Strategic Planning Process Overview and Talking Points

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Overview of the
Planning Process
Structuring the Strategy Process
Strategic planning is the periodic resetting of mid-to long-term
strategic direction and priorities; the process focuses on key issues
and the specific initiatives needed to attain long-term strategic goals.
A Valued Activity
McKinsey Quarterly Survey

Executive Responses, 2006
Somewhat
Significant Very
29% Significant
44%
Almost 60% of executives in a

recent survey confirmed that
Slightly
the strategic planning process
Significant plays a highly-significant role in
10% developing strategy.
Not at all
Significant Extremely
3% Significant
n = 796.
14%
CSB19GDVQL © 2008 Corporate Executive Board. All Rights Reserved. 2
Key Components
Establishing Guidelines and Strategic Direction
– Who should be involved with the process and what are our strategic aims?
Conducting External and Internal Analysis

– What are our competitors doing and how do current market trends influence
the business?
– What do our customers need and what does our current portfolio look like?
Formulating Corporate Strategy and Target Setting

– What goals do we set for ourselves and how do we intend to get there?
Creating and Aligning BU Strategy

– What strategies must our BUs pursue to meet corporate objectives?
Budgeting
– How can we align our budget and operating plans with corporate strategy?
Communicating Strategic Plans

– How can I build internal clarity and support to gain momentum for execution
of study?

A Calendar-Driven Process
Annual Strategic Planning Process Map
Illustrative
Time Q1 Q2 Q3 Q4
Frame
Establishing Process Defining

Steps and Strategy Corporate Strategy Budgeting
Direction and Setting Targets
Stage
Conducting External Formulating and Communicating and
and Internal Analysis Aligning BU Strategy Executing Strategy
Process steps for Set of Discussion Planning dialogue Central and Companywide
Key upcoming cycle assumptions of strategic between corporate BU budget e-mails on strategy
Outputs about external alternatives and BU head targets created objectives
Evaluation of trends and communicated
previous year’s threats Presentation Hiring and Dashboards
performance; of strategic BU develops redefinition created and
lessons learned Evaluation plan to board individual plan in of employee monitored
of internal line with corporate roles/
Preplanning competencies goals responsibilities Strategy
dialogues responsibilities
between BU BU adjusts plans cascaded down
heads and center based on center’s the line
input
Presentation of BU
strategic plan to
the board
1 Establishing Process Internal/External Defining Formulating Communicating
Budgeting
Guidelines Analysis Corporate Strategy BU Strategy the Plan
Stage 1—Establishing Process Guidelines

Objective: Document lessons learned, organizational goals,
planning process steps and responsibilities.
Input Activities Output

• Preview year’s workplan • Review of previous year’s • Evaluation of performance
and strategy results in preparation against strategy, highlighting
preplanning lessons learned and
• Overall and BU–specific
critical gaps
financial results for previous • Overall mission/strategic
two years objective reviewed • Workplan (process steps
for upcoming planning cycle)
Milestones Sample Tools and Approaches

Preplanning dialogue between BU Business
Units
Strategy Planning Process Design
May
“Run the Business” Strategy Development Process
• BU Strategy
July August
• BU Strategy Board • Update/review 3

Meeting/Workshop presentation
• Update strategic
tactical objectives
• Update/review
October November
Process Design
plans and objectives 5-year financial
and Center
• Update key projection (if
technical strategic needed after annual
initiatives budget is prepared)
Corporate • Kick-off planning • Update 5-year • Consolidate
process with financial projection 5-year plan
business units • Partner business
• Provide standard unit leader and
tools, templates facilitate strategy
development
• Facilitate strategic
process; provide
standard strategy
toolkit to simulate
strategic insights
Milestones • BU strategy • BU Strategy Board • Publish 5-
*
meeting/workshop Reviews year “Run the
Palladio Corporation Business” Plan
Meeting between strategist and senior

* Pseudonym.
Clarifying Strategic Planning Responsibilities
executives to discuss previous year’s

Organizational Requirements For Business Strategy
Business Strategy Components Strategy Organization Role

Process External Industry Internal
Analysis • Reality • Competitive • Performance • Support SBU on demand with • Advise SBU continuously on
testing analysis analysis Fact packs for Business Strategy formulation SBU Competitiveness and best practices
• World best • Value driver Strategic models
practice analysis Management cockpit
• Financial
Responsibilities Chart
analysis
Design • Strategy formulation (strategic workshops) • Support SBU on demand with • Advise OCE on
• Target setting Facilitation of Business Strategy workshops Decisions regarding identified strategic issues
SBU target setting Functional guidance on strategy and
performance and pitfalls to avoid

Strategy documentation operations improvement
Planning • Planning • Support OCE by • Maintain
• Scheduling Ensuring SBU complies with requirements in Archive of business planning documentation
• Prioritizing the planning process
• Resource allocation • Support SBU with
• Budget Guidelines, templates, and relevant information
(i.e., assumptions, calendar, etc.)
Approval • Strategy presentation to OCE • Support OCE by • Maintain
• Budget presentation to OCE SBU strategy and budget acceptance for Archive of business planning documentation
approval
• Support SBU with:
Guidelines, templates, and relevant information
Implementation • Execution • Support OCE by • Maintain
• Quarterly Performance Review SBU strategy and budget acceptance for Archive of business planning documentation
approval

Strategy Planning Process Design
“Run the Business” Strategy Development Process
May July August October November

Business • BU Strategy • BU Strategy Board • Update/review 3
Units Meeting/Workshop presentation tactical objectives
• Update strategic • Update/review
plans and objectives 5-year financial
• Update key projection (if
technical strategic needed after annual
initiatives budget is prepared)
Corporate • Kick-off planning • Update 5-year • Consolidate
process with financial projection 5-year plan
business units • Partner business
• Provide standard unit leader and
tools, templates facilitate strategy
development
• Facilitate strategic
process; provide
standard strategy
toolkit to simulate
strategic insights
Milestones • BU strategy • BU Strategy Board • Publish 5-year
*
meeting/workshop Reviews “Run the
Palladio Corporation Business” Plan
* Pseudonym.
Clarifying Strategic Planning Responsibilities
Organizational Requirements For Business Strategy
Business Strategy Components Strategy Organization Role

Process External Industry Internal
Analysis • Reality • Competitive • Performance • Support SBU on demand with • Advise SBU continuously on
testing analysis analysis Fact packs for Business Strategy formulation SBU Competitiveness and best practices
• World best • Value driver Strategic models
practice analysis Management cockpit
• Financial
analysis
Design • Strategy formulation (strategic workshops) • Support SBU on demand with • Advise OCE on
• Target setting Facilitation of Business Strategy workshops Decisions regarding identified strategic issues
SBU target setting Functional guidance on strategy and
Strategy documentation operations improvement
Planning • Planning • Support OCE by • Maintain
• Scheduling Ensuring SBU complies with requirements in Archive of business planning documentation
• Prioritizing the planning process
• Resource allocation • Support SBU with
• Budget Guidelines, templates, and relevant information
(i.e., assumptions, calendar, etc.)
Approval • Strategy presentation to OCE • Support OCE by • Maintain
• Budget presentation to OCE SBU strategy and budget acceptance for Archive of business planning documentation
approval
Implementation • Execution • Support OCE by • Maintain
• Quarterly Performance Review SBU strategy and budget acceptance for Archive of business planning documentation
approval

Establishing Process 2 Internal/External Defining Formulating Communicating
Budgeting
Stage 2—Internal/External Analysis

Objective: Determine external environment implications and internal competencies
to create consensus on assumptions, trends, and viable strategy alternatives.

• Recent Survey data • Collect and review data on • Preliminary list of strategic
industry trends alternatives
• Input from external
consultants • Conduct and coordinate • Set of assumptions about
external market research internal strengths and
• Industry/market analysis
weaknesses and external
• Scenario planning
trends

Briefing book on analysis sent
Business Environment
to senior management
Summary
Summit on business outlook Driving Force Analysis
Driving Forces Defined
“Driving forces are the fundamental root causes of issues a company needs to address—economic,
technological, organizational, demographic, competitive and regulatory factors in a company’s
environment that either constitute threats or create opportunities. Clearly expressed, they make
explicit the assumptions key employees have about the problems and opportunities a company faces.”
Professor Clayton M. Christensen
Harvard Business School
Driving Force Analysis

Driving Forces in the World Injectable Drugs Market
Wexler Company*—U.S.-Based Global Pharmaceutical Firm
Competitive Technological
Competitor using cash flow from international markets Impact of new orally administered treatments on
to fund initiatives “in-play” in the United States existing core injectable product line
Organizational Regulatory
Primary decision making regarding treatment Strategic Issues Drug approval processes becoming less
options moving away from traditional Threats and antagonistic, more cooperative and more
marketing channel contacts (i.e., specialists) Opportunities partnership-oriented
to third-party payers and primary physicians
Demographic Economic
Increased longevity, improved diagnostic capabilities, Presence of treatment on third-party payer approved
adoption of western dietary habits will increase list determines consumer willingness to pay premium
treatment demand for convenience
* Pseudonym, case disguised.

Driving Force Analysis
Driving Forces Defined
“Driving forces are the fundamental root causes of issues a company needs to address—economic,
technological, organizational, demographic, competitive and regulatory factors in a company’s
environment that either constitute threats or create opportunities. Clearly expressed, they make
explicit the assumptions key employees have about the problems and opportunities a company faces.”
Professor Clayton M. Christensen
Harvard Business School
Driving Forces in the World Injectable Drugs Market

Wexler Company*—U.S.-Based Global Pharmaceutical Firm
Competitive Technological
Competitor using cash flow from international markets Impact of new orally administered treatments on
to fund initiatives “in-play” in the United States existing core injectable product line
Organizational Regulatory
Primary decision making regarding treatment Strategic Issues Drug approval processes becoming less
options moving away from traditional Threats and antagonistic, more cooperative and more
marketing channel contacts (i.e., specialists) Opportunities partnership-oriented
to third-party payers and primary physicians
Demographic Economic
Increased longevity, improved diagnostic capabilities, Presence of treatment on third-party payer approved
adoption of western dietary habits will increase list determines consumer willingness to pay premium
treatment demand for convenience
* Pseudonym, case disguised.
Establishing Process Internal/External 3 Defining Formulating Communicating
Budgeting
Stage 3—Defining Corporate Strategy

Objective: Achieve consensus on corporate goals by reviewing historical, peer,
and market growth. Align specific targets to the appropriate strategy alternative.

• Evaluation of performance • Center reevaluates the • Determination of initial
against strategy marketplace company’s core competencies growth targets
and examines opportunities
• Preliminary set of strategic • Overall strategic plan
for growth
alternatives with goals
• Center examines business
• Mission statement review • Template and tools for
portfolio BU guidance
• Presentation of plan to Board
of Directors

Presentation of strategic plan Core Transformation
Growth Strategy Matrix
New Business Creation
Growth Strategy
Introducing an unfamiliar business system Adding to the core business by entering
that delivers more effective growth within an adjacent industry space using an
the existing industry. unfamiliar business system.
to the Board of Directors Business System

• Pricing Model
• Value Chain Structure
• Leveraged Technology
• Applied Intellectual
Property
New
Core
Transformation
New Business
Creation
Matrix
• Brand Attributes Existing
Core Value Adjacency
• Employee Skill Set Maximization Extension
Existing New
Core Value Maximization Industry Adjacency Extension

Investing resources in the existing • Customer Base Pursuing sales opportunities in an
business system and industry. • Competitor Set unfamiliar industry space that leverages
• Product Offerings strengths of the existing business system.
Presentation to BUs of plan

and discussion on ways to
Setting Goals
Methodologies by Which Participants Set Planning Goals
General
Methodology Possible Formats
• Benchmarking versus companies of similar size in similar industries
Benchmarking
• Benchmarking with a peer group of companies
• Ambition to reach or remain in a certain peer group of companies
Ambition
Setting Goals
• Ambition to gain or retain the leading position in current markets
meet objectives
Analysis of markets • Anticipation of major economic or market developments
or macroeconomic
trends • Methods vary depending upon market situation and other external variables
• Examination of business projections given current strengths
• Ad-hoc discussion of long-term goals over the course of the year
Business line
• Assessment of objectives necessary for the coming year or years
partnership or
internal analysis • Negotiation with business units concerning their assessments of appropriate goals
• Determination by business unit management; “Healthier businesses tend to set
bold, more creative goals”
Tradition or desire to
meet predetermined • A predisposition towards certain performance measures stemming from the
goals, set by board of corporation’s culture—essentially, an historical preference
directors, charter, • Certain levels of profitability, market share, ROI or other traditional measures
or long-term plan

Growth Strategy Matrix
Core Transformation New Business Creation
Introducing an unfamiliar business system Adding to the core business by entering
that delivers more effective growth within an adjacent industry space using an
the existing industry. unfamiliar business system.
Business System
New
Core New Business
• Pricing Model
Transformation Creation
• Value Chain Structure
• Leveraged Technology
• Applied Intellectual
Property
• Brand Attributes Existing
Core Value Adjacency
• Employee Skill Set Maximization Extension
Existing New
Core Value Maximization Industry Adjacency Extension

Investing resources in the existing • Customer Base Pursuing sales opportunities in an
business system and industry. • Competitor Set unfamiliar industry space that leverages
• Product Offerings strengths of the existing business system.

Setting Goals
Methodologies by Which Participants Set Planning Goals
General
Methodology Possible Formats
• Benchmarking versus companies of similar size in similar industries
Benchmarking
• Benchmarking with a peer group of companies
• Ambition to reach or remain in a certain peer group of companies
Ambition
• Ambition to gain or retain the leading position in current markets
Analysis of markets • Anticipation of major economic or market developments
or macroeconomic
trends • Methods vary depending upon market situation and other external variables
• Examination of business projections given current strengths
• Ad-hoc discussion of long-term goals over the course of the year
Business line
• Assessment of objectives necessary for the coming year or years
partnership or
internal analysis • Negotiation with business units concerning their assessments of appropriate goals
• Determination by business unit management; “Healthier businesses tend to set
bold, more creative goals”
Tradition or desire to
meet predetermined • A predisposition towards certain performance measures stemming from the
goals, set by board of corporation’s culture—essentially, an historical preference
directors, charter, • Certain levels of profitability, market share, ROI or other traditional measures
or long-term plan

Establishing Process Internal/External Defining 4 Formulating Communicating
Budgeting
Stage 4—Formulating BU Strategy

Objective: Compose BU plan that incorporates product and customer analysis to
propose growth strategy alternatives and align BU activities to corporate objectives.

• Strategic planning • Center works with individual BUs to • Individual strategic
tools and templates develop BU-specific targets and goals and operational BU
plans
• BU strategic and • Center compares BU plans to
operational plans corporate strategy for major • Adjusted BU plans
discrepancies and adjusts accordingly based on Center’s
• Center-defined target
recommendations
and goals • Presentation to the Center for
approval

BU presentation of plan to center Business Unit Strategy Building Blocks Template
Strategy “Building Blocks”
Sample Questions and Planning Outputs
Business Unit Strategy

Planning Outputs
1 Aspirations • Revenue
• What are specific business unit aspirations in terms of market leadership, share, penetration, • Operating margin
customer loyalty, and brand image? • Earnings growth
• Three years from now, why are you the company of choice for your various customer groups? • Industry-specific metrics
2 Where to Play
• Customer segments
• In three years, how will your customer base change? What types of customers will you gain or lose? • Geographic areas
• In which specific markets will you play? In which markets will you not play? • Product types
• How will the types and mix of products be different from today? • Distribution channels
• How will distribution channels differ?
Question Template
3 How to Win • Value proposition to
• What are specific features of your future products? How do these differ from today? target customers
• How do your major competitors look in three years? In which areas are they dominant? Are there • Sources of competitive
“white spaces”? advantage
4 Capabilities Required for Success
• Functionalities
• In which core capabilities must you excel, compared to your competitors?
• Critical competencies
• What processes or functionalities are necessary in three years, but currently present to a lesser
• Required investments
degree, or absent altogether?
5 Performance Management Systems Required • Metrics to judge success
• How will you measure success in creating value for the customer? • Reward systems
• What incentive programs are necessary to promote this value creation? • Feedback mechanisms
Architecting a Good Strategic Conversation

Who • CEO and BU head What • Mid- to long-term strategy
Strategy Discussion
• Other principal decision • Fact-based analysis
makers, typically:
• Not
– CFO
– Short-term financial
– Group or division head
performance
– HR head
– Annual operating planning
– Top BU leaders
– Budgeting or investment
• Head of strategy as owner decision making
of process – All discussed elsewhere
• 6–12 total, must be capable
of real discussion
How • Intense BU-owned
Guidelines
preparation
• Supported by strategy group;
Where • BU site if possible but not overly “templated”
• Mandatory prereading
• Real discussion, not “dog
May
When • Annually—timing linked to and pony” slide show
overall corporate calendar • Constructive challenge,
• Half- to full-day per BU not “gotcha”

Business Unit Strategy Building Blocks Template
Strategy “Building Blocks”
Sample Questions and Planning Outputs
Planning Outputs
1 Aspirations • Revenue
• What are specific business unit aspirations in terms of market leadership, share, penetration, • Operating margin
customer loyalty, and brand image? • Earnings growth
• Three years from now, why are you the company of choice for your various customer groups? • Industry-specific metrics
2 Where to Play
• Customer segments
• In three years, how will your customer base change? What types of customers will you gain or lose? • Geographic areas
• In which specific markets will you play? In which markets will you not play? • Product types
• How will the types and mix of products be different from today? • Distribution channels
• How will distribution channels differ?
3 How to Win • Value proposition to
• What are specific features of your future products? How do these differ from today? target customers
• How do your major competitors look in three years? In which areas are they dominant? Are there • Sources of competitive
“white spaces”? advantage
4 Capabilities Required for Success
• Functionalities
• In which core capabilities must you excel, compared to your competitors?
• Critical competencies
• What processes or functionalities are necessary in three years, but currently present to a lesser
• Required investments
degree, or absent altogether?
5 Performance Management Systems Required • Metrics to judge success
• How will you measure success in creating value for the customer? • Reward systems
• What incentive programs are necessary to promote this value creation? • Feedback mechanisms
Architecting a Good Strategic Conversation
Who • CEO and BU head What • Mid- to long-term strategy
• Other principal decision • Fact-based analysis
makers, typically:
• Not
– CFO
– Short-term financial
– Group or division head
performance
– HR head
– Annual operating planning
– Top BU leaders
– Budgeting or investment
• Head of strategy as owner decision making
of process – All discussed elsewhere
• 6–12 total, must be capable
of real discussion
How • Intense BU-owned preparation
• Supported by strategy group;
but not overly “templated”
Where • BU site if possible
• Mandatory prereading
• Real discussion, not “dog
and pony” slide show
May
When • Annually—timing linked to • Constructive challenge,
overall corporate calendar not “gotcha”
• Half- to full-day per BU

Establishing Process Internal/External Defining Formulating 5 Budgeting
Communicating
Stage 5—Budgeting
Objective: Determine Corporate and BU budgets
to align resource allocation to strategic priorities.

• Final corporate and BU • Center and BU determine • Central budget and BU
operational and strategic budgeting cycle individual operating budgets
plans created
• Finance and Strategy interact
• Previous year’s targets to negotiate targets
and budgeting plan and allocations
• Center allocates total
budget to BU

Budget created • Budget allowance set at the
top with no participation
Budgeting Structures
The three principal methods used to prepare budgets are top–down, bottom–up,
and negotiated, each determining the input and participation levels from budget holders
Attributes Budget Styles Strengths and Weaknesses
Sets clear and directive targets

Budgets more likely to align with
from the ultimate budget Top– long-term strategic priorities
holders in the budgeting Down
process (“Imposed Buy-in can become an issue if budget
Budgeting”) holders feel targets are unrealistic
• Combines elements of the other Consolidates knowledge spread across

two more extreme styles divisions
• Budget allowances created Negotiated Inclusive planning process improves
on the basis of negotiations communication between managers
between budget holders and Time-consuming process
those to whom they report
• All budget holders Involvement can positively motivate

participate in setting their budget holders
own budgets Participation facilitates cooperation,
Bottom–Up (“Participative Budgeting”) avoiding silos
Mid/junior-level budget holders lack
budgeting expertise and strategic
vision
Allows unmotivated budget holders to
build slack into their budget allowance
Budgeting Timeline Variations

Hypothetical Schedule of Relationship Between Cycles
1
Jan
Budgeting Cycle
Planning Cycle
1
Jun
2 3
Dec
Time of start depends on the following factors:

• Length of cycle and anticipated time needed until
presentation to board of directors
Budgeting Timeline
Variations
• Seasonal nature of business, and therefore the
availability of seasonal data
2 Length of cycle varies according to the
following factors:
• Number of iterations
• Complexity of organization (e.g., number of SBUs)
3 End of cycle, typically coinciding with
presentation to the board of directors

The three principal methods used to prepare budgets are top–down, bottom–up,
and negotiated, each determining the input and participation levels from budget holders
Attributes Budget Styles Strengths and Weaknesses
• Budget allowance set at the Sets clear and directive targets

top with no participation from
Budgets more likely to align with long-
the ultimate budget holders in Top– term strategic priorities
the budgeting process Down
(“Imposed Buy-in can become an issue if budget
Budgeting”) holders feel targets are unrealistic
• Combines elements of the Consolidates knowledge spread across

other two more extreme styles divisions
• Budget allowances created Negotiated Inclusive planning process improves
on the basis of negotiations communication between managers
between budget holders and
Time-consuming process
those to whom they report
• All budget holders participate Involvement can positively motivate

in setting their own budgets budget holders
Participation facilitates cooperation,
Bottom–Up (“Participative Budgeting”)
avoiding silos
Mid/junior-level budget holders lack
budgeting expertise and strategic vision
Allows unmotivated budget holders to
build slack into their budget allowance

Budgeting Timeline Variations
Hypothetical Schedule of Relationship Between Cycles
Budgeting Cycle 1
Planning Cycle 2 3
Jan Jun Dec
1 Time of start depends on the following factors:

• Length of cycle and anticipated time needed until
presentation to board of directors
• Seasonal nature of business, and therefore the
availability of seasonal data
2 Length of cycle varies according to the
following factors:
• Number of iterations
• Complexity of organization (e.g., number of SBUs)
3 End of cycle, typically coinciding with
presentation to the board of directors

Establishing Process Internal/External Defining Formulating 6 Communicating
Budgeting
Stage 6—Communicating the Plan

Objective: Increase commitment to strategic plan execution by communicating and
cascading strategic objectives and responsibilities throughout the organization.

• Final corporate and BU Communicating
• Strategic and Executing Strategy • Companywide e-mails
plans communicated
strategic plan to BU and staff through and/or voicemails
meetings, memos, and
• Next year’s budgets • Strategic dashboard updated
workshops to monitor progress toward
• Center adjusts incentives strategic and financial goals
to reward employees for
performance

Strategy shifts communicated Guarding Against Mixed Messages
Illustrative Communications Documents Cascading Strategy Communication
Strategy Communication
EVP Sales to
Core Message Document
Divisional VP
1. Become the most admired growth
company in America
• Seven years of remarkable growth
• Time to move to the next level Divisional VP to
• Evolution based on RadioShack’s Regional Sales
core principles, strategy Managers
2. Realigning organization to heighten
our already intensely customer-
focused culture Regional Sales
• Become a multichannel sales/ Managers to District
Cascade
service company Sales Managers
• Expand customer base
District Sales
Managers to Store
Managers
Store Manager to
Frontline Staff
Monitoring Strategy
Balanced Scorecard
Goals/Targets Strategic Deliverables Outcomes May June July Comments
Achieve business unit revenue

Financial Revenue of $X M
targets
Grow the Deliver operations efficiency
Cost Reductions of $X M
Balanced Scorecard
Business targets
Profitably
Achieve earnings targets Earnings of $X M
Customer Continue to strengthen Improve Customer Satisfaction

Increase Focus customer satisfaction by X%
on Customer Implement strategy initiatives
See following page
Needs as planned
Delivery Maintain Product X best-in- Line of Business A: XX%

Service class delivery, and progress Line of Business B: XX%
Exceed Industry Product Y toward industry
Service Levels levels Line of Business C: XX%
Employee Expand sales force by X%, and

Invest in frontline resources
Continue to deliver sales training to 100%
Strengthen
Continue to increase Improve employee satisfaction
Employee
employee satisfaction by X%
Engagement

Guarding Against Mixed Messages
Illustrative Communications Documents Cascading Strategy Communication
EVP Sales to
Divisional VP
Core Message Document Divisional VP to

Regional Sales
1. Become the most admired growth
Managers
company in America
• Seven years of remarkable growth
• Time to move to the next level
• Evolution based on RadioShack’s Regional Sales
core principles, strategy Managers to District
2. Realigning organization to heighten Sales Managers
our already intensely customer-
focused culture
• Become a multichannel sales/ District Sales
service company Managers to Store
• Expand customer base Managers
Store Manager to
Frontline Staff

Monitoring Strategy
Balanced Scorecard
Goals/Targets Strategic Deliverables Outcomes May June July Comments
Achieve business unit revenue

Financial Revenue of $X M
targets
Grow the Deliver operations efficiency
Business Cost Reductions of $X M
targets
Profitably
Achieve earnings targets Earnings of $X M
Customer Continue to strengthen Improve Customer Satisfaction

Increase Focus customer satisfaction by X%
on Customer Implement strategy initiatives
See following page
Needs as planned
Delivery Maintain Product X best-in- Line of Business A: XX%

Service class delivery, and progress Line of Business B: XX%
Exceed Industry Product Y toward industry
Service Levels levels Line of Business C: XX%
Employee Expand sales force by X%, and

Invest in frontline resources
Continue to deliver sales training to 100%
Strengthen
Continue to increase Improve employee satisfaction
Employee
employee satisfaction by X%
Engagement

Lessons to Guide You
Conducting Defining Corporate Formulating Communicating
Designing the
External Strategy and and Aligning Budgeting and Executing
Planning Process
Analysis Setting Targets BU Strategy Strategy
Overview of the Introduction Redefining the Identifying Budgeting Implementing

Planning Process to Scenario Corporate Mission Growth Strategy Drivers and a Strategy
Planning Alternatives Concepts Communication
Designing Setting BU Workshop
an Effective Analyzing Growth Targets Defining the Principal
Planning Process Industry Business Budgeting Ensuring Cross
Driving Forces Model Methods Business
Designing a Alignment
Robust BU Assessing Aligning M&A Funding Growth
Planning Competitive Strategy with Projects Using Hoshin
Template Disruptions BU Strategy Kanri for
Strategic Plan
Continuous Deployment
Strategic
Planning Models

Sources
p 9: Duke Energy Corporation; Marakon Associates; Working Council for Chief Financial Officers research.
p.10: Christensen, Clayton M., Making Strategy: Learning by Doing, Harvard Business Review (November/December 1997):
141156; Wexler Company; Corporate Strategy Board research.

Corporate Executive Board
Washington, D.C. • Chicago • San Francisco • London • New Delhi • Sydney
w w w.executiveboard.com
CSB19GDVQL

Strategic Planning Process Overview and Talking Points

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Strategic Planning Process Overview and Talking Points

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Washington, D.C.

• London • New Delhi • Chicago

San Francisco • Scottsdale • West Chester • Sydney

The Corporate Executive Board: What the Best Companies Do

High-Quality Insight Intelligent Networking Execution Support

Benchmarking Peer-to-Peer Online

Make Better-Informed Decisions Get Answers Quickly Execute Faster

Strategy, Procurement, and Finance Membership Programs

McKinsey Quarterly Survey

Almost 60% of executives in a

Conducting External and Internal Analysis

Formulating Corporate Strategy and Target Setting

Creating and Aligning BU Strategy

Communicating Strategic Plans

CSB19GDVQL © 2008 Corporate Executive Board. All Rights Reserved. 3

Establishing Process Defining

Stage 1—Establishing Process Guidelines

Input Activities Output

Milestones Sample Tools and Approaches

• BU Strategy Board • Update/review 3

Meeting between strategist and senior

Clarifying Strategic Planning Responsibilities

executives to discuss previous year’s

Business Strategy Components Strategy Organization Role

performance and pitfalls to avoid

CSB19GDVQL © 2008 Corporate Executive Board. All Rights Reserved. 5

May July August October November

Business Strategy Components Strategy Organization Role

CSB19GDVQL © 2008 Corporate Executive Board. All Rights Reserved. 7

Stage 2—Internal/External Analysis

Input Activities Output

Milestones Sample Tools and Approaches

Driving Force Analysis

CSB19GDVQL © 2008 Corporate Executive Board. All Rights Reserved. 8

Driving Forces in the World Injectable Drugs Market

Stage 3—Defining Corporate Strategy

Input Activities Output

Milestones Sample Tools and Approaches

to the Board of Directors Business System

Core Value Maximization Industry Adjacency Extension

Presentation to BUs of plan

CSB19GDVQL © 2008 Corporate Executive Board. All Rights Reserved. 11

Core Value Maximization Industry Adjacency Extension

CSB19GDVQL © 2008 Corporate Executive Board. All Rights Reserved. 12

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Stage 4—Formulating BU Strategy

Input Activities Output

Milestones Sample Tools and Approaches

Business Unit Strategy

Architecting a Good Strategic Conversation

CSB19GDVQL © 2008 Corporate Executive Board. All Rights Reserved. 14

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Input Activities Output

Milestones Sample Tools and Approaches

Sets clear and directive targets

• Combines elements of the other Consolidates knowledge spread across

• All budget holders Involvement can positively motivate

Budgeting Timeline Variations

Time of start depends on the following factors:

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• Budget allowance set at the Sets clear and directive targets

• Combines elements of the Consolidates knowledge spread across

• All budget holders participate Involvement can positively motivate

CSB19GDVQL © 2008 Corporate Executive Board. All Rights Reserved. 18