All great strategies have 3 key elements:
No matter the strategy’s scope and complexity or even the company’s size, great strategies include these three elements. So, successful strategic planning accounts for all three.
The 5 key elements of strategic planning are:
- Define your Vision
- Craft your Values
- Determine desired Outcomes
- Declare explicit Accountability
- Establish leading KPIs
When a strategic planning process incorporates these elements, strategies become simple and guide decisions. If you want to kick start your strategy development, use this strategic planning template that thousands of organizations apply at the start of their strategy formulation.
Before we go into the details of the key elements of a strategic plan, let’s clarify something. A comprehensive strategic plan addresses 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
Everyone reading the strategic plan should be able to answer these questions. This includes employees, business partners, investors, or other stakeholders.
Now, let's look at the 5 key elements of a strategic plan that will help us answer those questions:
1. Defining your Vision
Start by defining your organization’s vision (its destination).
This is an expression of the unique Point Of View you bring to the market. Make it simple, different, inspiring, and positive. People who read your vision should be able to understand exactly what you stand for. Take a look at our guide on how to write a good vision statement to help you in the process.
Your vision will help you to:
- Bring alignment to your organization. People will unify their efforts towards a common goal, driving increased efficiency.
- Create strategies that are cohesive and focused.
- Inspire employees, investors, and other stakeholders to invest emotionally and commercially in your business.
Knowing your vision isn’t enough. Create a vision statement to articulate it and explicitly define it.
Mission statement vs Vision statement
You may also want to create a mission statement.
A mission statement differs from a vision statement. 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 surrounding 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:
- "Best product"
- "Reduce environmental harm"
- "Encourage discussion on the environmental crisis”
Their focus areas essentially describe how they will achieve their vision and act as the bedrock for most of their strategic goals and KPIs.
2. Crafting your 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 the execution of your strategic plan.
Follow this guide to craft your company’s values, so they help you to:
- Assess your current state (the starting point) as an honest reflection of what you do well and are proud of doing.
- Make better decisions by ruling out courses of action that are not appropriate for your company
- Recruit better people who share your beliefs and passions
The values that go into your strategic plan shape your culture and are not aimed at customers. Instead, they are a frank self-assessment of how your organization’s people behave as they deliver against your vision and Focus Areas. They should reflect the values of your very best people and the values that have helped you to succeed the most in your journey to date.
If your strategy clashes with your company’s culture or values, it will fail. Identifying your core values is a critical component towards defining your starting point and your journey.
3. Defining desired Outcomes
A strategic plan leads nowhere 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, make sure they look like this:
Action + Detail + Metric + Unit + Deadline
Expand our international operations into 3 new markets by 21st December 2022
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 keep you focused and honest when tracking your progress. Having a deadline works in much the same way.
Our guide on how to create strategic objectives walks you through the process of creating achievable and executable outcomes.
4. Declaring explicit Accountability
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
Define accountability in the initial strategic plan as 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.
Contribution drives engagement.
Engagement enforces self-accountability.
Accountability enables execution.
For each of your outcomes, simply state ONE single person who will have primary accountability for that outcome. Avoid defining yourself accountable for every single outcome. It's fine for the owner to invite other people to work on the outcome (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.
5. Establishing leading KPIs
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 whether or not you're succeeding towards your vision. Note that KPIs are not the metrics you set to create 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:
Patagonia's first Focus Area 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.
Patagonia's second Focus Area was “Reduce Environmental Harm.” They could have a KPI for maintaining their carbon footprint at 0 (i.e., being carbon neutral).
Patagonia's third Focus Area was “Encourage discussion on the environmental crisis.” Probably the hardest to set an effective KPI. They could measure the number of mentions of the company on social media that also reference the environmental crisis.
Don't let establishing leading KPIs become harder than it needs to be. Follow this easy 4 step formula on how to write KPIs to be effective. Make sure that your KPIs accurately reflect what success looks like for each Focus Area and that you can accurately measure the KPI regularly.
Selecting the right KPIs is, therefore, one of the key elements of a strategic plan.
How the 5 key elements of a strategic plan affect your company’s strategy
Companies that incorporate all five elements in their strategic planning process build easier-to-execute strategies.
People understand them and make consistent decisions throughout the organization. Pair them with regular reviewing organizational habits and you have highly adaptive companies that go beyond reacting to market changes. They anticipate and lead them.