Strategy Evaluation - Process Guide
by Tom Wright, on Dec 3, 2019 11:18:00 PM
The process of strategy evaluation is often overlooked in the overall strategic management process. After the flurry of activity in the initial planning stages, followed by the reality check of executing your strategy alongside business-as-usual, strategy evaluation is often neglected. When this occurs, strategies quickly become outdated and out-of-sync with the changing face of the organization.
What is Strategy Evaluation?
The strategy evaluation process involves analyzing your strategic plan and assessing how well you've done against achieving the goals in your strategy. A strategy evaluation is an internal analysis tool and should be used as part of a broader strategic analysis for the organization when making decisions about your strategy.
Typically, the strategy evaluation process involves answering questions such as:
- How much progress have we made towards our Vision?
- Are our Strategic Focus Areas still relevant?
- Which of our Objectives have we completed?
- Which Objectives are no longer needed?
- Do we have sufficient Projects to deliver incomplete Objectives?
- Are our KPIs still effective for measuring progress towards our Objectives?
- Where we fell short of our targets, why did this happen?
At the very least, you need to evaluate your strategy twice a year - or better yet, every quarter. Even if you feel as though your existing strategy is 'too far gone' and needs a fresh start, you'll want to perform a thorough strategy evaluation of what went wrong last time around. The mistake that people often make when it comes to strategy execution, is thinking of their strategy as a linear set of steps. I'm sure you've all seen those PowerPoint slides with the strategy running from left-to-right on the page? In reality, strategy is a circular process of constant iteration and evolution. A good strategy should never really 'end'. Rather, it should morph into something more ambitious and sophisticated as goals are met. The way we envisage strategy at Cascade is as a wheel:
The strategy evaluation process falls between our 'Track' and 'Plan' segments. Evaluation drives iterations and adjustments which are then refined in the 'Plan' segment.
In this article, we'll give you a simple set of steps that you can follow to ensure that your own process of strategy evaluation is easy, effective, and helps to keep your plan on track.
Strategy Evaluation: Step 1
Evaluation starts at the start
It may sound counter-intuitive but ideally, you'll be kicking off your strategy evaluation process back in the planning stage. Strategy evaluation is essentially the process of figuring out:
- What did we do well?
- How can we improve upon what we did well?
- What did we learn about ourselves and the environment along the way?
One of the best ways to answer these questions is by setting effective KPIs in your planning stage. We'll look at an example:
Let's say that your vision is "to become the number one provider of strategy software in the world."
Then let's say that you have a focus area which is "Becoming the primary source of strategic knowledge on the internet".
To be able to effectively evaluate progress, you're going to need a KPI of some kind. So you might set a KPI of "Achieve a top 5 Google search ranking for 80% of the most common strategy search terms."
Right away when you kick-off your strategic planning process, you'll be able to assess:
- Did we meet our KPI?
- Why did we fall short?
- Was this even the right KPI?
That last point is critical - but more on that a little later.
Strategy Evaluation: Step 2
Implement consistent processes and tools
Not to sound too much like a broken record, but effective strategy evaluation requires planning that goes beyond the setting of good KPIs. You'll also need to plan out your 'strategy rhythm' - things like:
- How often will I measure progress against my goals?
- What standardized set of reports will be used throughout my business?
- What level of detail shall we capture in our written commentary of progress against the plan?
This is of course where a platform like Cascade can really shine through in terms of value. Even if you're going old-school with your strategy evaluations, you'll want to determine these types of things up front. Then, implement a regime of meetings and reports throughout the organization to match. We like to call this process your 'strategy rhythm'. As it should form the backbone of your organization's activities, and be maintained regularly and consistently throughout the year.
Strategy Evaluation: Step 3
Empower teams to evaluate their own strategies
Empowerment plays a critical role in strategy execution regardless. However it's especially important as part of the strategy evaluation process. Rather than have the leadership team alone participate in your strategy evaluation, invite a team from each functional area. Each team should prepare their own evaluation of how they think their area performed against the strategy. There are a number of benefits of doing so:
- You'll have the opportunity to assess your team's understanding of the strategy. Does it match you own?
- Your team will realize how seriously you take the process of strategy and value it more as part of their day-to-day roles.
- You'll gain additional insights that you wouldn't have thought of yourself.
You'll want to provide them with a basic framework to perform the analysis, and have them answer the key questions we posed above:
- Did we meet our goals?
- What was it that helped us to succeed?
- What challenges made us fall short?
- Were our goals well set, and have they brought us closer to achieving our overall vision?
Strategy Evaluation: Step 4
Take corrective action
Steps 4 and 5 (below) are somewhat intertwined and should be performed largely in conjunction with each other. If you find that you're not meeting one of your goals, you'll want to do two things:
- Start by figuring out if the goal is still the right one (see below).
- If it is, take corrective action to address any shortcomings.
Assuming you're still convinced the goal you've set is the right one, you need to implement an action plan to get yourself back on track.
There are many reasons why you might be struggling to hit your goals, ranging from relatively simple issues such as:
- A lack of resourcing (human or financial)
- Conflicting priorities
- Ineffective tracking of targets
- Misalignment or understanding of the goal
Or your challenges may be more complex and relate to:
- Increased competition
- A significant capital shortfall
- Regulatory pressures
- A lack of internal innovation
Whatever the case, the sooner you can identify these issues, the sooner you can start to take corrective action. This once again highlights the importance of a robust strategy evaluation process.
Strategy Evaluation: Step 5
Iterate your plan
There are two scenarios where you'll want to iterate your plan as part of your strategy evaluation - one being significantly more positive than the other:
Scenario 1: You've achieved your goals
In an ideal world, you'll be iterating because you met some or all of your strategic goals. Remember, your plan is a living, breathing entity and may evolve in irregular and unexpected ways. Specifically, you'll find yourself hitting some goals far earlier than you expected and you'll need to replace those goals with new ones, without waiting for all elements of the plan to be completed. It's actually not that hard to do this, as long as you have a robust strategy evaluation routine:
You've achieved all your goals. Great - have you therefore achieved your focus area? No? Then you need more goals within that focus area.
You've achieved all your focus areas. Great - have you therefore achieved your vision? No? Then you need new focus areas.
The best strategies are the ones that never truly end, but are instead agile to the needs of the business with the focus areas constantly changing, whilst always being guided by the overall vision.
Scenario 2: You've failed to meet some of your goals
This is where we continue directly from the start of step 4 above. Just because you failed to meet a goal, don't actually assume that the right thing to do is to take corrective action. One of the most common outcomes of effective strategy evaluations is the redefinition of KPIs.
Cast your mind back to our example at the top of this article. Let's say that you did in fact meet your KPI around Google search rankings, and yet despite that, found no significant uptick in the number of people starting free trials of your software. In that case, it's likely that the KPI you set was incorrect. But you wouldn't have known that without either the KPI in the first place or the process of strategic evaluation.
You need to find a balance between not being afraid to redefine your goals, versus constantly changing them without ever really achieving anything. Failure to find this balance is one of the main reasons why so many strategies fail.
Strategy Evaluation: Step 6
We've saved the most fun part of the strategy evaluation process for last - celebrating success. We're written previously on the importance of celebrating success to drive engagement in your strategy. The strategy evaluation process is the time to implement those celebrations.
Given that your strategy will never ‘finish’ – it’s important to celebrate the successes along the way. The first time you achieve a KPI or even a focus areas - enjoy it!
Don't do so privately, but rather share that success with the entire organization. Whether it’s a simple email of thanks or a full-blown party, the fact that you’re so notably celebrating the success of a strategic goal is not only great for morale, but it also sends a strong message that the execution of the plan really really matters.
A Strategy Evaluation Example
To help you get started with your own strategy evaluation process, take a look at how our Customer Success team here at Cascade handled it for their strategic plan.
First they looked back on their strategy for the year and updated each of their goals to show which ones were completed and which weren't...
Then, they looked at some of their key metrics for the year against each of their Focus Areas...
The Focus Areas they evaluated were: Onboarding, Adoption, Growth, Renewals. With this in mind, they then conducted a survey within the team to ask how each person thought we performed against these Focus Areas...
Finally, once they'd finished their strategic evaluation, they started work on their new strategic plan...
The team did a great job of capturing the essence of good strategy evaluation, and I'm excited to see what they come up with for the final version of their next strategy!
Don't be afraid of strategy evaluation
So often organizations shy away from the process of evaluating their strategy because they're scared of uncovering the depth of their 'failure'. But strategy is hard - and you're not meant to ever deliver against it 100%. Business strategy is not that different to life. It's not so much about success or failure - rather it's about continual improvement and self-awareness. That's why strategy evaluation is so important to your continual growth as an organization. Don't hesitate a moment longer - if you had a strategy at some point in the past, now is the time to dust it off and start evaluating what (and how) you did. It might not be pretty - but I promise it'll be a whole lot easier next time around.