Business Analysis Guidebook/Strategic Analysis and Planning

Strategic vs. Tactical vs. Operational

The term strategic is often used interchangeably with tactical, which can lead to lack of clarity. Essentially, strategic is what you are planning to achieve and tactical is more of how you will achieve it. Examples of these two terms are as follows:

Strategy #1: Improve retention of key staff by 5%

Tactic #1: Create opportunities for key staff that appeal to them—allow time for R&D, implement their ideas, and allow them to participate on cross enterprise initiatives.

Strategy #2: Reduce maintenance costs by 10%

Tactic #2: Work towards eliminating legacy systems with high maintenance, seek to automate routine maintenance tasks, and establish controls to ensure work performed is necessary.

The term operational refers to day to day efforts to run the business. Once strategies and tactics are incorporated and achieved, they become how the business or organization operates.

Strategic Planning Components

Traditional strategic plans contain a variety of core elements to help the organization achieve success. Each of these serves a critical role in the overall plan development. At a macro level, they include:

1. Mission and Vision
2. Values and Behaviors
3. SWOT Analysis and Environmental Scans
4. Goals and Objectives
5. Measures
6. Strategic Projects

Each of these elements is detailed below and includes actual governmental examples.

Mission and Vision

The mission of an organization serves as a foundation of the organization and conveys what the organization does, who it serves and often describes what its primary purpose is. Noted examples found on the internet include:

• NYS Department of Health: We protect, improve and promote the health, productivity and well being of all New Yorkers.

• The Office of Children and Family Services serves New York's public by promoting the safety, permanency and well-being of our children, families and communities. We will achieve results by setting and enforcing policies, building partnerships, and funding and providing quality services.
• It is the mission of the New York State Department of Transportation to ensure our customers - those who live, work and travel in New York State -- have a safe, efficient, balanced and environmentally sound transportation system.
  

The vision is a statement which describes an organization’s mental picture of success and where it is striving to be in 3-7 years. Without knowing where you are headed—then any path will do—but you may end up in circles along the way! A vision of what the future you are striving for can often help guide staff in the absence of specific directions.

Sample Vision Statements include:

• The New York State Archives provides unparalleled services that build, maintain, and provide access to New York's records to sustain a free, open, and democratic society and to support the cultural and intellectual life of all New Yorkers. We relentlessly pursue excellence in all our endeavors .
• New York State Police Vision: To build on our tradition of service.
• NYS Department of Health Vision: New Yorkers will be the healthiest people in the world - living in communities that promote health, protected from health threats, and having access to quality, evidence-based, cost-effective health services.
  

Values and Behaviors

One softer side of the strategic planning process is identification of values and behaviors that are critical to organization success. Research has shown that values typically influence behaviors, which in turn can drive results—particularly if the organizations culture and policies are aligned to support and recognize them. Organizations that adopt a standard set of values or behaviors need to ensure that the leadership of the organization demonstrates and role models what is acceptable. Clearly the values will be dependent on the type of organization. For example, an audit agency would likely value accuracy, credibility and integrity over innovative, customer service or respect for the individual, but perhaps an IT organization would value dependability, excellence, state-of-the–art and reliability. These values are often incorporated into mission statements or code of conducts.

Government examples in this area include:

Department of Motor Vehicle Operating Principles:

• We work with each other and our customers in an ethical, honest and respectful manner
• We protect the confidentiality and integrity of the information in our care
• We encourage the open exchange of ideas and perspectives and provide opportunities throughout the agency to suggest improvements
  

Department of Health Values: Dedication to the public good, Innovation, Excellence, Integrity, Teamwork, Efficiency

New York State Troopers Value:

• Integrity: To live and work in accordance with high ethical standards.
• Respect: To treat people fairly while safeguarding their rights.
• Customer Service: To ensure that everyone we meet receives dedicated and conscientious service.
• Continuous Improvement and Learning: To constantly improve ourselves and our organization.
• Leadership: To inspire, influence and support others in our organization and communities.
  

Enterprise Analysis

Enterprise Analysis, as described in the Business Analysis Body of Knowledge v2 is to “assess the capabilities of the enterprise in order to understand the change needed to meet business needs and achieve strategic goals.”

There are a variety of techniques that can be done to analyze the enterprise at a strategic level, and we will profile three of the most common ones here: environmental scan, SWOT analysis, and a customer and product/service matrix.

Environmental Scan: Prior to embarking on the development of goals and strategies, it if often valuable to conduct an environmental scan to see which, if any, appear to be influencing the organization more than others. By looking at the components of each factor and ranking them in order of importance, an organization can try to be more tactical in developing strategies to help achieve their goals.

• Customers/Constituents: Who are the people that are receiving goods and services from your organization? What are their requirements, how do they interface with you, what are their demographics?
• Economy: How is the current economy influencing your organization? What is the impact of inflation, unemployment, interest rates, credit availability and local taxes on the organization?
• Human Resources: How are we doing as an organization attracting ans retaining top talent? Are our employees, manager and departments as productive as possible? Are we growing the right skills sets to enable us to thrive in the future?
• Infrastructure: This relates to the internal systems and operations of the organization and includes things like information systems, equipment, tools and procedures. Are they optimized or are we spending tons of time on maintenance and patching old equipment and systems?
• Organizational Culture: This relates to the values of the organization including norms, policies, rules and rewards. Are these aligned and support where the organization wants to be in the future?
• Policy: This variable relates to the overall objectives of the organization and includes policies, plans, targets, measures, key performance indicators and strategies. Are these aligned with the organizations values and goals?
• Products/Services: Do we have the appropriate mix of products and services that will help the organization meet client needs and the achievement of the organizational mission? Are our services offered in a manner that today’s customer expects and demands?
• Public Sector: This references the influence of government such as laws, regulations and politics. Is government ensuring free markets and corporate growth, or are the policies stifling expansion?
• Social: Is the organization aligned and in tune with the overall needs of the citizens and the communities that they live in?
• Technology: This refers to the investment the organization makes in equipment, software, tools and telecommunications. Are we leveraging current technology and economies of scale, or have we diversified away our potential savings?
  

Once an organization sees themselves in the eyes of those whom they influence, then they are ready to conduct the next exercise, a SWOT analysis.

SWOT Analysis:

SWOT stands for Strengths, Weaknesses Opportunities, and Threats, and is a common technique used by organizations to develop a common understanding of where they are today. Using a simple 2x2 matrix, participants brainstorm the various areas as a starting point prior to development of strategies. A completed matrix is below for illustrative purposes:

Strengths: * Talented, diverse workforce. * Strong partnerships with industry associations. * Mature processes have been optimized to increase efficiencies.	Weaknesses: * Aging workforce. * Limited knowledge transfer tools.
Opportunities: * Need to grow social media presence. * IT transformation facilitates sharing of resources across agencies. * Optimize website to incorporate responsive design.	Threats: * Security, security, security. * Economy still rebounding. * Limited pool of funds for infrastructure investment.

Goals and Objectives

At a minimum, goals should include an action verb and a noun. They can be as succinct as Improve Employee Satisfaction, Provide Quality Customer Service or Protect Consumers. Typically they refer to where the agency wants to go, and the objectives are the actionable steps an agency employs to get there. One of the most widely used acronym to measure the effectiveness of goals (and requirements) is SMART, attributed to a paper by George T. Doran published in the November 1981 issue of Management Review called There's a S.M.A.R.T. way to write management's goals and objectives! In this instance, SMART stands for specific, measureable, assignable, realistic and time bound. For example, using the goal “Provide Quality Customer Service”, possible key objectives can include:

• Increase/improve access to services through use of technology, including website enhancements
• Improve response time to customers
• Provide complete and accurate information to customers
• Provide fair and courteous customer service
  

Each of these is specific as a standalone goal. They convey a specific actionable action that can be taken that is not vague or left up to the reader for interpretation. These objectives could be measured—either through use of service delivery channels (mail vs. phone vs. internet vs. in person), cycle time process measures, and number of interactions needed to complete a transaction, and also customer satisfaction surveys. In terms of assignable—can someone take responsibility for the achievement and measurement of each of these goals? The next letter of the acronym is R for realistic. While you don’t want really simple objectives, you should avoid totally unachievable ones either (e.g. world peace comes to mind)! Realistic and time bound go together. If you can take steps to move in a positive direction in achieving an objective, even if you cannot totally achieve it, then it is likely a worthwhile endeavor.

Measures

Often measures are referred to as key performance indicators. In recent years, with the proliferation of data and the tools needed to link disparate and/or mine large data sets, the ability to measure performance has been enhanced. For measures, there are a variety of different types, including process measures such as inputs and outputs, as well as outcome type measures aimed at effectiveness and efficiency of products and services delivered. Illustrative examples of each type are in the table below:

Type of Measure	Basic Types	Examples of Measure Type
Inputs refer to resources used to complete or improve operations	Resources Used	* level of personal services/man hours to perform a task * equipment usage (vs. idle time)
	Operating Costs	* warranty Cost * cost per transaction (by type of service delivery channel)
	Cash Expenditures	* % capital investment * % R&D
Outputs refer to the units of work completed	Completed Work	* % of project complete * number of workorders closed
Effectiveness refers to how well a product or service meets needs of the customer	Process Quality	* rework hours * number of visits/calls customer had to make to complete the transaction
	Satisfaction (customer)	* did products and services conform to requirements * eere employees courteous
	Satisfaction (employee)	* attrition rate * # of employee suggestions implemented
Efficiency refers to how effectively resources were used in delivering products and services	Timeliness	* project completed on time or early * process cycle time
	Operating Ratios	* supervisory span of control * direct to indirect costs

The key with performance measures, especially relative to strategic planning, is to select a variety of measures that show you how you are doing relative to your goals. When establishing measures, it is helpful to keep the following criteria in mind:

• The measures should be relevant to what you are trying to achieve
• It must be important to the stakeholders
• The data must be obtainable and cost effective to acquire and report
• It must be easily understandable by all who review it
• Must be used for constructive purposes.

One thing to keep in mind about data—people will typically give you the information they trust you to use. If people perceive the information will be used against them for non-constructive purposes, it is possible the numbers could be adjusted before receiving.

Strategic Projects

While measures and objectives are helpful in achieving goals, often an agency or organization needs to undertake a series of projects in order to make substantial progress towards achieving the goal. When organizations are evaluating their portfolio for project selection, one common criteria used is alignment with strategic goals. Will the outcomes and deliverables of the project help the organization to achieve one or more strategic goals? How closely is the project aligned with a goal—it shouldn’t just “fit” but embody the essence of what the agency is attempting to achieve. If a project does not help foster a goal, and it is not critical to agency infrastructure, or offer a positive ROI, then perhaps it should not be undertaken. Projects deemed as “strategic” should be of a high enough priority that it gets the attention it deserves. Conversely, if every project in the portfolio is considered strategic and of a high priority, then you may have diluted the importance of all of the projects. See the section on prioritization for additional guidance on strategic project selection.

Session Planning Guidelines

When putting together a strategic planning session, there are several recommended guidelines for successful sessions, including:

• Allow enough time for thoughtful discussion. Perhaps give the questions in advance for key managers to solicit input from their staff beforehand. Typically strategic planning should be done over a full day, if not more.
• Ensure you have the right people. Strategic Planning requires leadership commitment to carry it out. If you do not have executive management on board, you will have difficulty implementing.
• Where possible, plan to do this off site. If people are close enough to the office, they will pop in and out during the day and not dedicate the time and effort.
• If possible, have smaller groups do some of the up front analysis and planning and have them present their results to the larger group for input and acceptance.
• Don’t get so caught up in completing the technique that you forgot why you started the process
• Don’t let the lack of data stop you from completing the process. Use your judgment and experience when needed.
• The plan is only as good as the follow through. If you don’t work the plan, all you really have is a good doorstop at the end of it all.

Techniques to Engage Staff

Depending upon the importance and maturity level of planning within the organization, a variety of techniques can be employed to gain employee engagement. Some examples to consider are as follows:

• Seek input on mission/vision—ask people to provide examples of how they would apply it in their day to day job
• Ask employees to contribute their personal values up front and feed this into the plan
• Engage staff at the department/bureau/office level to do strategic planning, cascaded from the overall agency strategic plan
• Have employees develop process measures aimed at demonstrating achievement of the organizations goals
• Engage staff at all levels of the organization to participate in strategic planning in order to gain broader input
• Publish the organizations mission, vision and values statement on the intranet. Create posters of these and place them in the meeting rooms.
  

The important part is to communicate the plan to employees and them have them validate it. Does it ring true? Can they see themselves within the mission and vision?

Facilitating the Generation/Acceptance of the Plan

Once the planning has been completed, the statements drafted, the goals written and the measures established, it is time to put all the elements together in a document. The actual format or framework varies from organization to organization—but it should be something that is published and distributed throughout the organization—not only to your managers and employees, but also your customers, suppliers and stakeholders so they have a picture of what matters most and where you are going as an organization.

Ideally, once the plan is finalized, it is time to “work the plan.” This involves regularly measuring performance, and publishing the results so that all are aware how the organization is doing relative to its goals. Where possible, leaders should use the plan to help reinforce what matters—whether it is post it notes listing the mission, putting the current measure and target on a wall for all workers to see, a key phrase on a coffee cup, employee rewards and recognition noting excellence in the values/behavior area or sharing results upon completion of a strategic project. It is important to keep the plan alive through regular and frequent communication that reinforces key elements of the plan.

Resources

Local Government Management Guide to Strategic Planning, http://www.osc.state.ny.us/localgov/pubs/lgmg/strategic_planning.pdf

References

Doran, G. T. (1981). There's a S.M.A.R.T. way to write management's goals and objectives. Management Review, Volume 70, Issue 11(AMA FORUM), pp. 35–36.