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M5 – Developing the Strategic Plan ((Strategic planning process details…

- - - - the vision and mission
        Establish the values and goals
        Develop strategic options
        Consider the impact on various levers
        Perform a risk analysis
        Develop/ evaluate strategic themes
        Develop the strategic plan
        Establish KPMs
        Develop Review
        Rachel Steps
        
        Developing the vision and mission
        
        Establish the values the goals
        
        Develop strategic options (Consider the impact on various levers)
        
        Evaluating the strategic options and determining the strategic fit
        a. Perform a risk analysis
        
        Develop/evaluate strategic themes
        
        Develop the strategic plan
        a. Establish Key Performance measurements
        b. Reviewing the plan
        
        Step 3: Developing the strategic option
        
        Strategic options
        are alternative strategy ideas that an organisation considers in order to achieve its goals and are possible ways the organisation could compete in the future. The purpose of examining strategic options is to determine: ‘Where are we going, and by when?’
        
        The outcome of these tasks will be a strategic plan that is ready to implement
        
        diagram!!!!!!!!!!
        
        Operational levers
        The term ‘lever’ is used because when you pull on a lever, you are making a change. This section considers what changes can be made (i.e. what levers can be pulled?). The operational levers attempt to answer the question: ‘How can we achieve the strategic options through our operations?’.
        
        Organisational and people levers
        
        Step 1 & 2: Strategy Components
        
        vision table!!!!!!!!
        
        Values
        • Enable staff to flourish by providing them with a common cause
        • Help managers to make trade-off decisions about the direction when faced with competing interests
        
        Mission
        An effective mission should be able to answer:
        • What is the organisation going to do to achieve its vision?
        • Where is the organisation going to operate?
        • When will the organisation’s activities be done?
        • Captures the organisation’s reason for being, and energise its stakeholders to pursue common goals
        • A mission should not describe the organisation’s current offerings of particular products and services.
        
        Vision:
        • This begins with understanding the current state of organisation and where it sits within its operating environment, before defining where the organisation would like to be in the future.
        • The vision does not include the specifics of how the organisation will achieve this state— those details are included in the organisation’s goals. Rather an articulated description of an organisation’s ideal future
        
        5GFADST
        est for an effective vision: (Kotter’s test on vision)
        
        Does it convey a picture of what the future will look like?
        
        Does it appeal to key stakeholders?
        
        Does it comprise realistic, attainable goals?
        
        Is it clear enough to provide guidance in decision-making?
        
        Is it easy to communicate; can it be successfully explained in 5 minutes
        
        Is it ambitious enough to force people out of comfortable routines?
        
        If a vision fails, it is usually due to one of the following reasons:
        failure of imagination;
        failure to build consensus;
        failure to act consistently; or
        failure to properly implement.
        ICIA
        
        goals
        SMART
        
        An organization’s goals are specific outcomes the organization seeks so it can achieve its mission. The most useful and achievable goals are those which have SMART characteristics. When an organization has achieved one of its goals, we can assume that it has developed the capability to carry out specific activities that led to this success. As the organization gradually achieve all of its goals, this ultimately allows it to achieve its vision.
        
        How mission, vision, and goals connect
        The mission identifies the organisation’s intended direction and the vision illustrates what the organisation should look like when it reaches its destination. The mission and vision should motivate all areas of the organisation to achieve the worthwhile, tangible goals defined by the organisation
        
        An organisation’s vision, mission, values and goals are inextricably linked. The organisation’s vision is realised through the development and achievement of its mission. Goals provide the stepping stones that lead to the realisation of a mission. These four elements are used to
        develop the strategy and then, perhaps more importantly, measure the progress of the strategy’s implementation.
        
        Step 4 Evaluating the Strategic Options (Strategic Fit)
        
        An important part of the strategy development process is prioritising the strategic options, and considering a trade-off, with more important or beneficial options taking priority over less significant options
        
        After the strategic options and levers are agreed, the next task is to evaluate the options relative to the current industry to determine their ‘strategic fit’ with the organisation. This exercise is useful for determining which options will help the organisation to deliver its vision and mission.
        
        Approaches to evaluate strategic options to see if they “fit”:
        
        Value/effort assessment tool;
        
        Weighted criteria evaluation tool; and
        
        Risk assessment,
        
        ‘what-if’ analysis
        
        The value/effort assessment should be the first check of the evaluation process, because it can immediately eliminate dead ducks and prioritise low-hanging fruit options. This then gives an initial prioritised list which has culled the options not worth the time to evaluate further.
        
        4a Risk Analysis
        
        Options that appear at face value to be most attractive are not necessarily always the ones to pursue, depending on the tolerance for risk
        
        Rachl risk analsysis diagram!!!!!
        
        inherent risk table
        
        Risk treatment
        Different options to treat risk
        
        Eliminating the risk;
        
        Accepting the risk and ‘taking a chance’;
        
        Acting to reduce the potential negative consequences of the risk (through control and procedures)
        
        Transfer the risk, completely or partially, to another party ( e.g. joint venture)
        
        Business analytics can be used to assess risk in strategic options:
        
        Analyse external and internal data to discover patterns: e.g. in business transactions, customer surveys, competitor analysis, and macroeconomic statistics
        
        Identify patterns in data
        
        Assess probability of certain ‘risk events’ and their likely outcome (impact) if this occurs.
        
        timing risk
        
        Risk management is an ongoing process.
        
        Step 5 Develop/evaluate strategic themes
        
        Strategic theme:
        
        A broad strategy within which a strategic option can be placed and can be used to describe the intended purpose of the strategy
        
        It expresses a specific strategic option in general terms. (an umbrella, and categories the available options)
        
        Narrowing the field to the most important and beneficial options & Prioritising a list of options
        
        Rumelt’s criteria (Evaluating Strategic Themes)
        • Focus on the longer-term health of the organisation and require evaluation of factors that are not currently directly observable or easily measured
        • Provide a framework to comparing and prioritising strategic options and their strategic themes:
        
        External consistency;
        
        Internal consistency;
        
        Feasibility;
        
        Competitive advantage
        
        Rumelt’s criteria (cited in Mintzberg & Quinn 1996) offer a strategic framework against which to compare and prioritise strategic themes that look beyond what is currently known.
        
        The process of developing strategic themes involves deciding which option(s) to pursue and making sure they are properly integrated with each other, rather than in conflict.
        While many options may be commercially viable (i.e. the value to be gained outweighs the effort), options must also have a strategic rationale (i.e. options need to be viable in the context of the organisation’s external environment, stakeholder needs, internal performance and capabilities). Options also need to be operationally feasible and worth doing, creating a competitive advantage for the organisation over its competitors.
        
        The final evaluation step involves narrowing the field to the most important and beneficial options. The result is a prioritised list of options from which the organisation may select to direct its strategy. The leadership team will then discuss and make a strategic choice that will form the basis of and guide the organisation’s themes, projects and ultimate strategy.
        
        figure 5.11!!!!!!!!!!!
        
        Step 6 Develop the strategic plan
        a. Establish Key Performance measurements
        b. Reviewing the plan
        
        Having made its strategic choices, an organisation must develop projects and programmes to enable it to turn its theme into actions:
        
        Make strategic decisions. Select preferred strategies.
        
        Create projects to put these strategic decisions into action.
        
        Key performance measures should be established to ensure that the goals and themes are being achieved:
        a. Revenue and cost  i.e. carefully tracked across the whole organisation
        b. Internal processi.e. track project completion speed
        c. Learning and growth i.e. turnover rate of employees
        d. Customer satisfaction  i.e. repeat customer, new customers
        
        A formal and detailed pre-implementation review should be carried out:
        a. Because the strategic plan can take several months to develop and during that time the external environment is subject to change, so what initially was the right strategy may no longer be appropriate
        b. Pre implementation steps:
        1) Consider Kotter’s 7 question to test the vision if it still viable
        2) Carefully reviewed to identify any potential gaps that have previously been overlooked, consider expected customer and competitor responses once the plan is implemented, and how the organisation will respond to different unfolding scenarios (e.g. delays in implementation).
        3) Initiate discussions with major stakeholders, so that the future direction and plans are clearly and effectively communicated to them
        
        This module has described how an organisation can develop a clear vision, mission, values and goals. The organisation must then discuss and analyse a number of themes to determine which options are most promising. All these aspects come together in a strategic plan that details the organisation’s vision, mission, values, goals, strategic themes, a high-level implementation plan and key performance measures. The key performance measures are included in the strategic plan and are used to link the themes back to the organisation’s goals and to measure the success of the strategy after it is implemented.
        
        Set KPIs
        
        The organisation must determine the best set of key performance measures to ensure that the strategic goals and themes are being achieved. These measures should directly address the organisation’s goals. As
        
        Review Strategic Plan