Strategic planning: A strategic plan can only work if you use it

Northwestern Financial Review, Dec 1-Dec 14, 2002 by Austin, Douglas V

A decade ago, I would glower at audiences and ask, "Why aren't you strategic planning?" Five years ago, I looked out over audiences and discovered that more than half had started to strategic plan. In recent years, I am pleasantly surprised to find that all of my audiences are strategic planning.

Then why do I choose to discuss what to do now? The answer is, unfortunately, because my audiences are not following up on their strategic plans.

Twice in recent months, I have participated in retreats where holding companies had undertaken three- and fiveyear plans, but with no modifications, adjustments or follow-up from that point forward. After the initial three or five years had passed, the holding companies were going to make additional strategic plans. They did not utilize the professional services of the original facilitators and did absolutely no follow-up during the life of the strategic plans.

If strategic planning is not high on your "to do" list, allow me to offer a few helpful hints to increase your financial institution's profitability, safety and efficiency:

Know where your strategic plan is! You would be surprised how many banks do not know where their strategic plans are filed. More often than not, the members of the board of directors do not have copies, and senior managers cannot locate theirs.

Distribute copies of the strategic plan to all relevant personnel. Anyone who needs the information to perform more efficiently and productively should have a copy. Recipients should know what is in the plan and should be included as part of the performance of the plan. If they do not know what is going on, how can they assist?

Strategic planning should be an annual exercise - not simply addressed when it is time to meet regulatory requirements. Start in January or February and plan for the revision process during the balance of the year. Schedule a retreat for the board of directors and senior management sometime during the latter part of the year. Tie in long-- term strategic planning with short-term budgeting analysis. Strategic planning and budgeting are not opposites -- they are complementary exercises to aid you in surviving as a financial institution.

Know where you are heading. Each financial institution is different, but they all have one thing in common - the future is in front of them, and it is their independent decision as to how to get there. As a board of directors, you must decide the future for your financial institution, and then you can fill in the guidelines on how to achieve those goals and objectives in order to get to Valhalla!

Make the strategic-planning retreat part of the board's agenda. You cannot plan as a team if some members of the team do not show up for the planning. Almost every strategic-planning retreat has at least one missing director. There are no justifiable excuses for missing a strategicplanning retreat - unless the director died the night before. There should be no reason for a director to miss the retreat if the retreat is planned well enough in advance.

Review your current strategic plan. If there is one mistake many planning sessions have in common, it is that they do not review the existing strategic plan that was implemented the prior year. If you are under the strategic plan for Year 2002, and it arose from your planning process in 2001, you should quarterly review the setup that is to be implemented periodically. It will not do any good to discover in December that plans established for the year were not accomplished. It is much easier to make adjustments on a quarterly basis than to take radical actions at the end of the year.

Hold management accountable for the strategic plan. The reality is that the directors prepare the strategic plan, adopt it and then go home. It is the responsibility of senior management and the staff to implement the strategic plan.

Either plan or do nothing at all. You should plan and follow up aggressively each year to make sure that implementation is carried out appropriately. When implementation is not feasible, make sure changes are made quickly, and that revisions take place each year to improve the plan. Either that, or do nothing at all.

Time and resources spent on strategic planning -- retreats, facilitators, planners, meetings, reviews, etc. -- will be wasted unless follow-through is achieved year after year. Make sure the strategic-planning process is a high priority for the board of directors in meeting its fiduciary obligations.

If you are not going to make strategic planning a priority, then do not bother to plan at all. Instead spend your time deciding to whom your financial institution will be sold.

Douglas V. Austin is chairman and CEO of Austin Financial Services, Inc. of Toledo, Ohio.