19DECEMBER 2022CFO TECH OUTLOOKCXO INSIGHTSIt's interesting that I get this question a lot and it's usually under the context of whether it's better to develop a three-year or five-year strategic plan. To me, it really doesn't matter what time horizon a company chooses as it relates to the shelf life of a strategic plan because the answer is the same: zero-it has no shelf life!Strategic plans need to be living, breathing documents to be effective and should never be literally or proverbially placed on a shelf. To help "make it real," there are three areas of focus that help ensure actionable strategic plans: strategic and operational planning alignment, transparent accountability, and rigorous execution.Alignment of Strategic & Operational PlanningThe overall planning cycle includes both strategic and operational planning that should be aligned to increase efficiency and improve results. For organizations on a calendar year-end, I like to kick-off the strategic plan update in April, after Q1 results are finalized, and complete the Strategy in the July timeframe. Notice I used the term "update" versus "create". Unless the company is new or recently merged, once the plan is created, an annual update that extends out one year should suffice instead of creating a new plan from scratch. For example, in 2021, a three-year strategic plan from 2021- 2023 should be updated to cover 2022-2024. A review of mission, vision and core values should still be performed with a SWOT Analysis (strengths, weaknesses, opportunities, threats) but in an abbreviated manner, versus the extended workshops necessary when developing a new plan.After the strategic plan update is completed in the Summer, it can be leveraged for budget development in the fall for the subsequent year. In the example above, the 2022-2024 strategic plan completed in the summer of 2021 should be the framework for the 2022 budget developed, starting in the fall. In this way, strategic planning is aligned with operational planning so the work included in the strategic sessions flows nicely into the efforts to produce the budget commitments for the subsequent year. A few words of caution here though: don't let the strategic plan development become a forecasting exercise­it's a slippery slope that defeats the purpose. Be sure that the focus is on strategy development and let that drive the results, not vice versa.Transparent AccountabilityI've seen many companies with aspirational plans supported by lengthy strategic documents and slides that are very impressive on the surface, but ultimately fail to produce the desired results. In strategic plans that I inherited, the average percentage of accomplished initiatives at the end of the planning period was less than 50 percent- a failing grade! It's great to be aspirational, but the strategic objectives need to be achievable. Transparent accountability is the key to ensuring that the plans are not just PowerPoint fantasy sitting in a binder to die on the shelf.Strategic objectives should be supported by goals and specific strategic initiatives that align with the vision of the ENHANCING ORGANIZATIONAL PERFORMANCE THROUGH STRATEGIC PLANNINGBy Paul Young, Chief Financial Officer, Liberty Bank - CTPaul Young
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