FP & A Best Practice Principle 1: Translate Strategy into Actionable Plans

By Lawrence Serven, Regional Sales Director, The Americas, BOARD International

This is the first of a 12-part blog series appropriately called The 12 Principles of Best Practice in Financial Planning & Analysis. These Principles are based on global research conducted with more than 700 organisations worldwide.

Principle #1 : While most organisations have a Strategy, the best performing companies do a better job of translating that Strategy into actionable plans.

Most organisations have a strategy, even if it’s very informal. It may be written on the back of a napkin; something like “We need to continually find ways to cut costs and do more with less so we can remain the low-cost provider.” Or it may be captured in a 3-inch binder and delivered by a strategy consulting firm after months of analysis and offsite executive retreats. While we cannot comment on the quality of any given strategy, the global survey results indicate that the best run companies do a better job turning that strategy into something actionable and concrete. How? By defining initiatives to achieve the strategy and then translating those initiatives into action plans that will be executed in the shorter term. In the experience of the authors, a one-year time frame is a reasonable definition of “shorter term” and fits into the framework of the conventional annual plan process.

To help illustrate the point, one CEO we spoke to told us that the first year in his role he scheduled a 3-day offsite retreat that was facilitated by a well know strategy consulting firm. The results, in his words, were excellent. The team of executives had identified their strengths, weaknesses, opportunities, and threats. They developed a winning strategy to deal with the competition and grow the business. They even took it to the next step and identified strategic initiatives. Seemed like they had everything in place and had thought through everything they needed to.

Three months later when reviewing the Annual Operating Plan, the CEO said “I couldn’t see where our strategy was anywhere in our plan. I had pages and pages of financial projections but nothing that connected the strategic initiatives we talked about in our offsite meeting with what I was looking at in the AOP. Frankly it felt like a waste.

That CEO is not alone.

What the survey of more than 700 organisations revealed is that connecting strategy to actionable plans is part of what makes the best performing companies so successful. They actually have a strategy or some type of long range plan, as do a lot of other organisations. But what begins to separate them apart from average companies is they document specific initiatives designed to achieve that strategy. What sets them even farther apart is they break those broad initiatives into actionable projects.

A good example comes from a somewhat unlikely source, the City of Fayetteville, North Carolina. It’s not often that a government entity is seen as leading innovation, but a new push for increased government accountability and transparency drove the innovation. As they so succinctly put it:

It allows for long range planning at the organisational level with alignment to departmental operations and performance expectations. With this system in place, the City is able to allocate resources appropriately and build strategies for continuous improvement.

To understand better the approach they have taken, Click Here. To view their performance dashboard, visit TRACStat; this site provides an interactive dashboard.

This is just one example of course, what you design and build for your organisation could look very different. And that brings us to the role of Finance in all this. It’s not necessarily to plot the strategic direction of the organisation, but it is to help design and then facilitate the process of translating strategy into actionable plans.

In the next blog post we’ll see what the best performing organisations do to ensure those projects don’t just collect dust in binders, but actually get executed. Stay tuned.