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Making Sense of Strategic Planning Part 4
By Enda Larkin
In continuation of his four part series, Enda Larkin explores how to makes sense of the strategic planning process, particularly in the context of small and medium sized operations. Part 3 explored how to translate Vision and Mission statements into goals, strategies and plans, so that they actually added real value to the business. In this final article, how to measure the effectiveness of strategic planning over time will be addressed.
- View Part 1 here -
- View Part 2 here -
- View Part 3 here -
Making Sense of Strategic Planning - Part 4
How will we know we are getting there?
In Parts 1 -3, the focus was on creating cohesive linkages from vision and mission right down to specific activities in the annual plan. The final part this series will explore the question, how will we know we are getting there? in relation to achieving your goals and ultimately your vision and mission. The answer to this question can of course only come from measuring progress, analysing the implications of the results you get and taking action to continuously improve.
Continuous improvement is a feature of all excellent companies and is only possible within a culture where there is genuine concern, dedication and a willingness among managers and employees to constantly get better at what they do. Hence, everyone in your hotel will have a role to play in the process, but you must naturally take the lead here. Five basic Steps can be taken to manage continuous improvement:
1. Define the results you want to achieve
You will already know what you want to achieve. It's your goals which have been developed based on your vision and mission. As we work through the continuous improvement framework, we will again use our fictitious hotel example to help make sense of the process. As a reminder, here are the goals which they were seeking to achieve:
2. Take action to achieve the results you want
Clearly, if you don't implement your strategies through your annual plan as described in Part 3, then measuring impact is pointless, because you won't see any results and, even if you did, you would not know why they occurred - be they good or bad. So, make sure that the defined actions are addressed within the agreed timeframes.
3. Consider how progress will be measured
Measuring progress in relation to the strategic map has two dimensions: implementation and impact. Measuring implementation is straightforward and essentially relates to what we just said; making sure the actions agreed in your annual plan are actually carried out within the agreed timeframe through regular review during the year. Measuring impact is obviously more complicated but clearly more valuable in terms of what it can tell you about your progress towards your goals and by correlation towards achieving your vision and mission. You are, no doubt, already familiar with terms such as key performance indicators/measures and even scorecards but, as with everything else, we will streamline the jargon.
Certainly, you already measure impact in areas such as financial performance; however, when seeking to identify progress to your goals, there may be measurement gaps to be bridged because clearly not all the goals in your strategic map will be financial in nature. So, what measures will you actually need? Naturally, this will depend upon the goals you set and the key point here is not to overload yourself with measures; you only need those that are of value for you. Taking our hotel example, this might involve the following sample measures:
Without the sample measures identified above, the management team in this fictitious hotel couldn't determine whether they were on the right track. You will also notice that their mix of measures gives them feedback relating to each of their primary stakeholders, owners, customers and employees, so they would have a very holistic feel for how the hotel is performing.
Do you have the necessary systems in place?
Having identified the measures you will use, you might then need to consider whether you have the systems in place to give you the data you need at the times you need it. To be in a position to measure anything, information systems are required and whilst these do not have to be complicated, they must provide you with the feedback on actual progress against projected in the relevant areas. In a larger operation you probably already have the required systems in place, but in a smaller hotel you may not; however, every business regardless of size needs regular information to support ongoing decision making. Of course, this might present resource challenges for you, but if you are serious about continuous improvement, you must find ways to address the issue. Without the right data, you cannot measure impact, make informed decisions, take corrective action or indeed get better as a business. In any case, think of any costs incurred here as an investment, the return on which will be improved decision making and ultimately a better hotel. As part of creating your own strategic map, you should therefore think about what your information needs will be in future, what you currently have available and put the appropriate systems in place to bridge any gaps.
4. Measure Progress at defined intervals
At defined intervals in the future, the measures you have identified need to be produced so that you can track progress. For some measures, such as financial data, you will produce them frequently whereas for others, such as an employee engagement %, it takes more time to see results so such measurements might be taken quarterly, bi-annually or annually depending upon the scale of your operation.
5. Analyse the results and make improvements
The final stage of the continuous improvement cycle is the most important component and is really the cornerstone of the strategic map itself. Depending on actual results achieved against expected you will obviously be faced with some decisions. If progress is not matching expectations, you must identify what's causing the shortfall and take corrective action. Even when the result is positive, you still need to learn the lessons, so that you can make it even better in future. This analysis phase will require you to investigate root causes and might involve, depending upon the specific measure, a range of actions such as:
Based on what you learn from this analysis, you then plan for the next period to make improvements so that you actually do get better. You might even be forced to re-examine your strategies or maybe even to conclude that the goals you set were simply overly ambitious in the first place. Also, as part of this analysis and improvement phase, you will over time be able to identify trends in your key measures and this will help you to determine whether you are consistently improving.
Benchmarking your results
To strengthen your understanding of how your hotel is performing against the defined goals, you should also explore ways in which you can benchmark your results against industry norms. These benchmarking relationships can be informal in nature, agreed with what you consider to be comparable hotels, or they can be more structured systems. For example, many hotel associations or government agencies now produce sector-wide performance data and you can use this to determine how well your business is performing against your peers. After all, you might show improvement in key areas within your hotel year on year, but if similar hotels are generating even greater results, then you are still underperforming.
This concept of constantly striving to be better, based on accurate feedback, is the essence of continuous improvement; being the best means never standing still, always pushing out the bar and having the right data to guide improvement decisions. You should always aim to be better in all your key activities a year from now, than you are today for to stand still is in reality to go backwards in a competitive industry like ours. Managing continuous improvement does not have to be a complex undertaking but it does need structure and is dependent upon having the right information to guide you, if you want to see positive results.
There is no magic pill for creating an effective strategic map for your hotel but the principles we have covered in these four articles will set you on a course where devising a winning strategy is a more likely option. All great hotels, whether they are big or small, independent or part of a chain, succeed in large part because they know what they want to achieve, implement a range of integrated actions to make that happen, track their progress and continuously improve based on the results they get. You now have the tools to help you apply those principles to your hotel. Best of Luck!
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