1. June 26-29, 2011 Las Vegas, NevadaStep Out of the Ivory Tower The Right Way to Develop a Strategic Plan Mason Holloway June 25 SHRM 2011 Annual Conference & ExpositionSHRM 2010

2. AgendaModule 1: Where are we now?Module 2: The strategic planning frameworkModule 3: The 5 elements of effective strategic planningQ&A and Wrap-up 2 SHRM 2010 3. Activity - Where Are We Now? Module 1 Where we are we now? Think about your organization:> What is the approach to strategicDISCUSSIONplanning in your organization?> Where is it formed?> What data is used?> How is it executed? 3SHRM 2010 4. Youre Not AloneModule 1 Where we are we now?Which choice best describes the way important strategicdecisions are made in your company?By small senior group, including CEO or equivalent 52 With formal strategic planning process 23By business unit leaders 11By CEO or equivalent 10 By sector leaders2 By frontline employees1% respondents1Other1 1 All data weighted by GDP of constituent countries; respondents who answered dont know are not shown; figures sum to 100% because of rounding. Source: July/Aug 2006 McKinsey Quarterly survey of business executives4 SHRM 2010 5. Discussion - What Has and Has Not Worked? Module 1 Where we are we now?Think about your organization: > What impact/success have youDISCUSSION achieved with your strategic plans? > Did you get the results you desired? > Why/Why not? 5 SHRM 2010 6. Welcome to the Club: A Sobering Statistic Module 1 Where we are we now?QUICK FACT Most companies strategies deliver only 63% of their promised financial value. 6SHRM 2010 7. Where Does the Performance Go? Module 1 Where we are we now?37% Average Performance Loss7.5% Inadequate or unavailableresources 5.2 % Poorly communicated strategy 4.5% Actions required to execute not63%clearly defined (no clear outcomes)Average Realized4.1% Unclear accountabilities forPerformance execution 3.7% Organizational silos and culture blocking execution 3.0% Inadequate performance monitoring 3.0% Inadequate consequences or rewards for failure or success 2.6% Poor senior leadership 1.9% Uncommitted leadership0.7% Other obstacles (including* Harvard Business School Publishing, 2005inadequate skills and capabilities) 7 SHRM 2010 8. How Important is Strategy?Module 1 Where we are we now?The Institute for Corporate Productivity study, the Top TenCritical Human Capital Issues of 2011:1. Leadership development2. Succession planning3. Strategy execution/alignment4. Managing/coping with change5. Talent management.6. Innovation and creativity7. Performance management8. Knowledge retention9. Engagement10. Coaching8SHRM 2010 9. Activity When the Strategy Went Off the RailsModule 1 Where we are we now?Think of the development and implementation of a strategyfrom your past that failed to produce the desired results: Document, using a scale of 1-5, where 1 is low:1. How involved was leadership in setting the vision?2. How involved were managers involved in setting the vision?3. How much input did key performers have in the strategy?4. How closely tied was the strategy to organizational vision, mission, values and business model?5. How well was the strategy communicated to the workforce as a whole?6. How effectively did the organization align talent to support the strategy?Share your story with a colleague at your table, offering your diagnostic of what went wrong9SHRM 2010 10. The Ivory Tower ApproachModule 1 Where we are we now?The Ivory Tower approach What it includes: > Usually: Company Mission, Vision and Values SWOT assessment Environmental scan > Sometimes: Expert input from strategist Market analysis or feedback > Occasionally: Past performance data relative to previous strategy Talent assessment of current capability > Rarely: Direct input from the line on key strategic considerations Specific performance data from key performers (opportunities and gaps)10 SHRM 2010 11. What it Says and What it DoesModule 1 Where we are we now?What it says: Even though you have the most intimate contact with yourpart of our business we dont trust or value your opinion. Just get back to work! If we want your opinion well ask for it, but dont hold yourbreath!What it does: Breeds disengagement Creates a division between senior leadership and the rest ofthe organization Reduces the likelihood of successfully translating thestrategy to execution CREATES MASSIVE DISCONNECTS!11SHRM 2010 12. The Effect of the Disconnects Module 1 Where we are we now? 12SHRM 2010 13. Activity The Circle Strategy ChallengeModule 1 Where we are we now?Scenario: Your organization currently deploys the circle strategy. Changes in leadership have given rise to the development of a new strategy that your organization is charged with implementing You will take the role of ether a Leader, Manager, or Performer for this activity Follow the instructions provided and be prepared to share your observations13 SHRM 2010 14. Instructions for ActivityRoles for Activity Everyone will be assigned a Role: Leader: Your mission is to first successfully implement the current2 per groupstrategy, then shift as a new strategy is introduced. All activity Manager: will be timed. BOTH HANDS MUST REMAIN ON THE ROPE.4 per group Round 1, 4 minutes Managers work with performers to perfect implementation of the circle strategy. Execute the strategy as Timer/Observer: many times as possible in 4 minutes. Leaders meet and discuss1 per group the strategic alternatives and select a new strategy. Performer: Round 2, 4 minutes Leaders communicate the new strategy toEveryone not managers who in turn discuss the implementation withassigned another performers. (+10 second penalty for touching the rope during this)role Round 3, 4 minutes Implementation of the new strategy as many times as possible in (penalties of +10 seconds if there is talking on a team while moving OR if someone takes a hand off the rope)14SHRM 2010 15. Questions on the Activity1. How does this activity mirror the difficulties involved in choosing and implementing a new strategy?2. What are some of the factors that impacted success?15 SHRM 2010 16. What is Strategic Planning? Module 1 Where we are we now? Strategic planning is a clarifying activity that enables organizations toDefinition identify, align on, and to move toward desired future states. It consists of the process of crystallizing a shared vision, specifying goals and objectives then implementing plans and initiatives to reach them. 16 SHRM 2010 17. Out of the Ivory Tower Module 1 Where we are we now? The new paradigm in strategic planningOldNewTop-down, isolated creationInclusive, holistically generatedPlan first, resource later Resources integrated planningLimited input from performersRelies on input from key performanceDisconnected from performanceLeverages performance opportunitiesDifficult to translate to executionClosely linked to execution 17SHRM 2010 18. The 3 by 5 Strategic Planning Framework Module 2 The Strategic Planning Framework Three Phases (the 3 Ds) > Develop the shared vision > Design and test the strategies > Drive the Execution Five Elements > Visioning foundation > Human performance factorsHumanVisioning > Execution capabilityFoundation PerformanceFactors > The long view > AlignmentStrategicPlan The LongExecution View Capability 18 SHRM 2010 19. The Strategic Planning Framework Module 2 The Strategic Planning FrameworkDevelop a Shared Vision Design and Test StrategiesDrive the Execution VisioningExecution The LongFoundationCapabilityViewStrategic Execution What weve Strategic Alternative Amonitoring and done before GoalsevaluationInternal and External Factors CompanyVision, Strategic StrategicMission and Alternative B Plans andValues What we are What weInitiativesPerformancedoing wellwant to dofactors:today nextStrategicprediction and View of theAlternative Cmonitoringmarket andexternalStrategicexpectationsDecision Contingency Key Performance Criteriaplanning andPerformer Gaps andimplementationInput Opps Reduce EliminateHuman Performance Innovate ExtendFactors Alignment19SHRM 2010 20. The 3 Ds (Phases) of Strategic Planning Module 2 The Strategic Planning Framework Develop the shared vision > Include the right people and the right data Design and test strategies > Use known performance factors as decision criteria Drive the execution > Predict and plan for contingencies monitor and evaluate progress 20SHRM 2010 21. Develop the Shared VisionModule 2 The Strategic Planning Framework Process for developing the shared vision > First, assemble the appropriate team and contributors Includes representatives from the business units Includes input from Key Performers in critical business areas > Restate and align on the companys mission, vision and values Values serve as the context rather than the criteria > Openly discuss perspectives on the market, the industry, and the companys SWOT > Assemble the perceptions into a collective view > Use the Vision Foundation Matrix to evaluate past, current and predicted performance data against the collective perspective > Select strategic goals based on the overlap of performance opportunity and market opportunity21 SHRM 2010 22. Tools for the Shared Vision - SWOT Module 2 The Strategic Planning Framework 22SHRM 2010 23. Design and Test the StrategiesModule 2 The Strategic Planning Framework Process for designing and testing the strategies > Begin by reviewing the strategic goals against the performance opportunities and gaps > Discuss and draft strategic initiatives that will drive the strategic goals > Use selection criteria to rigorously evaluate the draft initiatives: Alignment with performance opportunities and gaps Ability/need to reduce/eliminate/innovate/extend for the initiative tosucceed Alignment with the shared vision > Develop a business case for the best alternatives > Cascade the initiative into individual goals, measures and accountability 23 SHRM 2010 24. Tools for Evaluating Strategic Alternatives Module 2 The Strategic Planning Framework 24SHRM 2010 25. Drive the ExecutionModule 2 The Strategic Planning Framework Process for driving the execution > Begin by establishing the monitoring and evaluation criteria and governance What is a failure in strategy and what is a failure in execution? > Discuss and predict with the team, specific performance factors that might impact the execution > Create contingency plans for the most likely failure points and link to the monitoring25 SHRM 2010 26. Tools for Execution Balanced Scorecard Module 2 The Strategic Planning Framework 26SHRM 2010 27. The 5 Elements of Effective Strategic PlanningModule 3 The 5 Elements of Effective Strategic Planning VisioningHumanFoundation PerformanceFactors Strategic PlanThe Long ExecutionViewCapability27 SHRM 2010 28. Module 3 The 5 Elements of Effective Strategic PlanningVisioningFoundation Visioning Foundation 28SHRM 2010 29. Whats in a Vision? Module 3 The 5 Elements of Effective Strategic PlanningIf you dont know where you are going... Any road will get you there. - Lewis Carrol 29SHRM 2010 30. Characteristics of the Visioning FoundationModule 3 The 5 Elements of Effective Strategic Planning Owned by Typically owned by the C-suite > May include input from executive committee or key leadership Influenced by Market and shareholder perception > External market changes > Shareholder expectations and actionsIntegrated with And supported by the business model > Must align with the companies core principles and value proposition Informs And drives organizational goals and goal setting30 SHRM 2010 31. Vision Foundation MatrixModule 3 The 5 Elements of Effective Strategic Planning Past PerformanceCurrent Performance Predicted PerformanceVision How has the workforce How closely does our currentWhat will the workforce need to do in translated the vision into action execution support our vision? the future to align more closely with in the past?the vision (In performance terms)? What human performance factors Where have the disconnectsprevent better alignment? Should the Vision be occurred? updated/modified to reflect future Does the vision still resonate in trends? How has the marketthe current market and workforce? responded?MissionHow has our mission beenHow do our current humanWhat effect will modifying our carried forward or been performance factors align with ourmission have on the workforce? changed by our execution? mission?Business How well has our workforceHow well is our workforce aligned What can (or should) be changed performed within our business to drive success within our current (either business model or workforce)Modelmodel?business model? to drive greater success? Where are there performance gaps? Opportunities?31 SHRM 2010 32. Important ConsiderationsModule 3 The 5 Elements of Effective Strategic Planning Must be an inclusive process Must address human performance factors with a rigorousmethodology Must arrive at a unified view that can be internalized by all All initiatives must be put through the same processregardless of their origin32 SHRM 2010 33. Module 3 The 5 Elements of Effective Strategic PlanningHuman PerformanceFactorsHuman Performance33 SHRM 2010 34. Characteristics - Human Performance Factors Module 3 The 5 Elements of Effective Strategic Planning Owned by Typically owned by the Human Resources function > May be driven by the talent function or shared with the line Influenced by Market demand, organizational design and talent pool > External market changes > Internal organizational design decisions > Resource allocationIntegrated with Development and talent requirements from the line > Must align with the business drivers from the line Informs And drives the understanding of limitations and potentialsthat support the Visioning Foundation 34SHRM 2010 35. Human Performance Thinking Module 3 The 5 Elements of Effective Strategic PlanningAsking THE RIGHT QUESTIONSFinding THE RIGHT SOURCES&(THEN BEING WILLING TO ACCEPT WHAT YOU HEAR) Look for the performance opportunities to leverage Use real performance data to inform vision and strategy Challenge old assumptions!The Right People arethe Key! 35SHRM 2010 36. The Power of the Bell Curve Module 3 The 5 Elements of Effective Strategic Planning The most effective strategies extend performance opportunitiesStandard New Standard PerformersPercent of Workforce Minimal Performers Key PerformersLevel of Performance 36SHRM 2010 37. More Than Just KnowingModule 3 The 5 Elements of Effective Strategic Planning Human performance factors cover a range of elements> Not just about the workforces skill or knowledge> Must be viewed holisticallyInformation, Expectations &Tools & Technology Structure & Process Feedback Selection & Motives &Skills & Knowledge AssignmentConsequences37 SHRM 2010 38. 3 Steps to Integrate Human PerformanceModule 3 The 5 Elements of Effective Strategic PlanningIntroduce Human Performance to your Strategic PlanningProcess in Just 3 StepsIdentify Performance STRENGTHS that you can LeverageSTEPHOW? Identify and include key performers from high performingfunctions in the planning processWHAT? Get input on how their performance could support or extendLook for performance gaps that if closed would creategoals and vision.opportunities to drive toward the organizational opportunitySTEPIdentify now close laterFocus on answering the question: if this performance gap wereclosed, what incremental or even transformational opportunitieswould become possible? (e.g new initiatives based on excessSTEPIdentify performance capability that does not currently exist, but if added wouldcapacity.)create opportunity?Integrate with the Visioning Foundation!Are you Willing to Challenge The Status Quo38 SHRM 2010 39. Practice! Module 3 The 5 Elements of Effective Strategic PlanningComplete the practice worksheet in your participant materials: Partner with someone at your table Independently: Using the Vision Foundation Matrix (VFM) andHuman Performance Factors checklist, complete the VFMWorksheet Next, discuss your effort with your table partner and draft 3strategic goals based on your VFM Past PerformanceCurrent Performance Predicted PerformanceVisionMissionBusinessModel 39SHRM 2010 40. Module 3 The 5 Elements of Effective Strategic Planning ExecutionExecution CapabilityCapability40 SHRM 2010 41. The Case for InclusionModule 3 The 5 Elements of Effective Strategic PlanningTake away my people, but leave my factories, and soon grasswill grow on the factory floors.Take away my factories, but leave my people, and soon we willhave a new and better factory. - Andrew Carnegie41 SHRM 2010 42. Characteristics Execution Capability Module 3 The 5 Elements of Effective Strategic Planning Owned by Typically owned by the business line management > May be supported by other corporate functions Influenced by Organizational design, recruiting, development programs > Access to resources > Process design and decisions > Management structure and communicationIntegrated with Resource planning > Must align with the business requirements from the line Informs The translation of strategy to execution 42SHRM 2010 43. The Keys to Execution Capability Module 3 The 5 Elements of Effective Strategic PlanningDeveloping execution capability is essential to deliver onthe organizations strategic promises Use the Human Performance Factors as strategic decisioncriteria for execution planning > Ensure that the team has the capacity to execute the assigned initiatives fill any talent gaps > Provide for the necessary knowledge, skill, information and structure > Initiate regular feedback against clearly defined and articulated goals and objectives > Plan for incentives, motivation and consequence > Ensure that process, tools and support structures are aligned to the desired outcomes 43SHRM 2010 44. Execution is Part of the PlanModule 3 The 5 Elements of Effective Strategic Planning Turn Your Strategic Vision Based on Human Performance into Capabilityin Just 3 StepsSTEP Identify Priority Plans Consider the overall vision and strategy as well as thestrategic vision or your organization. Document the top 3 initiatives that your organization mustSTEP Move from Initiative to accomplish the strategy. achieve in order to Goal HOW? Use a technique like Hoshin planning to connectHOW? Determine what goals, when achieved, wouldstrategy to initiative.naturally help you accomplish the Initiatives you identified?For each of the initiatives, identify 2 goals that, if achieved,STEP Clarify anddrive results and lead to achievement of the initiative.would Align Ensure that yours are specific, measurable, and can beeasily and clearly communicated and understood. Align to team performance capabilities using an approachlike Performance DNA to assess.44 SHRM 2010 45. Activity Initiatives to Goals Worksheet Module 3 The 5 Elements of Effective Strategic PlanningGoals That Lead to PlanHow will I know if we are How will I know this (result Achievementsuccessful?described in previouscolumn) has occurred?Initiative #1 Goal #1Goal # 2Initiative #2 Goal #1Goal # 2Initiative #3 Goal #1Goal # 2 45SHRM 2010 46. Activity Goals to Capability Worksheet Module 3 The 5 Elements of Effective Strategic PlanningInitiative:GoalCriticalTeam If Yes, Key TeamCapabilitiesMembers Members to Support (Human with RightThis Goal Performance)Capabilities(* indicates lead) Available? Goal #1:YesNo Goal #2 YesNo 46SHRM 2010 47. Module 3 The 5 Elements of Effective Strategic PlanningTheThe Long View Long View 47SHRM 2010 48. Characteristics The Long ViewModule 3 The 5 Elements of Effective Strategic Planning Owned by Typically owned by leadership, managers > May be supported by a communication or change management plan Influenced by Changes in the external forces or expectations or internalperformance characteristics > Predicted performance and measurementIntegrated with Strategy evaluation and monitoring > Must be tied back in to current predictive and subsequent go-forward planning Informs The ongoing execution and contingencies for the currentstrategy48 SHRM 2010 49. Forgetting to Look Ahead Module 3 The 5 Elements of Effective Strategic Planningis a guaranteed path to failure! Predict and include points, trends or expectations ofperformance that you will constantly monitor in yourstrategic plan Envision a better outcome and examine your humanperformance factors to evaluate the potential impact to/fromthe workforce Expect execution success but include contingency optionsfor execution failures 49SHRM 2010 50. Structure and Maintain Your Long ViewModule 3 The 5 Elements of Effective Strategic Planning Use a structured approach to regularly update your assumptions Brainstorm to encourage creativity Group, prioritize and align with your plan and resources.BrainstormAffinitizePrioritize Align & Assign Priority #1 Owner: Results needed: Performance resources: Measurement: Contribution to Goal: Governance50 SHRM 2010 51. Module 3 The 5 Elements of Effective Strategic PlanningAlignment 51SHRM 2010 52. Characteristics Alignment Module 3 The 5 Elements of Effective Strategic Planning Owned by Typically owned by leadership > May be driven by a strategy office if present Influenced by Market evaluation and feedback of current strategy > Communication and execution feedbackIntegrated with All aspects of strategy formation and execution > Must get and provide continuous feedback Informs The spectrum of strategic activity 52SHRM 2010 53. The Glue to Make it StickModule 3 The 5 Elements of Effective Strategic PlanningContinuously ASK YOURSELF Do my planning priorities reflect the top priorities of the organization? What else can my team do to help the organization achieve its most critical goals and what performance factors are required? Are we performing in a way that aligns with the organizations vision and current overall strategy? If not, what must change? As you make key decisions Is this a good idea given my teams capability? ASK YOURSELF Is this a good idea for the organization?(Does it fit with our strategy and goals? Is it important to our customers?Do we have the resources? How will it impact our long term position?) Is it a good idea for the organization now?(How does it compare to other priorities? Is it more important? Lessimportant?)53 SHRM 2010 54. Knowledge is the KeyModule 3 The 5 Elements of Effective Strategic PlanningOrganizational Vision > For the Organization Overall > For Your Unit & For Your Group > For You & Your TeamOrganizational Goals > For the Organization Overall > For Your Unit & For Your Group > For You & Your TeamOrganizational Strategy > For the Organization Overall > For Your Unit & For Your Group > For You & Your Team54 SHRM 2010 55. Questions? Q&A and Wrap-up Mason Holloway, DirectorBeacon Performance GroupCONTACT www.beaconassociates.netmholloway@beaconassociates.net 443-995-4797 55 SHRM 2010