This is the second part of this series and these last 4 essential operational planning steps will dramatically improve strategy execution in any organization. (Read Part 1)

7. Define Metrics and Measurements

Metrics and measurements can apply to two groups:

  • Measurements and metrics related to strategic goal effectiveness (plan performance)
  • Measurements and metrics related to managing execution of the strategic plan (execution performance)


Measuring Plan Performance:

As with the development of strategy, the relationship of strategic goals to metrics and measures can be tricky. For instance, a strategy might have a strategic goal related to “increasing productivity by X% over X quarters” and another related to “increasing profitability by X% over X quarters”. Setting the wrong metrics might help accomplish one goal, but simultaneously compromise the other. How? Assume the following:

  • Volume metrics for production are encouraging managers to seek higher labor productivity
  • The contribution of labor to profitability is 10%
  • The contribution of materials to profitability is 60%

In this case, a 10% increase in labor productivity will create a decrease in material management efficiency - as inventory levels must increase to address the volume change. That could easily translate to a materials efficiency decrease of 2% or more to support the 10% labor efficiency increase. Give the profit contribution assumptions above, the net result is as follows:

  • a 10% labor productivity improvement times 10% profit contribution equals a 1% profitability increase
  • a 2% materials productivity decrease times 60% profit contribution equals a 1.2% profitability decrease

As you can see, net profitability actually decreases when high volume production is encouraged by metrics misalignment - compromising the strategic goal of “increasing profitability by X% over X quarters”.

Care must be taken to set metrics that actually drive the desired behaviors, and do not risk undermine the intent of the strategy.

Measuring Execution Performance:

Operational planning is all about reality, accountability and execution, so estimating work effort and time-to-complete correctly is important to get right up front. To estimate effort as accurately as possible, past metrics are essential to help answer questions such as:

  • How well can resource horsepower be utilized?
  • How much resource horsepower is at our disposal?
  • What is the expected productivity of their horsepower?

With realistic timeframes and accountabilities in place, measuring execution performance is much simpler and managing the strategic portfolio can be accomplished effectively at each organizational level.

8. Plan Change Management

Implementing corporate strategy is dependent upon the energy, dedication, hard work and faith of the organization’s employees. Motivating employees to act decisively in the face of uncertainty is a challenge where many an organization have failed miserably. Employees are often starved of adequate information related to strategy. Quite often, employees one or two levels down from the CEO have little knowledge about the strategy or what they can do to help with its successful execution.

In order to convince employees that change is necessary, the organization's leadership must communicate about the strategy and develop a sense of urgency around the need for a shift. The urgency becomes the catalyst for change that is needed for employees to rally behind.  It becomes the "cause". 
The sense of urgency must be real. Change management is never to be about deception.  Effective change requires an open and honest dialogue between leadership, management and employees so that each person in the organization understands the change imperative - whether it is changes in competitive marketplace conditions or an economic downturn. You must let your staff feel that they are part of the process in helping the change come to fruition.

The change program must be treated as any other large initiative. It must be managed and measured to know if goals are being reached or might be in danger of being missed. Governance of such a program through a PMO or planning office is the most effective way to administer the long-term transformation.

9. Governance

Plan governance is the essential “follow-through ingredient” to set the wheels in motion for strategy execution. Organizational performance indicators and metrics help provide the ability to control and manage, as they signal the need for evaluation and analysis early when corrections to implementation tactics can be made more easily with fewer cost implications.

Plan governance, whether implemented as a formal Plan Management Office or administered through a less formalized committee structure, should be responsible for the functions of selecting, managing and measuring of everything entering or within the plan portfolio.  The plan portfolio is the overall macroscopic view of all programs (related groupings of initiatives) and projects within initiatives that are involved with strategy implementation.

With proper management controls in place, this approach allows those closest to the action to respond quickly and appropriately when it is needed – always operating within predefined spheres of control and in concert with the strategic goals. The goals are well known and understood by empowered employees, as their direct managers will have effectively communicated these goals to them, accompanied by the expectations for how they can directly contribute – allowing them to embrace the vision and fully participate in the tactical execution.

10. Sustain / Rejuvenate

As a function of the ongoing management of the plan portfolio, plan governance also involves refreshing the strategic and supporting operational plans to reflect changes because of completing plan goals and taking on new ones.  A plan governance structure allows for strategic and operational planning to become much more actively managed and based on a shorter time horizon.  Shorter time horizons for plans lead to more focus on execution and results in better outcomes.  As we’ve discussed in previous articles, a rolling 12-month plan that is refreshed quarterly is best suited for achieving optimal results in execution. 


Even companies that do a reasonable job at defining strategy and performing high-level strategic planning tend to struggle with operational planning. The overall strategic plan must be thought of as a portfolio to be managed. The strategic plan portfolio represents the overall macroscopic view of all programs and initiatives involved with strategy implementation. 

During the operational planning stage of strategic planning, initiatives get defined that support the strategy’s outcomes. Those initiatives can then be broken down into bite-size projects so that they can be estimated, understood, and eventually – managed. To manage the overall strategic plan, however, we must have some different views of the work to be completed in order to successfully manage it. Grouping projects into programs provides a big-picture way of tracking, managing, and reporting on the tens, hundreds, or in the most extreme cases - thousands of projects that can arise from a corporate strategic plan. Projects can be grouped into programs in terms of how they support the overarching strategy and goals or along budgetary lines. The overall group of programs is the portfolio. Plan governance then becomes the vehicle to manage the plan portfolio and ensure the of operational initiatives with plan goals and track progress of plan-supporting strategic initiatives through effective oversight at the corporate and operational levels.

About the Author(s)

 Steve   Feld

Steve Feld is a Certified SCORE Mentor and a business coach.

Business Coach, Feld Business Growth
The 10 Essentials of Operational Planning You Need to Know Part 2