Avoid these six pitfalls as you create your organization’s strategic plan.

As you look at your organization’s strategy and your current strategic planning process, it’s critical to understand there are some really large pitfalls out there that you can fall into.

First, do you lack a clear direction? If your organization can’t clearly articulate, “Here’s where we’re going, here’s why we exist, and here’s what we look like three to five years from now,” you may lack direction.

Second, do you know how to say no? Or do you say yes to everything? Look at the latest set of initiatives you’ve pursued over the past year. How many of them have been failures? How many of them should you have walked away from? That’s an indicator that you’re not saying no.

The next pitfall is failure to prioritize. Go look at everything everybody’s working on right now in terms of major initiatives. Are they all properly resourced or are some of them lagging? If you have a bunch of projects that are stalled or are behind schedule, you probably haven’t resourced appropriately and your prioritization process may be broken.

Lacking diversification is another pitfall. When you look at your portfolio of initiatives, do you have excessive concentration either in a specific market or a specific product? Or are your bets spread out?

The next pitfall is starving the kids. Are all of your resources going to the one big core business that generates most of your profits, and all the great new ideas are never getting funded?

Finally, the last pitfall is not revisiting your strategy on a regular basis. You should be refreshing your strategic plan at least once a year. That doesn’t mean doing all of these exercises again, but it does mean sitting down, validating the market, and looking at your spot. Look at your core competencies, your vision, your mission, and ask, “Are these still valid and relevant?”

Let me make this real because these risks are huge. I know a consumer package goods company that failed on several of these dimensions. First, they lacked a clear direction. Everything looked interesting, and they were more than willing to pursue something as long as the financial returns looked attractive. Second, they weren’t very good at saying no. When something came along with a high enough rate of return, they would tend to pursue it. And third, they didn’t look at diversification risk. They were so concentrated on a specific set of new initiatives and new markets they wanted to get into that they took on excessive risk.

The way these failures manifested was that they made an acquisition for approximately $100 million in an entirely new market that they didn’t know a lot about. They made the acquisition based on the fact that the financial return seemed like they would be very attractive. Fast forward three years from that decision and every year they lost between $2 and $5 million. After three years, they realized they couldn’t run the business well. They didn’t understand the market. They wrote off the entire business and shut it down.

So these pitfalls are real. Do the diagnostics and ask yourself these questions as you look at your overarching strategy to make sure you’ve got a strategy that’s viable and will help you achieve your overall goals.

Want to learn more about strategic planning? How about taking an entire course on it? Go directly to the course and start learning how plan strategically. The entire course is available at LinkedIn Learning. Enjoy!

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Strategic filters are tools you can use to prioritize your organization’s initiatives.

Being able to evaluate the initiatives you’re going to pursue as part of your strategic plan is at the core of the strategic planning process. You need to be able to identify what the high-priority initiatives are and what the low-priority initiatives are. To do so, you need a common set of criteria that everyone across the organization is going to use to conduct those evaluations. I call them strategic filters.

These filters are going to be things that are important to your organization, things like this idea meets a customer need, or it helps us be differentiated versus our competition, or it has an acceptable level of complexity. Sometimes your filters aren’t qualitative; they’re quantitative. So what’s the net present value of this initiative? What’s the financial return? What’s the return on investment? By articulating this set of criteria, you’re going to have a common lens to evaluate your initiatives through.

These filters are going to screen out initiatives that aren’t consistent with the stated direction of the organization. And they’re going to be customized based upon the needs of the organization. For example, if you need to grow internationally, you probably need a filter that says, “Helps us be more global.” If the initiative does that and gets you into new countries and new geographies, then it would be high on the priority list. If it doesn’t and it keeps you domestic, that initiative would be low.

Once you’ve generated your set of strategic filters, you need to understand how much risk they’re going to have you take on. There are five things to look at as you evaluate that risk.

First, consider how relevant your existing capabilities are. Are the strengths you have today going to be relevant to the initiatives you pursue tomorrow? 

Second, look at your channels. Will we be distributing our products through the same channels, or will we be entering new channels? For example, if we sell through retail today and we’re looking at selling online only tomorrow, you’re going to be taking on more risk with a newer channel.

Third, look at your cost structure or the infrastructure. If the cost structure and infrastructure required to pursue an initiative is similar to what you do today, then it’s lower risk, and if it’s not, then it’s higher risk.

The fourth thing to look at is your customers. Will you be serving the same customers or are you going after new customers? Obviously, new customers carry higher risk.

And lastly, will you be running against the same competitors or are you going to compete with different ones?

Once you’ve generated your filters, do this back-check against these five criteria to understand whether your filters are going to direct you in a riskier direction or a safer direction. The right answer lies somewhere in the middle. You want to take on some risk because that’s going to create new opportunities for you, but not so much risk that you’re risking the enterprise.

By creating this consistent set of filters, you’re going to be able to evaluate your initiatives quickly and effectively and stay on your stated path to reach your goals.

Want to learn more about strategic planning? How about taking an entire course on it? Go directly to the course and start learning how plan strategically. The entire course is available at LinkedIn Learning. Enjoy!

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Define your mission, vision, guiding principles, and goals to set the direction of your organization.

When you set direction for your organization as part of the strategic planning process, there are four elements to doing so: Articulating your mission, your vision, your guiding principles, and your goals.

A mission is: Why does your organization exist? What is its purpose in the world? The vision is then saying: If we’re fulfilling that purpose, at some point in time, where are we going to be? What do we want to achieve? What do want the organization to look like at some future point? Your guiding principles are the rules you want your team to live by. How do you want people in the organization behaving, especially when the boss isn’t around? What are the lenses you’re going to look through as you try to evaluate decisions? And lastly, your goals. Try to quantify these. It may be X number of customers by a certain date, or dollars of revenue, dollars of profit, a margin percentage, being able to put out hard numbers by a certain point in time to orient the organization and say, “Here’s what we’re shooting for.”

Here are some of the pitfalls that I’ve seen during this step of defining where you’re going.

First, many vision statements and mission statements are way too long. I’ve seen some that have spanned multiple pages. To the extent possible, make them short, clear, and free of buzzwords.

Next, your guiding principles need to be clear enough that everyone in the organization understands them and can apply them, even to the smallest actions.

And last, your goals need to be aggressive, but pragmatic. If they’re not aggressive, the organization isn’t going to push itself. They’re not going to innovate to try and fill that gap between where they are and where the goal says they should be. If the goals are too aggressive and you’re not pragmatic, people will look at the goal and say, “There’s no way we can achieve that,” and they just give up.

As you define it for your organization and set out that mission, vision, guiding principles, and goals, you’ll be providing clarity for where you want the organization to be in the future.

Want to learn more about strategic planning? How about taking an entire course on it? Go directly to the course and start learning how plan strategically. The entire course is available at LinkedIn Learning. Enjoy!

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Laying out your organization’s strategic plan can be overwhelming. Follow these steps to keep your strategic planning process simple and effective. 

Strategic planning is an inherently simple process. There are some major tools and steps that you’re going to follow as you pull together your strategic plan. 

First, you need to set direction and stay in a lane. That begins with articulating the vision, the mission, and the goals of the organization.

Once you’ve set that destination, it’s important to define the organization’s core competencies. What are you great at? And how are you going to compete in the market?

The next step of the process is defining strategic filters. This is the heart of the method. These filters are going to be the objective functions you’re trying to achieve. They’ll be the evaluation criteria you’ll use as you analyze the initiatives that you are or are not going to pursue.

Next, you’re going to say no to distractions. You’re going to stay focused. You’ll use tools like a two by two matrix to evaluate which opportunities you should pursue and which ones you should avoid. You’ll take all the initiatives on your list and run them through those strategic filters to identify the ones that are high value and high potential and the ones that should be avoided.

Next, you’re going to draw the line. Strategic planning is about focus and you’ll have your list of initiatives. You’re going to identify the top ones, the bottom ones, and resource them appropriately. You should only work on things above the line for which you have resources.

Next is making sure you have a diversified portfolio of initiatives, and then executing the strategic plan. You’ll look at your initiatives in the following ways. Are they long term? Short term? Do they balance your core competencies? Are they balanced across products or markets or services? You’ll look at your portfolio and how it evolves over time.

As you go through the strategic planning process, there will be major tools and frameworks you’ll apply at each step, and you’re going to come up with a very clear plan with a prioritized set of initiatives.

Want to learn more about strategic planning? How about taking an entire course on it? Go directly to the course and start learning how plan strategically. The entire course is available at LinkedIn Learning. Enjoy!

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