A CLOSER LOOK AT THREE KEY SHIFTS TO TRANSFORMATIONAL STRATEGY PLANNING: ROADMAPS, LEADING INDICATORS AND REVIEW CYCLES
Adopting Transformational Planning requires understanding three key shifts that differentiate it from traditional strategy planning.
These shifts are:
1. Moving from creating goals to be achieved via strategies to creating roadmaps with phases driven by triggers. In traditional planning, quantitative measurable goals are set, and strategies are defined and executed to achieve the goals. In Transformational Planning, the journey towards long-term goals is mapped out in phases that are embarked upon when pre-defined triggers occur.
2. Moving from key performance indicators that are lagging in nature and are based on measuring the past, to using leading indicators with thresholds that highlight changes and trends about to occur. These leading indicators are called health metrics.
3. From annual planning cycles wherein fiscal year goals and strategies are defined and then followed up on via quarterly business reviews, to quarterly planning cycles wherein certain internal and/or external triggers drive new phases and strategic choices that are then managed via weekly and monthly execution review meetings and a quarterly strategy revision.
Let’s take a look at each of these shifts in more detail beginning with the use of roadmaps.
ROADMAPS [1]
Transformational Planning creates a roadmap that outlines your company’s journey to a desired future state. This roadmap replaces the traditional Goals and Strategies document for communicating the phases of development and implementation. Each phase represents an essential state of the business or achievement that must be fulfilled before embarking on the next phase of the journey. Each phase is triggered by a pre-defined occurrence either within the company or outside in the marketplace. For example, Phase I may be “Stabilizing Profitability”. The triggering event for this phase is a lowering or loss of profitability below a pre-defined threshold. At this time, the business embarks on a series of actions to stabilize profitability. A new trigger is defined as a new acceptable level of profitability held consistently over a determined amount of time. Once that trigger has been reached, the business then moves into Phase II. In this way, business progress along its journey to a new desired future state is trigger-based.
Each phase also contains the key strategic choices or areas of focus required for moving the business successfully through the phase. This is all about defining strategic choices about direction and actions to be taken. Like strategies are defined to achieve measurable goals in traditional planning, in Transformational Planning strategies are defined to trigger specific changes within operations or outside in the marketplace.
The strategies defined for each stage are followed by articulating key results and actions to be taken to fulfill strategy and move the business through the phase. The strategies and key results are what are cascaded to teams for implementation during each phase of the journey to the desired future business state.
LEADING INDICATORS: HEALTH METRICS [2]
Leading indicators are dynamic and constantly in flux. As such they are harder to measure than lagging indicators which objectively measure something that has already occurred in the past. Because leading indicators can be harder to measure, Transformatiopnal Planning identifies thresholds of an activity as a way of determining a trend or indication of movement within or outside the company. In Transformational planning, the leading indicators used are called health metrics.
Health metrics enable weekly tracking of the pulse of the business. Similar to Key Performance Indicators, health metrics are not the same. They should be looked at with a twist. They are indicators that illustrate the health of the business such as cash reserves, receivables trending within 30 days, number of new site views, number of new patents, new sales, new markets and order increases. They are indicators of shifts in the business and marketplace. For use in Transformational Planning, the health metrics chosen for a given phase must be numbers that can be updated and are available for review weekly – ideally supported by a tool or systems that facilitates tracking and reporting. Instead of focusing on specific targets, Transformational Planning focuses on ranges and thresholds with special attention to minimums required to demarcate significant change.
REVIEW CYCLES: THE 90 DAY SPRINT [3]
Each cycle begins with a refresh of quarterly objectives, strategic choices and key results within the roadmap. These updates are communicated to all participating teams. Within the first month of a new quarterly cycle, week’s 1 thru 3 entail holding weekly check-ins that last no more than 1 hour. The focus of these check-ins is to look at the performance of the previous week and year-to-date against health metrics. In doing so, you are reviewing progress to see if there’s anything that needs to be calibrated for the work of the team that week to further move the health metrics in the right direction.
The fourth week of every month is used for a longer monthly check-in which should last no more than 2 to 3 hours. The focus of monthly reviews is to study a wider array of metrics beyond those used for weekly meetings. Additionally, strategic initiatives are reviewed to determine their continued relevance or need for change. Strategic choices and initiatives are not reviewed weekly.
At the end of a three-month cycle, a quarterly strategy session is held. The intention of quarterly session is to step way back from the focus on daily execution, evaluating strategic direction against market leading indicators and determining if triggers are reaching thresholds that will mark a shift to a new phase of business strategy and operations.
The publishing of results is critical so that teams can learn and adjust on the fly. This requires a move to greater transparency with regards to key performance indicators and leading internal and external indicators. Teams will use this information on a weekly, monthly and quarterly basis to make adjustments to their activity so as to further the company’s move towards their desired future state.
CONCLUSION
The move to Transformational Strategy Planning means making three key shifts to the way your organization plans. From traditional strategy documents to roadmaps that outline phases of transformation towards a desired future state. From looking back to looking forward, Transformational Strategy Planning uses leading indicators instead of lagging ones. And from annual planning cycles with quarterly reviews to quarterly planning cycles with weekly and monthly reviews, Transformational Strategy Planning drives sustainability of success by seeking to have you lead transformation instead of adapting to change others are driving.
Reference Materials:
[2] Adapted from OnStrategy’s video and guide on Health Metrics.
[3] Adapted from OnStrategy’s video Strategy Sprints and guide on Goal OKR/Cycles).
Planning Doesn’t Have to Be the Enemy of Agile by Alessandro Di Fiore (HBR).
Setting OKRs isn't the Win, Results Are by Workboard.
Objective and Key Results by OKRs.
Authoring OKRs by Workboard.
Setting OKRs that Work by OnStrategy.
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