An overview of strategic and operational planning
Conventional wisdom has it that first, you build the strategic plan including the Vision, the Mission, and the Focus Areas of the company, and then comes the operational plan.
The latter connects the front-line projects with the long-term vision of the business. These are the two distinct steps to create a practical map of the company’s destination.
However, this doesn’t work really well in a world that changes at an accelerating pace. Organizations need a better process to keep up with the market changes. There is a better way.
In this article we explore:
- What is operational planning
- The 3 key traits of an effective operational plan
- Strategic vs operational planning: the myth
- How to build an effective operational plan
- An operational plan example
What is Operational Planning?
Operational planning is the company-wide design of the projects and activities that align with the strategic priorities, these should be completed within a specified time constraint. In other words, an operational plan outlines the execution of your strategic plan.
The 3 key traits of an effective operational plan
Your operational plan must include the activities of every team or department that contributes to the implementation of your strategy.
Although delegating to them the outline of their own operational plans and budgets is a good idea, you must incorporate every single one of those individual plans into the overall business plan.
This isn’t easy in large organizations with dozens of regions, departments and teams. Tools like excel are stretched to their limits to try and meet that demand. And even then, the job is like a medium-rare steak, not well done.
Operational plans are detailed. They break down goals and objectives into projects and daily activities. They include all the metrics and KPIs that you need to track with the values they need to reach.
An effective operational plan is easy to navigate and provides a clear overview of the overall progress. That’s because it serves two main functions at the same time.
- It keeps the workforce accountable to its commitments and assigned goals. Management can easily keep track of the progress and prevent slip-ups from becoming pitfalls.
- It informs people’s decisions. It’s clear to read, easy to find the requested information and provides consistent priorities and context on the things that matter most.
These two functions separate the effective operational plans from the badly executed ones.
The sole purpose of an operational plan is to make the strategic objectives a reality. Creating a regional or departmental operational plan that doesn’t align with the long-term goals and objectives of the organization’s strategic objectives costs time and money.
It takes up resources and splits the company’s efforts towards two distinct destinations. Aligning daily operations with the company’s long-term vision and strategic goals is the toughest challenge large corporations face for two main reasons.
First, the tools that most companies use are ineffective. Sheets and slides lack the dynamic properties to align actions and metrics with objectives and goals.
You’ll make a dent in your screen trying to navigate through these slides:
And secondly, updating these documents and redistributing them inside the organization takes weeks. Companies can’t afford this kind of delay in internal communication.
Strategic Planning vs Operational Planning
The problem with the conventional way of planning is that strategy and operations happen separately and then, somehow, they have to be combined and in total sync.
The problem? They rarely blend together well, especially in large organizations. For example, the operational plan doesn’t change fast enough to reflect a shift in strategic priorities.
On the other hand, you might be unable to overview your operations quickly and easily to determine whether your strategy is actually performing or not.
The truth: They are one and the same
Don’t view your strategic and operational plans as two separate entities. It’s that specific assumption that creates the gap between strategy planning and executing.
And that gap disrupts the connection both ways. Your daily operations don’t align with your high-level strategic objectives and the insights from the front line don’t inform the strategic process.
This wasn’t a serious problem when senior management had access to the front line and its workforce. But now, things are different. Organizations operate in multiple time zones and leadership rarely interacts with the consumer.
How can sheets and slides coordinate 1,000, 5,000 or 100,000 employees around the globe? How can leadership develop transparency and accountability when they don’t have an up-to-date view of the situation?
It’s impossible with static tools. Your strategy and operational plan must exist together in a dynamic digital environment like Cascade to bridge that gap.
Strategy informs and guides daily operations and, in turn, day-to-day activities ground the strategic plan to reality.
Operational Business Plan
Many things go into developing an effective operational plan, from choosing the right KPIs to track to assigning clear responsibilities and realistic but challenging deadlines.
Here we will focus on the two things that enable you to build a transparent operational plan that aligns with your business goals.
Build regular, instant reporting
The purpose of creating a strategic plan is to predict, detect, initiate and lead changes in the market. Executing that plan leverages those changes by aligning the efforts across your organization.
It’s impossible to achieve alignment without a commitment to regular reviewing. That’s one of the benefits of merging your strategic and operational plan in a dynamic digital environment. You get to assess their performance much more easily.
Build a recurring reviewing habit on every organizational level. Schedule weekly meetings to assess the progress of your KPIs and projects in the front line and monthly meetings to address higher-level metrics and priorities.
That’s how you’ll see actual results like improved accountability and focused execution.
To make that habit stick, though, you’ll need to make it frictionless. For example, minimize the time it takes to build reports. Determine beforehand the metrics and measures you’ll be discussing and automate reporting using KPI report templates.
Make it executable = accountable + focused
An effective operational plan is aligned with the strategic initiatives, but most importantly, it is executable.
Improve the effectiveness of your operational plan by increasing your people’s accountability and focus. Here are two specific tactics you can implement:
First, define one specific owner for every project, KPI, goal or objective in your plan. That person will be responsible for the timely completion of the item. They might have contributors and a team working to achieve it, but they’ll be the ones responsible for its progress.
Secondly, expose your plan to everyone. Enable your people to access it whenever they need it to inform their decisions and work on what matters most. This goes beyond doing some strategy presentations and provides the context of the plan as well.
Operational Plan Example
In this example, each strategic focus is populated with a set of objectives and each objective cascades into more goals, projects and KPIs.
Notice how every objective has a specific end date and every metric has a specific value to reach and an owner. This is the amount of detail you want in your operational plan.
However, you can’t fit all the regional and departmental plans into that view. You can (and should), though, connect them with your top-level objectives and Focus Areas of your strategic plan.
So, what does a merged strategic and operational plan look like? Like this:
For example, create a tree-like representation that visualizes the connections between the plans and their progress in simple status updates. Here is an example of how you can achieve this in the Cascade Tree:
The purpose of having a dynamic digital environment for your strategy and operations is to facilitate overviewing and reduce the number of tools that go into the process.
A static graph that outlines how the departmental plans align but doesn’t display in real-time their progress brings little to no value.
What is the point of having three projects and their respective KPIs contributing to one parent KPI if updating the children doesn’t automatically update the parent KPI?
Digitizing your operational plan deals with these time-consuming activities and brings all the information into one place.
To adapt to this rapidly changing world, you need to build an operational plan with two qualities. The first is responsiveness to changes in the organization’s strategic priorities. The second is to inform senior leadership about opportunities or setbacks at the front line.
Here are the key takeaways from this article:
- Strategic and operational planning must align
- They shouldn’t happen separately. They are different sides of the same coin.
- You need automated and regular reporting to assess its performance
- Make it executable by defining ownership and exposing it to your people
Bring your strategy and operations into Cascade to execute and manage them effectively.