Strategic Planning Framework

The Goal of Strategic Planning

There is a story told inside Hewlett-Packard about Dave Packard, one of the founding partners of Hewlett-Packard Company. In the late 1940s he was at a meeting with executives from several fortune 500 companies, and there was a general consensus among those executives that the purpose of a corporation was to generate profit for the share owners. Dave disagreed. “Hewlett-Packard exists,” he said, “to make a contribution to society.” “Profit,” he went on to say, “is important, but it is a condition of existence, not the reason for existence.”(1)

We will come back to the question of validity of Dave Packard’s statement in a bit, but for now, it is a useful starting point for discussing why strategic planning is important. That simple statement, why we exist, creates the foundational structure on which you build goals and measures, then strategies and tactics, and finally, the specific programs(2) you plan to use to achieve your goals and ultimately satisfy your mission. The purpose of the strategic plan then, is to guide daily discussions from the shop floor to the board room.

To elaborate a bit more, consider the 4-quadrant diagram to the right. This chart plots the level of organizational alignment on two dimensions, consensus on goals (what to do), and consensus on strategy (how to do it).

The lower right quadrant is the area where a decision has been made to implement “Lean,” or “Professional Learning Communities” or “5S,” without a clear understanding of what the goal of those processes are. Organizations in this quadrant tend to get stuck in “process police” activity, without ever addressing the reason for those processes. They tend to be ineffective because they are bureaucrat.

In the upper left quadrant, there is general consensus on what to accomplish, but not how to accomplish it. The problem with working in this quadrant is that the members of the organization will often be doing things which inhibit or counteract the activities of others to achieve those common goals. Information hoarding is a common phenomenon in these organizations. Organizations working in this quadrant tend to be inefficient because the members are working at odds with each other.

The quadrant in the lower left is the worst situation for an organization to be in. In the absence of both goals and strategy, everyone is doing their own thing, usually with the good intention of trying to achieve what they believe is best for the organization, but often only contributing to chaos. The chaotic nature of the organization defies any attempt at trying to measure efficiency or effectiveness.

It is important to note that the people working in these three quadrants tend to be dedicated, hard working individuals who are trying to make a difference, however they are structurally bound by a system which inhibits their collective ability to achieve great things.

The goal in strategic planning therefor is to establish a framework which moves the organization into, and keeps it in the upper right quadrant of this chart. In this quadrant, everyone knows what the goals are, and there is general consensus, or at least understanding, on how to achieve them. People work collaboratively to achieve those goals, and processes are in place, not because of some abstract concept, but rather because they are demonstrated to show movement toward the goals.

Which brings us back to that opening story of Dave Packard.

The Mission

Almost any organization, including non-profit organizations can be modeled(3) at the very highest level as a black box which takes inputs from suppliers, producing products or services to customers under the constraints of external influences. The diagram to the right, depicting a school district, illustrates this.

In strategic planning, starting at this high level initiates a set of cascading conversations, and often identifies the first level of conflict in the organization, why it exists.

The best way to identify your reason for existence is to start with who your customers are. Dave Packard defined his customer as society, Apple identifies their customers as the non-technical users of technology, and the school district depicted in this diagram initially identified their customers as the community (because the community pays the taxes which support the organization).

Defining the customer helps define what good and services you provide to the customer. In Dave Packard’s case, it was products which contribute to society. In Apple’s case, it is products which delight non-technical users of technology, phones, music players and easy to use computers. In the case of a school district in this diagram, they recognized that they provide services which are valued by their students and their parents, but not directly by the community, wich caused them to reevaluate who their customers really were, and settling on their students as their customers, with parents, community an business as proxies for the students.

The combination of the products and services and the customers they are provided to, define your mission. Is your mission to produce new workers to support a manufacturing jobs, or is to enable students to fulfill their best potential? Is your mission to provide share owner value, or to delight your customers? Cycling through the customers, products and service, and mission a couple of times will generally result in convergence on a coherent mission statement. The framework is not intended to make value judgements for you, rather it is intended to focus discussions which evolve into consensus.

Having defined a mission, we now look at inputs to the system, both in the form of direct and constraining inputs. Direct inputs may be tangible inputs such as steel and labor, or they may be intangibles such as information. Who are your key suppliers, what goods or services do they provide? Is there a sufficient labor pool to support your mission? Is there a supply chain which can deliver raw materials, or maybe the supply chain constrains your ability to provide products and services to your customers? Are there technologies which define, or which may redefine what you do? Apple used to be a computer manufacturer, now it is a service and content provider which uses its proprietary technology as a delivery conduit.

Every organization has external influences which constrain what the organization can do. In the case depicted here, the major external influences are government agencies which enact laws, the leadership of the organization itself which establishes a set of values, the school board which enacts policy, and the community which, through tax dollars, funds the district. In the case of the system defined by Dave Packard, one of those constraints was the need to generate profit.

These elements interact in dynamic ways to define what your organization does, how it does it and why it does it. It is the foundation on which your strategic planning must rest.

Strategic Planning: the What

So far the discussion has talked around what happens in that middle box which represents your organization. This is by intention as helps to address the fundamental question, “why do you exist?” Once the answer to this question has been established, it is time to look inside that box. There are several ways of doing this, one often used approach is to look at process and work flow. Another approach, the approach used here, is is to use a Goal Strategy Alignment Matrix or GSA-Matrix.

The GSA-Matrix, diagrammed below, is another tool for focusing conversation on what you do, how you expect to do it, and ensuring alignment of programs you execute on a daily basis to those goals and strategies.

We begin filling the GSA-Matrix out by entering the organization’s mission statement in the left most column of the matrix, typically spanning several rows.

You next place your strategic goals, one goal per row, next to the mission statement. These goals are are placed next to the mission to ensure that each goal is congruent with that mission, that is, each goal should contribute directly to the fulfillment of the mission. Because you want to be able to keep these goals in mind when having regular business discussions, it is best that they be structured such that they can be kept in short term memory, meaning they should be succinct and be limited to more more than 3 to 7 items.

The use of the SMART thumb rule is recommended when defining your goals. Each goal should be:

• Specific: That is, they are the oposite of ambiguous. “Get better,” is not specific, which makes it hard to measure, and hard to take action on. “Meet state minimum standards for all students each school year” by contrast is much more specific, measurable and actionable.
• Measurable: Goals need to be measurable. More about this below. Ideally these are quantitative, for example, an improvement in student learning as measured a specific assessment, but can be qualitative, for example, one client working on a morral improvement effort defined success as “there will be laughter in the halls.” The important point is that there is a measure by which to adjust your programs during the implementation period.
• Actionable: It is important that there are clear actions that can be taken today to move toward the goal. One way of evaluating how actionable a goal is, is to see how many items your team can come up with in a brainstorming activity. If your brainstorming activity leaves people with blank faces as to where to begin, your goal is probably not actionable.
• Realistic (or Realizable): Setting a goal of putting a living person on Mars next year is actionable, meaning there are a lot of actions people could take to move toward this goal today, but with both the technical and financial challenges this represents, it is probably not realistic.
• Time Bounded: The single most valuable motivator for success in any change process is visible movement toward that change. To achieve this visible movement, it is important that every goal have a specific time frame or time increments for implementation. In the case of say a 3-year strategic plan, the goal should describe increments of progress, for example student progress improves as tracked against regular quarterly assessments.

Next to each strategic goal are leading and lagging indicators.

• Leading indicators describe how you will know that you are succeeding in such a way that you can make mid-course corrections. Leading indicators are important because operating without them is akin to trying to drive forward by looking only in the rear view mirror.
• Lagging indicators describe how you will ultimately judge success of achievement of the goal. Lagging indicators function as a quality control check of leading indicators. State identified tests are examples of lagging indicators. Their primary value should be to validate the effectiveness of district summative assessments.

To use the example of The Wind Mountain Group: The Wind Mountain Group exists to help clients solve complex problems. To achieve this mission, we have defined the following goals:

1. Help clients define and execute programs and projects which move toward solution of their pressing complex problems. Early indicators are regular project meetings with client sponsors, and lagging indicators are future work or referrals.
2. Deliver at least a 10x return on investment for clients. Early indicators are progress to plan and feedback from client sponsors, lagging indicators are post project reviews and future referrals.

Note that we also have a goal of generating a reasonable profit, but don’t include it as an organizational goal because it is not congruent with the mission statement. Similarly to how Dave Packard indicated profit as a condition for existence, we note it as external influence which constrains our work. It will be difficult to help clients if we are begging for money in the street.

Strategy: the How

So far we’ve been looking at the what view do of the organization. Now we need to begin to look at the how view. What we want to do is to fill in the top level column headings to the right of our goals.

At the highest levels, we will be looking at Strategies. These provide high level guidance for implementation. A strategy is, in essence, a principle of operation, a belief statement about how to move forward.

An example of a Strategy would be to “Recruit, Develop and Retain High Quality Employees.” The strategy doesn’t describe specifically how to achieve this, but rather sets a direction.

Under each strategy there should be two or more tactics. Tactics describe specific implementation techniques. Using The Wind Mountain Group as an example, we have defined facilitation as a strategy, and under that strategy we have defined specific tactics as Appreciative Inquiry, Future Search and Caffe Method.

At the intersection of the strategy/tactic columns and the goal rows, are programs, specific actions which you will take to move the organization toward achievement of the goal or goals. This intersection of goal and strategy/tactic is where the power of the GSA-Matrix takes hold, but we aren’t quite there yet. First we need to go back and address the strategies. How do you know what strategies/tactics you should be using?

If you don’t currently have a defined set of strategies and tactics, an effective approach is to interview broad cross section of the organization and ask “what are you doing to achieve the organizations goals now?” Capture these on sticky notes, then invite that same cross section to an affinity diagramming session, and ask the team to group sticky notes together in ways in which they seem similar. Then ask them to identify what the similar characteristic of each grouping is. This leads to a conversation about strategy and tactics, which after a couple of iterations, usually leads to agreement on the strategy and tactics currently in use.

Putting it all together

The last step in the strategic planning process involves going into some level of depth with each program. Do this by asking what goal each program is primarily targeting, what strategy and what tactic it implements. Placing each program on a sticky note, and then placing them physically on a large print out of the GSA-Matrix at the intersection of tactic and goal provides visual clues about about your focus, and facilitates the next step of the planning process, the analysis process.

In placing your programs on the GSA-Matrix, consider the following questions:

• Can the program be reasonably associated with a strategic goal and a defined strategy/tactic column? If so, it should be placed in the cell in the GSA-Matrix which intersects these.
• If the program cannot be directly associated with a goal and tactic, the next question to ask is, “is this a cost of doing business?” Accounting services for most organizations generally do not contribute to the organization’s mission, but are a necessary cost of doing business. If this program is a cost of doing business, capture it on a separate cost of business (COB) chart.
• If the program is not associated with a goal and strategy, and it is not a cost of doing business, it needs to be captured in a parking lot. It is important to capture these because as you perform analysis, you will want to ask if the program indicates a missing goal or strategy in your strategic plan.

Using the Strategic Plan

So at this point, we have three artifacts in our strategic plan, the black box diagram, the GSA-Matrix, and a collection of programs. What you now have are a set of tools with which to guide ongoing conversations and decisions. But we are not done yet. If at this point you place these artifacts in a binder and put them on a shelf to collect dust, your strategic planning work is not providing value. Now it is time to analyze your organization as a whole, time to start asking the hard questions, and these questions approach your organization from multiple directions. All of these are important.

Common questions to consider in relation to the strategic plan:

• Look at each program, and ask how does this particular program contribute to a goal? If you don’t know, you may be doing things which are not contributing to the organizations goals.
• How is contribution to a goal measured? If you cannot saner this question, you need to look at the program using the same SMART thumb rule used for goals.
• If you can measure the contribution to the goal, how well is each program working? Should you do more of this, or maybe less of it? How much is it costing you, and are you seeing a return on investment?
• What strategy/tactic does this program fall under? If there isn’t a strategy/tactic combination associated with the program, are you missing a strategy/tactic, or are you doing something not valued by the organization?
• If the program doesn’t contribute to a strategic goal, are you missing an important goal?
• After placing your programs on the GSA-Matrix, are there strategies/tactics for which there are no programs? If so, is this really a strategy/tactic which you should be using? If it is an important strategy/tactic, what programs should be considered here? Or maybe this a strategy/tactic which you really aren’t using, and should therefor be removed.
• Looking at your parking lot, are there programs which you really believe you should be executing? If so, this implies that you are missing something in either your goals or your strategies?
• Are there clusters of programs in some areas, and nothing in others? Are you focusing too much on some things, while ignoring others? Or maybe the cluster indicates where your real goals and strategies/tactics are, and the other items are just wishful thinking?

The power of the tool is found in the questions it helps facilitate. It should be considered a living document, something which directs daily conversation, and is used to guide decisions from the assembly line to the board room.

Epilogue

It’s three months since you participated in the strategic planning process, and your manager comes to you with a great idea of what you should start doing next week. You now have a tool to ask important questions which guide your work: “Great George,” you say, “I’ll be glad to get started on that next Monday, but it would be helpful if I understood how this fits into the strategic plan? What goal are we targeting, and how does it fit into organizational strategies? How should I evaluate my level of success in regard to contribution to the strategic plan when I’m done?”

If this get you fired, well, that strategic plan wasn’t of much use in the first place. But if your organization is truly committed to the strategic planning process, George will appreciate your question, and either answer it in a way which keeps you, and the organization in the optimal quadrant of the diagram introduced at the beginning of this article, or George will stop and reconsider. Either way, the tool, and your question will improve both your organizational effectiveness and efficiency.

---

Notes:

1. From the Video Origins. The story of Bill Hewlett, Dave Packard and the early days of Hewlett-Packard. Produced by Hewlett-Packard Company.
2. The term Program is used here loosely, referring to a set of actions which are taken to move towards the goal, not in the strict context of a program as a set of projects as defined in a project management context.
3. There is an old saying used in engineering that: “All models are wrong. Some are useful.” The intent of the models here is not to be “correct,” rather correct enough to be useful.