The 5 Key Elements of a Strategic Plan
by Tom Wright, on Jun 6, 2017 9:43:55 AM
There are 5 key elements of a strategic plan that must be included to ensure you've got a great strategy. Our Excel strategic planning template includes vision, values, focus areas & strategic objectives. Output a beautifully formatted one-page summary of your strategic plan.
We recently asked readers of the blog to submit & vote for our next blog post and the overwhelming winner was 5 key elements of a strategic plan. In this article you'll learn all about those key elements, and how to include them in your next strategic plan. We also have an awesome strategy template that you can download to work with offline to help get you started:
Download Strategic Planning Template
The template is 100% free and comes in Excel format allowing you to build up your strategic plan and output an auto-generated 'plan on a page'.
Before we go into the detail of the key elements of a strategic plan, we need to be clear about what exactly a strategic plan is meant to achieve. Essentially, a strategic plan helps you to answer these 4 critical questions:
- Where do I want to take my business? - The destination
- Where are we right now? - The starting point
- How will we get there? - The journey
- How will I know if I'm succeeding? - The checkpoints
A good strategic plan will address each of these questions and provide clear answers for readers of the plan. This may include employees, business partners, investors, or other stakeholders. Let's look at the 5 key elements of a strategic plan that will help us to answer those questions:
1. A Vision
No surprises here - we need to start off by defining our vision for the organization (the destination). We've written extensively about how to write the perfect vision statement, so do check out those posts for more detail. We can't emphasize enough how critical a vision is for your organization. Your vision will help you to:
- Bring alignment to your organization. People will unify their efforts towards a common goal, driving increased efficiency
- Create goals which are cohesive and focused
- Inspire employees, investors and other stakeholders to invest in your business both emotionally and commercially
Creating a vision statement is the obvious starting point for defining your overall vision. But you may also want to consider creating a mission statement too. A mission statement differs from a vision statement as follows:
- A vision statement defines where you want to be in the future. A mission statement defines broadly how you will get there (part of your journey).
Many organizations are moving away from separate vision and mission statements, due to the confusion that often surrounds their differences. Instead, you might want to try converting your mission statement into a series of focus areas. For example, Patagonia's vision statement is:
"To share our love for the outdoors and create a diverse range of products for all facets of outdoor life"
And their focus areas are:
"Reduce environmental harm"
"Encourage discussion on the environmental crisis”
Their focus areas essentially describe how they will achieve their vision, and also act as the bedrock for the majority of their strategic goals and KPIs.
2. Core Values
Values really don't get the credit they deserve! People often see them as a throw-away and vacuous - more aimed at marketing the organization than guiding its true internal behaviors. But a well crafted set of values can be the difference between success and failure in your strategic plan. Check out this blog post for more detail, but in summary, core values help you to:
- Assess your current state (the starting point) as an honest reflection of what you do well and are proud of (we wrote an entire article about how the best core values are the ones that you had from the start)
- Make better decisions by helping you to rule out courses of action that are not appropriate for your company
- Recruit better people who share your beliefs and passions
The values that should go into your strategic plan are not the usual sickly-sweet values you'll see in corporate marketing videos aimed at customers. Instead they need to be a frank self-assessment of how you want your organization to behave as it goes about delivering against its vision and mission / focus areas. They should ideally reflect the values of your very best people, and the values that have helped you to succeed the most in your journey to date.
Identifying your core values is s critical component towards defining your starting point and your journey.
3. Clearly Defined Outcomes
A strategic plan is nothing without a set of clearly defined outcomes. Visions, missions and focus areas are a great starting point - but no-one will take your plan seriously unless you can clearly articulate what steps you are going to take to get there - and what success looks like for each of those steps.
Not all of your outcomes will be immediately quantifiable - and that's ok (your KPIs below will help you in those cases). But when you define your outcomes, they ought to look something like this:
Action + Detail + Metric + Unit + Deadline
Expand our international operations into 3 new markets by 21st December 2018
Starting with a verb forces you to be specific about what you’re trying to do. If you can include a metric and a unit – do so. It will help keep you focused and honest when it comes to tracking your progress. Having a deadline works in much the same way.
We have an article you can read here about how to create strategic objectives - so check that our for more detail.
This is such a small detail, but it is also one of the key elements of a strategic plan that so many organizations fail to implement. A lack of accountability will absolutely destroy your strategy execution. Lacking or confusing accountability results in:
- Outcomes not being delivered because no-one knew who was in charge
- Conflicting interpretations of what the business should be working on
- Increased 'finger pointing' and hearsay when things don't go to plan
- No-one taking any satisfaction or pride in the outcomes delivered by their team
You need to define your accountability in your initial strategic plan as a part of defining your journey. Ideally, the people responsible for a particular segment of your plan should also have been critical contributors to the plan itself. That's the best way to drive engagement and to self-enforce accountability.
This also shouldn't be a difficult process. For each of your outcomes from step 3 above, simply state one single person who will have primary accountability for that outcome. Try to avoid defining yourself as the accountable person for every single outcome. It's fine for that person to invite other people in to work on the outcome with them (either by cascading the goal or inviting collaborators), but it needs to be clear that the primary accountability sits with the one individual initially assigned to the outcome, and no-one else!
OK, I'll admit it - creating KPIs is probably the hardest of all the key elements of a strategic plan. But without KPIs, you won't know until it's too late about whether or not you're succeeding as you head towards your vision. Note that KPIs are different to the metrics that you set as part of creating your outcomes from step 3. Rather, KPIs should relate to how well you're delivering against the components of your mission or focus areas. Let's take a look at some examples:
One of Patagonia's focus areas was 'Best product'. A KPI for this focus area could be their Net Promoter Score - i.e. how many customers would recommend Patagonia's products and services to others.
For their 'Reduce Environmental Harm' focus area they might have a KPI for maintaining their carbon footprint at 0 (i.e. being carbon neutral).
And finally for their 'Encourage discussion on the environmental crisis' focus area (probably the hardest to set an effective KPI for), they might measure something like the number of mentions of the company on social media that also reference the environmental crisis.
Don't let setting KPIs become harder than it needs to be, you don't need more than one or two KPIs for each of your focus areas. But you do need to ensure that your KPIs accurately reflect what success actually looks like for that focus area. You'll also need to be able to accurately measure the KPI on a regular basis. Selecting the right KPIs is therefore one of the key elements of a strategic plan.
What do you think about our key elements of a strategic plan?
We've tried to identify the top 5 key elements of a strategic plan, but we've only really scratched the surface of what your plan could contain. You might also want to include things like a SWOT analysis of your current organization, an assessment of the external environment, or a strategic framework such as McKinsey's Three Horizons of Growth. Let us know what you think a good strategic plan should contain in the comments below.