When Should We Update Our Strategic Plan?

Amidst the demanding pace of building winning businesses, leaders often ask me if and when they need to update their strategic plan. I appreciate the question, as it (1) at least implies that they have a strategic plan they are managing to in the first place and (2) acknowledges that engaging in a legitimate strategic planning process is a significant undertaking that a team can’t just wing or squeeze into an existing meeting. When I talk with leaders, I walk through three categories of indicators.

Category 1: Most Obvious Lagging Indicators

The two most obvious indicators you may need to update your strategic plan are obvious and likely mean you are behind schedule on working that update in:

1. The plan has been executed. The goals and objectives in the existing plan have been completed, and the plan is no longer guiding what the company should do and how the company should allocate its resources going forward.

2. The plan isn’t working. If the plan has been given a credible effort and the business is significantly off course generating the desired results, it is likely time to update the plan.

Category 2: Fairly Obvious Lagging Indicators - Conditions Have Materially Changed

You may also need to update the plan if the original conditions around and assumptions on which the plan was built have materially changed. These changes can be external or internal.

Externally, if the market has changed – regulation has changed, customer behavior has changed, the competitive landscape has changed, stakeholder expectations have changed, vendor/supplier relationships have changed – and this change may have a significant impact on your business, it may be time to revisit the plan. 

Internally, if your business has significantly changed, then the conditions during which you evaluated the original plan may be different. If your business has grown or shrunk significantly, if you have rolled out new products or services, if you have developed or failed to develop core capabilities, if you have entered new markets or formed new partnerships or bought new businesses, you likely have experienced a lot of change that you would be wise to step back and assess in an updated strategic plan. 

Category 3: Earlier Indicators

The purpose of the strategic plan is to guide the daily actions of the business to maximize value creation over time. To direct the business in such a way, the plan needs to be a great plan, the plan needs to meaningfully guide the work of the business, the relevant team members and stakeholders need to be aligned around the plan, and progress towards the plan needs to be monitored effectively.

Ideally, a team anticipates the need to adjust the plan prior to entering into category 1 or living too long in category 2 above. Great teams anticipate the needs to update the plan. Below are some earlier indicators that the plan is becoming less effective for your business, and likely needs an update:

• You are Wondering Why More Often: If you find yourself, as a leader, wondering why people are making the decisions they are, prioritizing and resourcing efforts the way they are, and suggesting efforts that seem off course to you more often, part of the problem could be a lack of alignment around and understanding of a meaningful strategic plan.

  
  

• People are Asking You Why More Often: If you find yourself answering the question why from your team and other key stakeholders more often, they likely either don’t understand the plan as fully as they should or the plan is no longer answering the whys of today compellingly.

  
  

• People are Disagreeing More Often and Less Productively: The strategic plan should provide a North Star through which decisions are able to be filtered and made with consistent logic. A great team with a strong strategic plan will be filled with productive disagreement – disagreement about how to fulfill the plan and disagreement that is resolved relatively quickly and leaves the business stronger. When more disagreements are harder to resolve, are less productive, and seem to linger, the current strategic plan is no longer serving you as well as it should. 

  
  

• You Feel Like the Business is Missing Opportunities: If you look around the marketplace and see either unrealized opportunities or opportunities that competitors are capturing and you think your business should be getting a larger share of those, it may be that your plan is not currently built to prioritize those opportunities and needs an update.

  
  

• You Feel Like the Dashboard isn’t Helping You Like it Used to: If you look at the metrics on your business dashboard and they no longer feel like they are communicating a compelling story to you about the state and progress of the business, you may need to update the plan and find a new set of aligned metrics.

  
  

Of course, it’s easiest to pre-empt these challenges by setting a cadence for creating and updating your strategic plan. That cadence should reflect the rate of change you anticipate in your business and your market. In microcap private equity, everything happens so fast that a revisit every 12 months typically makes the most sense. In a large enterprise that may be experiencing less relative change to their organization, longer probably makes sense. In both instances, the goal is to best support the needs of the business.