Strategic planning

Table of contents
By Omar Abisaí Coronado Mondragón 2
The development Process: general overview
The art and science of developing a strategic planning
Engaging people
Enabling steps
Program launch
The nine steps
Assessment
Strategy
Objectives
Strategy map
Performance measures
Strategic initiatives
Enabling steps
System rollout
The nine steps
Performance analysis
Alignment
Evaluation
Sustaining and managing the planning process and balanced scorecard

The development process: general overview
Developing a scorecard and strategic planning system includes the following essential components:
• Organization assessment
• Strategy formulation and selection
• Strategy communication
• Budget formulation
• Operating planning
• Executing strategy through the operating plan
• Measuring and analyzing results
• Evaluation and incorporating learning into successive plans
This process is captured in 9 steps.

External
Analysis
Internal
Analysis
Assess the
Organization Formulate Strategy Communicate Strategy
Formulate
Budget
Develop Operating Plan
Execute Strategy and Measure Results
• Vision
• Mission
• Core values
• Policies and governance
• Strategic goals
• Business Strategy
• Risks
Vision, Mission, Values and
Strategy plus:
• Strategic objectives and
Strategy map
• Performance measures and
targets
• Strategic iniciatives
• Change managmenet
• Risk management
• Department and Unit
plans
• Resource commitments
• Operational measures and
targets
• Program, projects,
activities and tasks
• Performance analysis
• Benchmarking
• Implement change
• Continuous improvement
The following flow illustrates the major components of an integrated strategic planning and
management system and how they works together.

The wheel emphasizes the connection among the steps and indicates a continuous process for
completing them.
Assessment
Strategy
Objtectives
Strategy map
Performance
measures
Initiatives
Performance
analysis
Alignment
Evaluation
1
2
3
4
56
7
8
9
Programm launch
System rollout
Financial Customers
Organizational
capacity
Internal porcess
Misson
Vision

Relationship among the nine steps and the essentials components of strategic planning and
management.
Components Steps
Assess the organization Program launch
Step 1: Assessment
Formulate strategy Step 2: Strategy
Step 3: Objectives
Communicate strategy Step 4: Strategy map
Step 5: Performance measures
Step 6: Strategic initiatives
Scorecard rollout
Formulate budget Scorecard rollout
Develop operating plans Scorecard rollout
Step 8: Alignment
Execute strategy
Measure results
Analyse results
Step 7: Performace analysis
Step 9: Evaluation
Apply learning Repeat steps 1 through 8 as required

The following example shows an organizational strategic plan synopsis.
Reduce
cost
Increase
profitFinancial
Customers
Internal
process
Organizational
capacity
Increase
revenue
Improve
customer
experience
Increase
awareness as
industry
leader
Improve
internal
efficiency
Increase
Acquisitions
Improve
product and
service
offerings
Increase
consulting
knowledge
Increase
employee
expertise
Optimize
technology
Optimize
human
capital
Improve
throught
leadership
- Profit
- Operating cost
- Revenue
- Customer experience
survey score
- % of customers with
completed CK charter
- References in media
- Efficiency index
- EBIT from acquisitions
- % of transactions in
CRM
- % new products and
services as % total sales
- % employee
development plans
- % systems automated
- Articles published
- 15% per year
- 15 M this year
- 5% per year
- 5% improvement in
next period
- 77% per period
- 15 new references
- 65% per period
- 7% per year
- 70% this year
- 11% this year
- 45% next period
- 69% this year
- 90 this year
- Implement new
financial systems
- Marketing campaign
in new markets
- Develop customer
knowledge CK charter
- Establish acquisition
integration team
- Establish BPR team
- Formalize new
product development
cycle
- Redisign employee
certification process
- CRM system training
- Formalize research
expertise
+ Integrity + Commitment to Excellence + Customer Focused + Honesty + Teamwork
Strategic objectives and Strategy map Measures Targets Initiatives
Strategic theme
Mission
Vision
+ International growth + Operational excellence + Market leadership
Efficiently delivery the highest standar of service providing energy products and expertise to customers
Be a world-revolutionizing provider of energy products
Strategic Result Increase in size and
shareholder value
Processes are executed in time
and cost-effective manner
Worldwide recognition for thought
leadership and energy service expertise

Engaging people
The process of building and implementing a Balanced Scorecard system is a change initiative that
affects existing organization systems, technology and people. Change management is an
important component of developing the scorecard system.
Effective change management involves:
• Understanding and managing the impacts on affected people.
• Involving the right stakeholders in planning for and implementing change.
• Communicating in two-way dialogue with individuals and groups.
• Supporting stakeholders with knowledge, capacity-building and reinforcement.

Engaging people
The key change management requirements by engaging a diverse group in the planning process
to maximize buy-in and create a more actionable strategic plan. Instead of being pawns who
need to be “change managed” employees are actively involved in the planning process and
become ambassadors for the new directions.
The following are key components of change:
• Vision
• Actionable strategy
• Capabilities
• Incentives (motivation and engagement)
• Resources
• Urgency

Engaging people
The following figure illustrates the components of change management and how a missing
component can lead to confusion, false starts, anxiety, restraint and resistance, frustration or
apathy.
Vision
Vision
Lacking
Vision
Vision
Vision
Vision
Vision
Actionable
strategy
Actionable
strategy
Actionable
strategy
Lacking
Actionable
strategy
Actionable
strategy
Actionable
strategy
Actionable
strategy
Capabilities
Capabilities
Capabilities
Capabilities
Lacking
Capabilities
Capabilities
Capabilities
Incentives
Incentives
Incentives
Incentives
Incentives
Laking
Incentives
Incentives
Resources
Resources
Resources
Resources
Resources
Resources
Lacking
Resources
Urgency
Urgency
Urgency
Urgency
Urgency
Urgency
Urgency
Lacking
Succes
Confusion
False starts
Anxiety
Restraint
and
resistance
Frustration
Apathy

Building an implementing a strategic planning and scorecard is part art and part science.
The art part is the human creativity and innovation enabled by management system that´s focused on
the most important things. The art par also includes communication and change management.
The science part is the strategic thinking that develops and connects the necessary elements into an
integrated system for planning and managing more strategically. The science part also includes the
discipline applied to developing a scorecard system.
There is 14 pieces called the strategic elements that comprise the strategic planning and scorecard
system.
Mission Vision Core values Customer needs
Customer value
proposition
Internal and
external
challenges and
enablers
Perpectives
Strategic themes
and results
Strategic
objetives
Strategy maps
Performance
measures,
targets and
thresholds
Strategic
initiatives
Business and support unit scorecard (Tier 2)
Individual and team scorecards (Tier 3)

Combining the 14 elements into a scorecard planning and management system, and using that to
create a high-performance organization, is like building a house: the right pieces have to come
together at the right moment and the right craftspeople have to assemble the pieces correctly.
• High level strategic elements form the roof
• Strategic results are the lintel elements supporting the roof
• Strategic themes are load-bearing walls supporting the lintel
• Perspectives are represented by four floors
• Critical success enablers form the foundation
Strategic results
Engaged people – Interactive communications – Core values
Mission
Vision
Customer value
Theme:
Operationalexcellence
Theme:
Strategicpartnering
Theme:
Serviceexcellence
Theme:
Culturechange
Financial
Customer
Internal process
Organizational capacity
Perspectives

The strategic framework cascades throughout the organization to create alignment among people,
processes and systems to connect to the high-level strategy. The are three Tiers:
• Tier 1: represents the full organization; the scorecard system at this level includes mission, vision,
enablers and challenges, customer value proposition, strategic themes and results, strategy map,
measures and strategic initiatives for the whole organization.
• Tier 2: represents business and units; the system includes strategic objectives, strategy map,
measures and initiatives for each unit.
• Tier 3: consist of individual employees or teams; the system includes personal objectives,
measures and activities for each position.
Alignment (the process is called cascading) comes from linking the components in order to
communicate how value is created for customers, at the enterprise level and later, at the business
units and individual employee levels.

The nine steps
The following figure shows the relationship between the 9 steps and the enabling steps.
Executive
sponsorship,
Resourcing and
program planning
Program Launch
Conduct
organizational
assessment and
SWOT
Create or re-evaluate
strategic elements
(Vision, misión,
customer value, etc.)
1 Assessment
Develop high-level
business strategies from
step 1 strategic elements
2 Strategy
3 Objectives
Develop strategic objectives
for business strategies
developed in Step 2
6 Strategic Iniciatives
4 Strategy Map
Create strategy maps for
business strategies and for the
Enterprise overall strategy
5 Performance measures
Develop outcome and ouput
performance measures for the
strategic objectives on the Enterprise
strategy map
Identify critical
projects to improve
performance
Develop performance measures
for initiatives (Scope, Schedule,
Resources, etc.)
Manage the
project portfolio
System rollout
Strategic
manafgement
system
rollout
Budget
formulation and
anual planning
Collect, report and present
performance information to
decisión makers
7 Performance analysis
Cascade
organization-wide
strategy to business
and support units
Cascade
strategy to
teams and
individuals
8 Aligment
Make corrections to
strategy based on
actual performance
9 Evaluation

Enabling steps: Program launch
In program launch, the executive management team plans the overall program. The role of senior
leaders is to stay engaged during this transformative initiative and to lead by example. The quality of
leadership in this period determines the success and sustainability of the scorecard system over the
long term.
The Program launch includes five components:
• Create sponsorship and engaged leadership.
• Resource the effort.
• Plan the program.
• Facilitate development.
• Launch the change management and communication process.

The nine Steps: Assessment
Assessment is a structured way to exploring forces, trends, opportunities and threats in the external
and internal environment, it conducts to review how the organization´s products and services meet
the customer and other stakeholders needs.
The assessment step starts with existing elements, building on what´s currently in place. This step
must be owned by the senior leadership team and starts the process of engagement throughout the
strategy development process.
There are three components in this step:
• Review existing high-level strategic elements (mission, vision, core values, customer value
proposition and plans) for adequacy.
• Conduct an environmental scan and market research.
• Develop or re-validate high-levels strategic elements.
The Assessment step outputs are the following:
• Strategy gap matrix
• PESTLE and SWOT analysis
• Mission, Vision and Core Values statements
• Strategic Management Maturity Model (SMMM) assessment
• Culture assessment
• Customer and stakeholder identification and analysis

The nine Steps: Strategy
It is necessary to define first the “strategy” concept: Strategy is the positioning choices (the path) and
actions (the plan) to move the organization from its current state to some desirable future state.
Strategy translates the mission and vision into programs, products, projects, services and activities
than can be acted upon, monitored, measured and evaluated for effectiveness.
The elements developed in the strategy step are formed through strategic thinking. There are many
ways of getting from a current state to a desirable future state, so making choices is the essence.
A strategy is developed and executed to lead to desired strategic results. A strategic result describes
something that must be achieved to be successful.
This step includes six components, but not every organization will use them all:
• Conduct scenario planning.
• Develop or change the customer value proposition.
• Develop or change strategy profile.
• Choose balanced scorecard perspectives.
• Choose high-level strategic themes and results.
• Incorporate new change management planning into strategy development.

The nine Steps: Strategy
The Strategy step outputs are the following:
• Customer and stakeholder needs
• Customer value proposition described
• Plausible scenarios developed
• Strategic risk identified
• Risk management plan developed
• Perspectives selected
• High-level strategic themes and strategic results developed
• Strategy profile developed
• Change management plan tied to strategic development

The nine Steps: Objectives
The strategic objectives make strategy actionable. They are described, documented, measured and
made actionable through initiatives and operational process.
At the corporate or enterprise level, strategic objectives identify the key continuous improvement
activities that are necessary to be successful and accomplish the vision and achieve the mission. At
the business and support units level, they identify the activities necessary to achieve departmental
missions and support the enterprise and hep define strategy of the unit. At the individual employee
level, strategic objectives identify personal activities that create value and support the department´s
mission.
The strategic objectives steps includes four components:
• Develop or change strategic themes.
• Create enterprise-wide strategic objectives.
• Describe and document the strategic objectives.
• Identify objective owners, their roles and responsibilities.
When strategic objectives are poorly developed, performance measures track the wrong outcomes,
strategic initiatives do not close strategic performance gaps and desired alignment is not achieved
through cascading and communicating strategy.

The nine Steps: Objectives
The Objective step outputs are the following:
• Strategic theme with strategic objectives
• Enterprise-wide strategic objectives
• Strategic objective description
• Strategic objectives placed in perspectives

The nine Steps: Strategy map
A Strategy map is a visual representation of how value is created for customers, owners and other
stakeholders. It is formed by linking objectives in cause-effect relationship to show how strategic
results are achieved. The strategy map helps:
• Communicate strategic intent with clarity
• Focus on the most important things
• Align vision and mission to culture
• Show logical connections between work and performance
The strategy map includes four process components:
• Understand strategy mapping logic
• Build the enterprise-wide strategy map
• Test the enterprise wide strategy map
• Update objective description
The Strategy map step outputs are the following:
• Strategy theme maps with theme objectives
• Tier 1 (Organization-wide) strategy map with strategic objectives
• Objective description (revised)

The nine Steps: Performance measures
Performance measures are the indicators of progress toward a desirable outcome. There is two types
of measures: strategic and operational.
The performance measures steps includes sic components:
• Describe the intended results
• Understand alternative measures
• Select the right measurements for each objective
• Define composite indices as needed
• Set targets and thresholds
• Define and document selected performance measures
The Performance measures step outputs are the following:
• Indented results for each strategic objective
• Performance measures targets
• Performance measures for each strategic objective
• Performance measurement data definition
• Performance measure thresholds
• Baseline data (where available)

The nine Steps: Initiatives
Strategic initiatives reduce performance gaps in strategic objectives and help achieve strategic results.
An objective can have two or more initiatives, and a one initiative can impact two or more objectives.
Six process components are used in the following order:
• Identify and categorize potential initiatives
• Develop selection criteria
• Evaluate and select initiatives
• Prioritize initiatives
• Fund and manage portfolio of initiatives
• Execute
Candidate initiatives Prioritized funded initiatives
Select
Categorize
Evaluate
Identify
Prioritize

The nine Steps: Initiatives
The Initiatives step outputs are the following:
• Potential strategic initiatives
• Prioritization framework
• Selection criteria
• List of ranked initiatives
• Initiative documentation
• Project plans
• Project execution reports

Enabling steps: System rollout
Scorecard rollout is an enabling step that starts the process of aligning the organization around
strategy. Its goal is to create more internal “fans” and build the coalition of employees that starts
thinking more strategically and using the system to better inform decision making.
This step includes four components:
• Write the strategic plan.
• Celebrate scorecard system development process.
• Update the financial and operational planning with strategic information.
• Maintain a strategy focus and culture of continuous improvement.
Capital
plan
Programs
Projects
Services
Operations
support
Operating
plan
Strategic
plan
Equipment
Facilities
Technology
Inventory
Budget according to Strategic
planning and Scorecard
Strategic
initiatives

Enabling steps: System rollout
Align budget and operations with strategy
Strategic results
Mission
Vision
Customer value
Theme:
Operationalexcellence
Theme:
Strategicpartnering
Theme:
Serviceexcellence
Theme:
Culturechange
Financial
Customer
Internal process
Organizational capacity
Strategic initiatives
aligned by
perspective
ERP project
Rewards program
Kanban project
Direct $
Cross training
Indirect $
Project 1
Program A
Direct $
Indirect $
Project 2
Program B
Direct $
Indirect $
Project 3
Program C
Direct $
Indirect $
Project 4
Program D
Operational activities aligned by strategic theme

The nine Steps: Performance analysis
Performance analysis transforms data into knowledge and understanding. Effective analysis helps
people make better decisions that will drive improved strategic outcomes.
The performance analysis step has four components:
• Select the most appropriate automation tool
• Collect and monitor performance
• Analyze and draw conclusions
• Improve performance
Improve
performance
•Continuously review strategy
•Identify and implement improvement actions
Analyze and
draw conlusions
• Enable data-driven discussion around performance
• Report and share information
• Identify underperformance
Collect and
monitor
performance
• Monitor performance trends
• Describe performance
Turning data into
information and
knowledge

The nine Steps: Performance analysis
The Performance analysis step outputs are the following:
• Software selection criteria
• Organizational information needs defined around reporting requirements and data
characteristics
• Software system evaluated and one system selected and installed
• Performance shape understood and interpreted using histogram, targets and thresholds
• Performance charts created to monitor variation
• Performance information collected
• Underperformance identified
• Process improvement actions identified
• Performance improvement reports developed and shared

The nine Steps: Alignment
Alignment is when organizational structures, process and systems support the strategy of the
organization. An organization is aligned when all employees understand what the organization is
trying to accomplish, make decisions and take actions based on that strategy.
Alignment is created when high-level strategy is cascaded first to business and support units and then
to individual employees.
The alignment process includes four components:
• Select the cascading approach
• Organize cascading teams
• Align business and support units
• Align teams and individuals with business and support units
The Alignment step outputs are the following:
• Tier 2 strategic and operational objectives, description and intended results
• Tier 2 unit strategy maps (optional)
• Tier 2 strategic and operational initiatives
• Tier 2 change management and communication plan
• Tier 3 personal objectives, measures, targets and initiatives

The nine Steps: Evaluation
Evaluation is an opportunity to review and refresh. This step evaluates how well the organization´s
strategy accomplish desired results and how well the strategic management system improves
communications, alignment and performance.
The evaluation step includes two components:
• Strategy effectiveness evaluation
• System effectiveness evaluation
The Evaluation step outputs are the following:
• Audit plan
• Balanced Scorecard gap assessment
• Interview forms
• Manager/employee surveys
• Executive survey
• Update strategic elements (Tier 1, Tier 2 and Tier 3)
• Update communications plans and change management plan
• System performance evaluation report
• System performance action plan
• Strategic Management Maturity Model (SMMM) review

Sustaining and managing the planning process and
balanced scorecard
Sustaining a balanced scorecard involves structure, process and change.
The structure creates a framework for assigning and reinforcing clear roles and responsibility for
managing and updating strategy without making the process bureaucratic.
The process involves the procedures and operations that impact the balanced scorecard, and how
performance information impacts the management and decision making.
The change is a cultural shift in the way the organization operates, transforming into a collaborative,
high-trust environment where performance information drives continuous improvement.
Sustaining and managing the planning process and balanced scorecard has three components:
• Institutionalize the strategic thinking process
• Change the agenda's management
• Cultivate a culture of continuous improvement leading to high performance

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