The 5 Most Common Mistakes in Strategic Planning

Because regulators require financial institutions to have a strategic plan, FIs do make sure they exist. However, it is common to create a strategic plan as a “check the box” activity rather than leveraging it to drive organizational success. Leveraging the strategic plan includes ensuring that the team understands it and are held accountable for implementing it. Unfortunately, this is not the norm in most organizations.

“According to research outlined in the Harvard Business Review, 85 percent of executive leadership teams spend less than one hour per month discussing strategy, and 50 percent spend no time at all. The research also reveals that, on average, 95 percent of a company’s employees don’t understand its strategy. It’s no wonder, then, that 90 percent of businesses fail to meet their strategic targets. Before an organization can reap the rewards of its business strategy, planning must take place to ensure its strategy remains agile and executable.” –- Harvard Business School Online’s Business Insights Blog

In our last blog, Ty Glenham, consultant at Profit Resources, Inc., looked at the importance of strategic planning in 2022-23 and why it matters now more than ever. In this blog, Mikelle Brady, Partner at PRI, discusses the five most common mistakes in strategic planning. Eliminating these unforced errors will ensure the FI creates a flexible, approachable strategic planning document that has the potential to help the organization grow and thrive.

Mistake #1: Limiting participation to a select few

In some organizations, the FI’s CEO is responsible for creating the strategic plan, robbing the organization of the discovery of new possibilities and fresh perspectives. PRI encourages an FI’s Board of Directors and everyone in the executive team as well as the next level of the management team to be included in creating the strategic plan. This approach ensures that new ideas and buy-in occurs within the top leadership levels of the FI.

Mistake #2: Spending time looking backwards

Brady said that a strategic plan should be forward-looking. FIs typically spend a great deal of time looking at financials. While having a deep understanding of financials can be instructive, a forward-looking plan looks at the big picture and communicates where leadership would like to take the organization in the next five years. It just doesn’t make sense to spend a substantial amount of time looking at past performance when you’re calling people to dream big about the future.

Mistake #3: Not thinking big enough

FIs that tend to get stuck on building on a previous strategic plan instead of starting from scratch can miss out on new opportunities to thrive. In today’s quickly changing competitive environment, FI leaders must think about what they could be and what they need to do to grow beyond their existing services and traditional delivery methods. While a consultancy like PRI can guide this process, it is up to the FI itself to envision what they want to be. When they can articulate this vision, PRI helps them formulate strategies to achieve it. This is the time and place to think big.

Mistake #4: Skipping the vision statement

While most FIs have a mission statement that articulates why they exist and what they do for their stakeholders, the vision statement is more forward-thinking and aspirational. It should touch on where the FI wants to be in 3 to 5 years, which will guide management decisions as they work to support this vision. In the rapidly changing environment of the past several years, many FIs have had to abandon or modify their strategic plan to remain relevant. This is why a clear and thoughtful vision statement is crucial, and it tends to guide a flexible and nimble strategic plan. This is an opportunity for leadership to “catch the vision” of the organization and drive it down into the FI’s operations.

“An engaging envisioning session helps leaders collaborate in creating a shared story of success. This activity unites and inspires the leaders and ultimately everyone to embrace the organization’s greater purpose.” — The Seven Keys To Successful Strategic Planning, Forbes

Mistake #5: Printing the plan and putting it on a shelf

The strategic plan must be flexible enough that changes can be made as the environment changes, but there must also be follow-through and action taken on the plan to make a real difference in the organization. Team members need to understand the strategic plan and be held accountable to driving the action steps. 

“There should be a team of employees working every strategic initiative of the action plan,” Brady said. “The FI should assign key drivers and timelines and ensure that the team meets at least quarterly to discuss challenges and accomplishments to be celebrated. A high-level progress report should be presented to the Board of Directors once or twice a year.”

Without measurement and accountability, the strategic planning process does not have a chance to live up to its promise.  

“Tracking progress on strategic goals and objectives on a regular basis is key to ensuring that the plan is being implemented and to making course corrections as needed. The discipline to make progress and report on success measures on a regular basis ensures accountability and follow-through. It may be helpful to assign a person responsible for collecting, tracking and reporting progress on the strategic plan using scorecards and dashboards. A quarterly business review includes a status report on strategy implementation through key performance indicators.”  — The Seven Keys To Successful Strategic Planning, Forbes

Strategic planning is a requirement from regulatory agencies.  But to really thrive as an organization, FIs should do more than check the box.  Ensure that strategic planning is set up to be an initiative that drives growth and success.

Profit Resources specializes in identifying profitability improvement areas for financial institutions through revenue growth, cost control, streamlining processes, and effective use of technology. Contact us to learn more about our personalized approach to propel growth and improve profitability.