validation Conception 18 © Operational Excellence Consulting Source: Lewrick et al., 2018

19. THE 8-STEP STRATEGIC PLANNING PROCESS MODEL 1 Monitor results and make improvements Plan the planning process 8 2 Execute Action Plans Define shared values and mission Strategic Planning Process 7 3 Develop strategies, objectives and plans Analyze the current organizational profile Compare current to envisioned organization 6 Create an inspiring vision 4 5 19 © Operational Excellence Consulting

20. STRATEGIC PLANNING PROCESS –STEP OVERVIEW (1 TO 4) 1 2 3 4 Define shared values and mission Analyze the current organizational profile Plan the planning process Create an inspiring vision 1.1 Determine organization’s readiness for strategic planning 2.1 Conduct a values scan 3.1 Analyze the macro environment 4.1 Envision the organization’s future state 2.2 Shape the organizational culture 3.2 Analyze the industry environment 4.2 Innovate strategic business model 1.2 CEO commitment 2.3 Formulate the organization’s mission statement 1.3 Identify members of planning team 3.3 Analyze the competitive environment 1.4 Educate planning team and organization 3.4 Analyze the internal environment 1.5 Involve other stakeholders 1.6 Set clear expectations 20 © Operational Excellence Consulting

21. STRATEGIC PLANNING PROCESS –STEP OVERVIEW (5 TO 8) 5 6 7 8 Compare current to envisioned organization Develop strategies, objectives and plans Monitor results and make improvements Execute Action Plans 5.1 Assess organizational performance 6.1 Formulate strategies and goals 7.1 Execute the action plans 8.1 Conduct weekly or monthly self-review 7.2 Assign accountability 5.2 Analyze the gap 6.2 Develop annual objectives and plans 8.2 Conduct quarterly or biannual review 7.3. Acknowledge, recognize and celebrate 6.3 Cascade goals throughout the organization 8.3 Conduct annual review 6.4 Develop and integrate action plans 6.5 Develop contingency plans 21 © Operational Excellence Consulting

22. STEP 1 –PLAN THE PLANNING PROCESS Step 1.1 – Determine organizational readiness for strategic planning For Strategic Planning to be effective, it requires a considerable expenditure of time and energy from the organization ● The planning team needs to devote time to the actual process; others who are not directly involved needs to be kept informed; data will need to be collected and analyzed, etc. ● Is your organization is ready for this level of activity? If not, the most sophisticated techniques employed in the planning process are doomed to fail. ● A variety of factors need to be considered in determining planning readiness. This include the organization’s fiscal viability, the vitality of its products and services, its culture, how thinly its resources are spread, etc. ● 22 © Operational Excellence Consulting

23. “ small things go in the right direction.” You’ve got to think about big things while you are doing small things, so that all the ALVIN TOFFLER Author and futurist 23 © Operational Excellence Consulting

24. STEP 2 –DEFINE SHARED VALUES & MISSION Step 2.3 – Formulate the organization’s mission statement The development of the mission statement follows the definition of the organizational shared values. The mission statement must be congruent with the desired organizational values of the planning team developed during the values scan. ● Develop the organization’s mission statement. The primary questions to address are: ● Why should the organization exist? ● What function should the organization perform? (What products or services should it offer?) ● For whom should the organization perform this function? ● How should the organization go about fulfilling this function? ● (see the next slide) 24 © Operational Excellence Consulting

25. FOUR BASIC ELEMENTS OF THE ORGANIZATIONAL MISSION WHAT? (Customers’ Needs, Products or Services) WHY? HOW? WHO? (Activities, Technologies, Methods of Sale) (Customer or Client Groups) 25 © Operational Excellence Consulting

26. THE VRIO FRAMEWORK IS A USEFUL INTERNAL ANALYSIS TOOL TO DISCOVER SOURCES FOR SUSTAINABLE COMPETITIVE ADVANTAGE VRIO Framework V R I O Value Rarity Imitability Organization “Is control of the resource/capability in the hands of a relative few?” “Is the firm able to exploit an opportunity or neutralize an external threat with the resource/capability?” “Is it difficult to imitate, and will there be significant cost disadvantage to a firm trying to obtain, develop, or duplicate the resource/capability?” “Is the firm organized, ready, and able to exploit the resource/capability?" "Is the firm organized to capture value?” 26 © Operational Excellence Consulting

27. PESTLE ANALYSIS EXAMINES THE EFFECT THAT EVENTS OR MACRO INFLUENCES MAY HAVE ON THE PERFORMANCE OF A BUSINESS PESTLE Analysis P E S T L E Political Economic Social Technological Legal Environmental Government policy Political stability Trade policy and restrictions Corruption Fiscal policy Tax policy Labor laws Economic growth Inflation Exchange rates Interest rates Inflation rates Disposable income Unemployment rates Population growth rate Demographics Age distribution Career attitudes Safety emphasis Health consciousness Lifestyle attitudes Cultural barriers Technology incentives Level of innovation Automation R&D activity Technological change Technological awareness Discrimination laws Antitrust laws Employment laws Consumer protection laws Copyright and patent laws Health and safety laws Environmental policies Climate change Pollution and green house gas emissions levels Increased focus on sustainability Pressures from NGO’s § § § § § § § § § § § § § § § § § § § § § § § § § § § § § § § § § § § § § § § 27 © Operational Excellence Consulting

28. EXAMPLE –PORTER’S FIVE FORCES ANALYSIS FOR A NATIONAL RAILWAY COMPANY Porter’s Five Forces Analysis 1. New Entrants § New local railway companies on profit segments 4. Suppliers § Higher fuel prices § Increased labor costs 3. Buyers § Interest group pressure 5. Existing competitors 2. Substitutes § Road transportation § Water freight § Air freight 28 Source: Based on van Assen et al., 2009 © Operational Excellence Consulting

29. THE BCG MATRIX CAN HELP TO IDENTIFY THE PROFIT & GROWTH POTENTIAL OF EACH BUSINESS UNIT AS A COMPANY The BCG Growth/Share Matrix High Analyze Invest ? Market Growth Low Divest Milk Large Small Market Share 29 Source: Adapted from BCG © Operational Excellence Consulting

30. THE MCKINSEY-GE MATRIX CAN BE USED TO IDENTIFY A POTENTIAL STRATEGIC DIRECTION FOR A PORTFOLIO OF BUSINESSES McKinsey-GE Matrix High Build Selectively Build Grow Market Attractiveness Medium Limited Expansion Hold Build Selectively Low Harvest Manage Protect Business Unit Strength Low Medium High 30 Source: Adapted from McKinsey/GE © Operational Excellence Consulting

31. THE ANSOFF GROWTH MATRIX IDENTIFIES FOUR GENERIC COMPETITIVE STRATEGIES Ansoff’s Matrix Market Development Sell more of the same products and services in new markets. Diversification Sell new products and services into new markets. New Market Market Penetration Sell more of the same products and services in existing markets. This growth vector indicates growth through increase of market share for the present product-markets. Product Development Sell new products and services into existing markets. This growth vector means growth by developing new products to replace or complement existing products. Existing New Existing Product 31 © Operational Excellence Consulting

32. THE BUINSESS MODEL CANVAS IS A TOOL TO ALIGN ACTIVITIES TO CREATE VALUE FOR CUSTOMERS Business Model Canvas KP KA VP CR CS KR CH C$ R$ 32 Source: Adapted from Strategyzer © Operational Excellence Consulting

33. THE 7-S FRAMEWORK CAN BEST BE USED FOR ASSESSING THE IMPACT OF THE PROPOSED STRATEGY OF THE ORGANIZATION Example: Sammy’s supermarket chain Shared Values Staff Skills Style Systems Structure Strategy - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Sammy’s is moving away from its traditional middle- of-the-road retail model towards an upscale, fresh, full-service, convenience- oriented grocery and fresh market. An initial decision to hire specialists may have consequences reaching far beyond the scope of the strategy at it was proposed. Strategy - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Structure - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Systems Shared Values - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Need for specialists: e.g. butcher, bread, baker, food display specialists - - - - - - - - - - - - - - - - - - - - Style - - - - - - - - - - Skills Potential conflict: (older) specialist vs. (younger) temporary employees Staff Source: Adapted from van Assen et al., 2009 © Operational Excellence Consulting

34. STRATEGIC PLANNING BEST PRACTICES Leadership Commitment Involve the Right People Strategic Thinking Use a Facilitator To create a strategic plan, your team needs time to think big. Do whatever it takes to allow that time for big-picture thinking (including taking your team off-site). Hire an outside facilitator, someone who doesn’t have any stake in your success. Encourage active participation, but don’t let any one person dominate the session. The key strategy conversation should take place among corporate decision makers, business unit leaders, and people with expertise essential to the discussion. The strategic planning process should be driven by the organization’s senior executives, not driven by a leader or the head of the planning department. 34 © Operational Excellence Consulting

35. STRATEGIC PLANNING BEST PRACTICES Fact-based Management Create an Inspiring Vision Plans Must Be Actionable Environmental Monitoring Creating a vision that inspires will activate the organization. Teams and individuals will be motivated and energized to make the transformation. Gather data to analyze the internal and external environment. Fact-based decision-making helps to identify opportunities and areas of improvement. To have any chance at implementation, the plan must clearly articulate goals, action steps, responsibilities, accountability, and specific deadlines. Environmental monitoring should be performed not just in the situational analysis stage but regularly throughout the strategic planning cycle. 35 © Operational Excellence Consulting

36. ABOUT OPERATIONAL EXCELLENCE CONSULTING Operational Excellence Consulting is a management training and consulting firm that assists organizations in improving business performance and effectiveness. Based in Singapore, the firm’s mission is to create business value for organizations through innovative design and operational excellence management training and consulting solutions. For more information, please visit www.oeconsulting.com.sg 36 © Operational Excellence Consulting