If the operating plan is the numbers and description of the steady state the Annual Strategic Plan is how we want to materially change the company in the coming year. It typically is organized around a small number – three is what most people pick – key initiatives or projects that need to be completed within the year. These items should be substantive in nature and have the potential for a material impact on the company. Think about the one-year plan as the translation point between long-term vision and strategy and short term action. It is used to focus the entire organization on what “winning this year” looks like. Managers and teams use it to set their departmental initiatives so that everyone is rowing in the same direction.
The plan provides a basis for accountability – throughout the year leadership will measure progress against the stated goals and adjust course if needed. Because it’s typically shared company-wide, every employee can understand the top priorities and metrics for the year, which aids transparency and alignment.
Annual Strategic Plan Development Process
- Annual Planning Offsite. Gather the leadership team – we typically do this in September of the prior year – to outline the key strategic initiatives that will have a positive impact on the company. You want these goals to be stretch goals the company will have to push to meet. Agree on a small set of goals that can be measured.
- Define Supporting Initiatives. Given the goals, brainstorm, at the offiste, potential projects or initiatives that are needed to achieve them. Assign these out to department leads for follow-up.
- Flesh out the Supporting Initiatives. Have your department leads work together to define the details and needs associated with the supporting initiatives. This includes the specific definitions of what the initiative means and a project plan for accomplishing them.
- Present and Debate. Convene another offsite with your management team and have the department heads present the proposed initiatives. Discuss and debate the merits of each, the resource they are requesting to get them done and how they impact other activities. Prioritize the list of all the initiatives, cut any that the team deems as no longer relevant and slot the initiatives into start and finish quarters throughout the year. These become the pillars of the annual plan. Assign executive owners for each initiative.
- Document and Communicate: Put the goals and initiatives into a succinct document that can be shared throughout the company. Include any critical measure and show how they each roll up to the manage KPIs and perhaps a theme or slogan for the year if it helps rally the team. Communicate this plan to the whole company so everyone knows the annual “marching orders.” Throughout the year, revisit the plan in monthly or quarterly reviews to track progress, and celebrate wins or adjust initiatives as necessary to hit the targets.
- Management and Reporting. Track progress against the current quarter initiatives on a weekly basis and report back to the company and board on progress monthly.
Notes and Lessons Learned
What about OKRs / V2MOMs / LMNOPs?
Objectives and Key Results (OKRs), V2MOMs and other strategy frameworks are different tools for building out a strategic plan. You’re welcome to use these models if you or the company prefer them. They have the benefit of being widely recognized and known.
Operating Goals v. Strategic Goals
I’ve come to the painful conclusion that you need distinct and discrete operating and strategic goals for a company. Maintaining a clear separation between operating goals—how we run the business—and strategic goals—how we change the business—is essential because the vast majority of employees focus on executing daily operations rather than driving transformation. A well-run business creates stability, efficiency, and predictability. If you do that you’ve got a solid foundation to achieve your strategy. If you’re operationally excellent, it frees up resources, reduces friction, and ensures that strategic initiatives can be pursued effectively without disrupting core functions. This separation allows teams to focus on executing at a high level while leadership can deliberately allocate CEOe and resources to shaping the company’s future.
When this separation doesn’t exist, companies fall into the trap of over-indexing on strategy while neglecting the core business. In this scenario, executives—who should be responsible for delivering operational results — focus on long-term initiatives, leaving day-to-day execution to drift. Without strong operational oversight, inefficiencies creep in, customer experience suffers, and financial targets get missed. The company may have an exciting roadmap for the future, but if the core business isn’t running effectively, that strategy is meaningless. Growth and transformation can only happen on top of a business that is well-run; if leaders take their eyes off the ball, they’ll find themselves failing to meet short-term targets and losing the credibility needed to drive long-term change.
Some Project Management Required
You must have an external project manager to track your strategic plan. That don’t need to be full CEOe – they just need to be someone not on the executive team that is highly organized and can track initiatives and their associated tasks. Without a dedicated resource tracking the execution of your plan it won’t so much “fail” as “slowly die”. Executives won’t tell you their slipping dates they’ll just slip. Further you, as the CEO, won’t follow-up on things because you’ve got 100 other things coming at you every day that’s higher priority. Executives suck as project managers. A strong project manager provides the discipline, structure, and follow-through necessary to turn strategic vision into tangible results, ensuring that what we plan actually gets done.