Strategic Plan vs Operating Plan

Planning is everything

Everyone thinks they need a Strategic Plan. And sometimes they do. But not always. Often what an organization really needs is an Operating Plan to effectively drive their work. This article will share when a Strategic Plan is appropriate, when an Operating Plan is a better option, and what a solid Operating Plan looks like. Let’s dig in. 

Strategic Planning

Strategic planning is an organization’s process of defining its overriding direction for achieving its mission or purpose. A business uses this process to make decisions on how it will allocate its resources to pursue their strategies. 

The general outcome of a strategic planning process is a Strategic Plan. This can be anything from a one-page visual to a binder full of documents, information, and goals. The trap many businesses fall into is believing that the point of strategic planning is to get to the Strategic Plan. In reality, the most important part of the process is engaging stakeholders, volunteers, constituents and staff in the activity of examining the organization. 

Gathering information and input from multiple sources ensures a business or organization is staying relevant and on track for fulfilling its purpose. Through this process leaders learn what is important to the community, their customers, and those people closest to the products or services of the business. In order for a strategic planning session to be effective, leaders must be open to change and willing to let go of the past. Otherwise, there is no reason to go through the work of strategic planning. 

Another pitfall of strategic planning is to create a beautiful plan, then leave it sitting on a shelf or in a drawer. Again, if you are going to go to all the work of strategic planning and then you don’t use it to guide the work of your business, you have just wasted a bunch of time and energy. This can also serve to disengage your most loyal allies. 

When Not to do a Strategic Plan

While the strategic planning process can be a very valuable tool for guiding your work, there are several reasons NOT to do it. 

  1. First and foremost, if done right, the strategic planning process takes a significant amount of time, energy, and money. If you do not have the time, determination, or funds to do it right, you are better off not doing it halfway. 
  2. A business that falls under the guidance of a parent organization probably does not need to go through a strategic planning process. Usually the parent organization sets the strategy. In that case, your operation is responsible for figuring out how you will execute those strategies for your service area. 
  3. A business that already has effective and relevant strategies in place does not need to go through the process. There’s no right or wrong answer to how often you should go through the strategic planning process. A general rule of thumb is every 3 to 5 years. If you are actively using your strategic plan and reviewing, the need for a new planning process will organically reveal itself. 
  4. When a business uses Strategy Screens (you can read more about this concept here), they go through the process of examining their strategies every time they are faced with an opportunity or challenge. Similarly to number 3, by using this system you will know when it’s time to go through a strategic planning process. It won’t be dictated by the cycle of the calendar. 
  5. As stated above, if leadership is not ready for the potential to make significant changes, then its probably not a good time to embark on a strategic planning process. This can happen because of egos, protecting turf, and special interests. In these cases, it doesn’t matter how fantastic a plan is, it’s unlikely to result in any real change. 
  6. Other reasons for not engaging in strategic planning include a lack of understanding of the purpose, lack of flexibility, lack of ability to follow-up and a lack of engaged stakeholders. 

Due to the significant investment it takes to do effective strategic planning, you want to be sure it’s the right option at the right time. If you decide that a strategic planning process isn’t right for you, it doesn’t mean you shouldn’t do some sort of planning. That brings us to the value of Operating Plans.

Operating Plans

Strategic planning focuses on how things have changed for your business over the past few years, what’s changing now and what might change in the future. On the other hand, Operations Planning looks at the way you will conduct business over the next year. If you have a Strategic Plan in place, your Operating Plan should be directly tied to it. For businesses that do not have a Strategic Plan, it might be even more important to develop an Operating Plan. 

I recommend some level of Operations Planning every year. The best time to do this is leading up to your budgeting process. A budget is simply a plan for your year, broken down into numbers. In order to put together your numbers plan for the year, you need to know what you will be doing. 

Since most people cannot predict the future, the best we can do is make assumptions about what will happen over the coming year. Then we make plans around those assumptions. Based on your expertise in your industry, you may predict growth, stagnation, or the need to add a new product or service. Taking the time to think through what will happen over the next year, you are able to put together realistic plans. Sometimes it’s appropriate to map out multiple plans. If XXX happens we will plan for YYY. If XXX doesn’t happen, we will plan for ZZZ. 

The next step in your Operating Plan is to develop the budget. With clear assumptions in place you can create the money story to support those plans. Whether you’re predicting growth, staying the same or changing products or services, you put your numbers in place in order to carry out the plans. This is an oversimplification of the budget process. If done right, that process involves a great deal of research, comparison, and give-and-take. That’s a topic for a whole separate article. 

Once you have your budget plan mapped out you can write your goals for the year. Done right, your operating goals for the year will keep you on track to meet your budget. And when tied to your Strategic Plan, they will keep you moving towards your mission or purpose. 

In addition to being tied to your Strategic Plan, annual assumptions, and budget, a well constructed Operating Plan will include the following:

  • Goals for the year – Spell out what you want to achieve over the next year. Define how your operations will be different at the end of the year. 
  • Action steps – Break down the goals into the steps it will take to get you there. Be specific and thorough. 
  • Accountabilities – Assign each step to one person who will be responsible for carrying it out. 
  • Due dates/Checkpoints – Set a due date for each of the action steps. A good practice is to set aside time at the end of each quarter to examine your goals, action steps and accountabilities. By checking in every 90-days you stay on-track and are able to refocus. 

As you develop your Operating Plans, you will want to run it by your stakeholders. This serves as a “reality check”. While you don’t want to turn this into a pseudo Strategic Planning process, you also don’t want to do your planning in a vacuum. Check the logic of your assumptions, goals and action plans. Not only will this ensure that your plans are solid, it will also garner confidence from your stakeholders, and make it easier to get budget approval. 

I really love the quote by Yogi Berra: “You’ve got to be very careful if you don’t know where you’re going, because you might not get there.” Whether you’re ready for a Strategic Plan, or an Operating Plan makes more sense for you, it’s best to know where you’re going.  

Need help with your Strategic Planning, Operational Planning or figuring out which is best for your business? Email me at kim@athena-coco.com to schedule a free 30-minute discovery call to get started creating the best plans for your business! 

Kim Stewart

Kim is a mom, wife, lover of being active and the outdoors,
and helper of small businesses and nonprofits.
kim@athena-coco.com

Are you Too Close to the Problem?

Remember that boyfriend (or girlfriend) who was really awful for you? All your friends knew it, but you couldn’t see it. Remember tuck rolling your acid washed jeans? It was cool at the time, but looking back it seems pretty ridiculous. And do we even need to talk about perms?

My point is, when you’re close to something it’s difficult to see the full picture. You get caught up in emotions or trends or the very small piece of the picture that is right in front of you. It’s not until you have the luxury of time or distance that you are able to see the full story.

The same goes for leading your business. When you are completely consumed with working IN the business every day, you are likely facing problems. These present themselves as feeling overwhelmed, having difficulty making decisions, and frustrations from things not going as planned. Sometimes you don’t even see the problems. If you’re knee deep in the hoopla, you might not even recognize that you have opportunities to make better decisions, simplify, or realign.

Working ON the Business

You may have heard this phrase before: working IN the business vs working ON the business. When you are working IN your business, you are doing any of the many tasks or management activities that make it possible for your business to run today. In our fast-paced world where there never seems to be enough time in the day, you may feel overwhelmed by the sheer number of tasks and management activities on your plate. This fact may make it seem impossible to ever step away, for even two hours, to spend time working ON your business.

Because breaking away from the day-to-day can be so challenging, I’m going to share four tactics for ways to pull yourself away and give yourself, and your business, the much needed time spent working ON the business. Before I get into these ideas, let’s address the frame of mind you need in order to successfully work ON your business.

When you work ON your business, you are focusing on strategy for tomorrow’s success. The first step is to understand and believe in the importance of taking time to think strategically about where you want your company to go. If you see spending time thinking strategically as a waste of your precious time, then don’t do it. You need to be committed for this to be valuable. Otherwise, it is a waste of time. It’s also crucial to be open to new ideas. If you have no plans of changing how things are done, then there’s not much benefit to stepping away to focus on strategy.

Tactic #1 = Communicate

Okay, so you’re excited about thinking strategically and you’re open to exploring new ways of doing things. The next question is: How? I’m sure that running your business could easily consume 24 hours of your day, 7 days a week if you let it. Obviously, you don’t let it do that. You sleep, you eat, and hopefully you make time for your family and friends; as well as recreation, wellness, and hobbies. These activities fit into your life for a couple of reasons:

  1. Because they are important to you, and

  2. Because you have created a culture where the people in your business understand that you sleep, eat, spend time with family/friends and have some sort of  personal life.

Similarly, you can make working ON your business fit in if it’s important to you and you create a culture where the business understands it’s a priority. We already talked about your mindset around working on strategy, so clearly it’s important to you. The next step is to communicate with your team about why it’s important and how it’s going to look. Share your vision for your company and your belief that to achieve your vision you will need to think differently. Then tell them what it will look like.

Tactic #2 = Get Out

Set aside a specific time on your calendar. The best plan would include about 2-hours a week at the same time each week. If this seems impossible, shoot for 2-hours every other week. Still too much of a challenge? At the very least I would recommend 4-hours, once a month. Pick a time of the day or the week that would be considered your “slow time,” if there is such a thing. Whatever you land on that works well for you, stick to it like glue. Put it in your calendar. Schedule other things around it. Make it a priority.

Then leave. Get out of your office, your store, or your facility. Don’t tell your team where you are going. Take nothing but a pad of paper and a pen. That’s right, leave your cell phone behind if at all possible. Go to a coffee shop or a park or the library. Find a place that allows you to relax and your mind to explore new ideas.

As stated in Tactic #1 – communicate this plan and the purpose of it to your team on a regular basis. By communicating and following through with your plan, it will become part of the culture.

Tactic #3 = Create Accountability 

Does this all sound great, but you know yourself well enough to know that this might last for two weeks before you will find excuses for why it’s more important for you to stay IN the business? If so, consider finding an Accountability Partner to support you. This could be a partner, a spouse, a team member, a friend, a mentor, or another business leader. Explain to the person what you want to do and ask them to help hold you accountable. You may even find someone who wants to do this with you, kind of like a workout buddy.

Tactic #4 = Outside Help

There are times when engaging outside help is the best option. A coach, a mastermind group, or any other peer group are all things to consider if you feel like an outside set of eyes would be helpful. These resources can help give you a new perspective, consider new ideas, or hold you accountable for the things you want to do to reach your business vision. An outside set of eyes will challenge you in ways that you may have never considered, and will push you to do things you might not commit to on your own. Most coaches and peer groups provide a free discovery call or visit so you can explore the different options available to you.

Next Steps

Once you have your time-away plan, either on your own, with a partner, or with a professional, use your time effectively. These steps can help:

  1. Stay laser-focused on where you want to take your business. If you don’t have a vision yet, this is a great first step.

  2. List out all the challenges you face that are preventing you from reaching your goals. Prioritize. Peel back the layers. Often the first thing that comes to mind is a side effect of the real problem.

  3. Once you get to the heart of an issue, explore strategies for working through it. Come up with as many strategies as you possibly can. Determine which best match your brand, your culture, your values, and which will best solve your problem.

  4. Decide.

  5. Plan your communications. If you have regular staff meetings (which I hope you do), add the decisions made to your meeting agenda. Communicate your thoughts and develop any action steps required to roll out the strategy.

  6. Tackle as many issues as you can in your allotted time. Save others for your next Strategy Session.

Put Your Mask on First

There is a strong pull to convince ourselves that business cannot possibly continue to operate if we are not there. Are you really needed all the time? Or does it make you feel good to be needed all of the time? If your business cannot run without you in it for every hour that you are open, I might suggest this as one of the first issues you tackle.

“In case of a drop in cabin pressure, put your own mask on first so you can assist others.” Same goes for your business. Thinking short-term: I have to help my child or my seat mate, is similar to focusing only on the daily tasks. You’re only going to be able to help for a finite period of time. Thinking long term: If I put my mask on first, I’ll be able to help many others, is the equivalent of taking the time to think strategically about your business. You have to think long term in order to take care of your business.

Some lessons can only be learned through experience (like that awful perm), others (like the health of your business) you want to proactive work to solve.

If you would like to explore how coaching or consulting can help you work ON your business, email me at kim@athena-coco.com to schedule a free 30-minute consultation. Calm the Chaos by working ON your business so you can find time to focus on what’s important to YOU.

All Strategies are Not Created Equal

Last week I wrote about Rethinking Strategy and the concept of Real-Time Strategic Planning, based on a book called The Nonprofit Strategy Revolution by David La Piana. While this book is focused on the nonprofit sector, I believe the concepts have wonderful application for both for-profit and not-for-profit businesses. Another concept in the book that I found really compelling is around the Strategy Pyramid. This article will dig into this concept and how it may be a useful way for you to think about strategy in your business.

Traditionally thinking around strategic planning conjures up memories of massive information gathering, multi-day farming sessions, and binders filled with fancy reports. Real-Time Strategic Planning is much more nimble and relevant to today’s fast paced business environment. It is built on the foundation of a strong vision or mission and gives a business the ability to quickly adapt as new challenges or opportunities arise.

Another common trait of traditional strategic planning is that oftentimes the strategies are not strategies at all. Through the traditional planning process many things come up that would be good for the business to focus on. These could be goals, programs, operational processes, technology, or something else all together. While important, these things are not necessary “strategy level” items. At least not Organizational Strategies.

This brings us to La Piana’s Strategy Pyramid. The Strategy Pyramid is made of three levels of strategies:

  • Operational Strategy (bottom)

  • Programmatic Strategy (middle)

  • Organizational Strategy (top)

In this pyramid, the base is made up of Operational Strategies, Programmatic Strategies are in the middle and Organizational Strategies are the top.

Operational Strategies

All strong organizations are built upon a strong base of administrative processes and management systems. In order to run effective programming and have a positive impact on the community a nonprofit must rest upon the solid base of strong operations. To deliver quality products and grow sales a for profit business must have the same solid foundation. Strong operations ensure the “trains run on time” (quote from my friend Cameron Nicholson).

Operational Strategies are the initiatives designed to improve efficiencies, execution, or responsiveness. These could include any number of things. Some examples include:

  • New software will help you manage your campaign more efficiently

  • A Diversity and Inclusion training to grow your staff team

  • Preventative maintenance plans to protect your assets

  • Initiatives to improve communications with staff or customers

Generally speaking, operational strategies are those things impacting the infrastructure of the business, such as human resources, finance, technology or communications.

Programmatic Strategies 

In the nonprofit world, programs are where the “rubber hits the road.” They are how an organization delivers their mission to the world and provides the impact they intend for their community. In the for profit universe, this layer of strategies is likely the products or services the business sells. In both instances, when a customer or community member thinks of the business, it’s the programs or products that they usually think of first.

Programmatic Strategies are the decisions around what activities/products will be delivered and how they will be delivered. Here are a few of the decisions that could lead to Programmatic Strategies:

  • Delivering programs in-person on on-line

  • Providing carry-out or delivery

  • Narrowly focusing your products or offering a broad range

  • One product/program, a few, or many

Programs (or products/services) sits on top of the operations; they are supported by that solid base.

Organizational Strategies

On the top of the pyramid are the Organizational Strategies. These strategies honor and are developed in order to fulfill the organization’s mission or the company’s vision. They take into account trends happening in the market, challenges coming from competitors, opportunities from partnerships, and their unique deliverables. Organizational Strategies are the big picture actions or activities the business will take to move towards achieving its mission or vision. Organizational Strategies include things like:

  • Expanding to new service areas

  • Establishing an intentional brand or culture

  • Shifting funding sources

  • Expanding to online retail

Even though the Organizational Strategies are on the top of the pyramid, this is actually where we start when formulating strategy for a business.

Start Building at the Top

With almost any construction project you start at the base and build up. This process of strategy formation does just the opposite, It starts with clarifying mission and/or vision and builds down through the layers. The mission/vision is the heart of the business, its purpose for being, and the very core of all decision making. It’s a solid practice to regularly visit the mission/vision to keep everyone focused on why the business exists. Your organizational strategies are the ways in which you will work towards your mission/vision. To quote La Piana: “Organizational Strategy is about who and what the nonprofit is in the larger world. It’s about organizational identity, direction, brand, and market position.” Same goes with for profit companies.

Once Organizational Strategies have been established, it gives clarity to the kinds of programs, products or services that should be delivered and how they will reach the participants and customers. Programmatic Strategies can be developed which support and align with the Organizational Strategies. After these top two layers are in place, Operational Strategies can be created in order to best serve the strategies that rest upon this base layer. By building each layer based on the strategies above it, each segment is connected and creates a coordinated set of actions. Programmatic and Operational Strategies can also be thought of as large or involved goals which will help you work towards your Organizational Strategies.

Examples

To help give some clarity, here are a couple of examples of how strategies may look in a for profit company and a nonprofit agency.

  • For profit clothing retailer:

    • Organizational Strategy: In addition to our thriving catalog and website sales we will add pop-up stores in order to see if physical locations will appeal to our customers.

    • Programmatic (Product) Strategy: This summer we will have pop-up stores at festivals in the three states where our sales are highest. We will provide our top selling summer items in a variety of sizes and limited colors.

    • Operational Strategies: In order to support our summer pop-up stores we will need to research and invest in a mobile pay system and mobile store hardware (racks, displays, tent, and changing booth). A dedicated staff will research and secure venues as well as create a schedule and communication system.

  • Nonprofit environmental agency:

    • Organizational Strategy: Our mission is to create a sustainable planet with future generations in mind. To this end we will focus on improving air quality in the metropolitan community we serve.

    • Programmatic Strategy: Our signature program will be a tree planting initiative which will engage volunteers and school or camp youth groups in planting trees. The program will involve education and follow-up care to ensure long-term impact.

    • Operational Strategies: Funding will be central to supporting the tree planting project. Development will focus on grant writing and corporate sponsorships. Additionally, a dedicated staff will be responsible for identifying locations, recruiting volunteers, securing youth groups and coordinating events.

These examples are greatly simplified, but they clearly illustrate the importance of each strategy building upon the one before it. Thinking of strategies as a coordinated set of actions not only reduces waste, it helps propel you towards your vision/mission.

If you would like to explore Real-Time Strategic Planning for your business or organization, email me at kim@athena-coco.com to schedule a free 30-minute consultation. Calm the Chaos by streamlining your strategy development, and find time to focus on what’s important to YOU.