September 1, 2022

The Biggest Problems With Strategic Planning in Manufacturing Today

by Mike O'Neill

Does your leadership team create a strategic plan to list the yearly production goals? Do you know the answer if you ask how close you are to meeting your goals? Or do you have to dust off your document and start calculating? It's common for many manufacturing companies.

In fact, the number of times I’ve seen eyes glaze over and thoughts visibly begin to wander at the mere mention of discussing a strategic plan is too many to count.  There’s no reason to be ashamed - I agree with you! The strategic planning process includes too much theory with a lot of talking and very little doing. 

Do you know what really bothers me about all the bells and whistles that come with traditional planning? The biggest mistakes that cost the most time and money? Those that are nothing less than completely ineffective? When smart companies invest time, resources, and money creating a document that is destined to live in a binder on a very, very dusty shelf, it means:

  • You have too many undefined goals
  • Your goals aren’t actionable
  • Your goals aren’t aligned with your organizational culture or mission
  • Employees aren’t even aware of the goals set in the strategic plan

I have 40 years of experience creating and implementing strategic plans. I’ve solved similar problems dozens of times before. Fix your strategic plan with my step-by-step process that’s practical, executable, and achievable.

Step #1. Write a Quarterly Strategic Plan 

The first big change I want you to make is thinking of your strategic plan as a document that you only look at once per year— you should be creating your strategic plan quarterly.

A quarterly strategic plan allows you to:

  • Create short-term goals that drive the long-term goals stated in your organization’s mission+vision.
  • Have fewer goals that are clearer and easier to achieve.
  • Give each contributor a voice and contribution to the plan.
  • Give your leadership team and employees an ongoing sense of achievement as you meet each goal.

Add a quarterly meeting to your calendar to review and revise your strategic plan. Use the previous plan as a template and ensure you have all relevant KPIs and metrics available to enable your leadership team to create new goals.

Step #2. Choose Quarterly Goals

I want you to create a maximum of 5 quarterly goals— personally, in strategic planning sessions, I cap the goals at 3. I’ve found that 3 is the magic number, but we should talk if you are struggling to come up with even 1 goal. Three goals are easy to manage and implement throughout your organization.

I often see several problems in goal-setting, including unattainable goals, vague language, and goals lacking a measurable outcome. To avoid some of the common issues I see, you should focus on:

  • Creating simple, executable goals.
  • Prioritizing goals that you can manage and achieve.
  • Choosing goals you can measure.

One thing I want you to consider when planning your goals is how you will implement them. Each goal has a sequence of initiatives, activities, and deliverables you need to design and implement.

Step #3. Have Measurable Outcomes

Your goal has a measurable outcome if it clearly states what you’re trying to accomplish. Strategic plans often fail because leaders set goals they cannot measure. How can you see progress if you cannot measure your goals?

Your goals should be defined by:

  • Clear measurements or KPIs.
  • Measuring & management through all layers of your organization, not just at the C-suite level.
  • Propelling action & achievement by the people who make it happen— your managers and employees.

Once you have a small list of actionable goals that you can measure, you need to determine how to measure them with KPIs. 

Step #4. Create KPIs

It’s true,  “culture will eat strategy for breakfast,”. Your culture determines how your organization functions and how work gets done. Create KPIs that align with your organization’s goals and culture.

To create good KPIs, you should:

  • Derive KPIs from what your employees do based on their job description and current responsibilities.
  • Choose practical and achievable KPIs within the quarter based on past performance data.
  • Have strong enough incentives to empower all levels of your organization to work together to achieve organizational goals.

I know that aligning your KPIs with your organizational culture and goals adds a layer of complexity to your strategic plan. However, you will not consistently achieve your goals if you don't do this.

Step #5. Make Goals and KPIs Visible

This is the last but most important step of your strategic plan. Your employees have to be aware of the strategic plan and the goals you have for their performance each quarter because they are the ones implementing it.

If you want your strategic plan to be successful, your employees need to:

  • Understand their departmental goals at a high level.
  • See the big-picture of what the organization is trying to achieve.
  • Take part in developing the action plan to achieve their KPIs.
  • Know precisely what is expected of them.

Keep your employees informed of their goals and KPIs by making them visible. Post goals and associated KPIs in each department and the previous quarter’s results. Seeing goals, KPIs, and outcomes helps employees understand how their work affects the organization.

How often do you write your strategic plan? Is it effective? Drop a comment below with your strategic planning tips.

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