3 areas where CEOs can improve strategic planning

End-of-year planning is a notoriously busy sprint for leaders. Upon reaching the finish line, CEOs must resist the urge to simply close the books and move on. Instead, they should pause to reflect on their process, and uncover ways in which they can improve moving forward.

As CEOs pace through a flat 2024 and ramp up for the growth cycle economists are forecasting in 2025, strategic planning is increasingly important. At its core, strategic planning should start by determining where you want to be. Then create shorter, tactical plans to support that goal. Today, nearly three-quarters (72%) of CEOs rely on an internally developed strategic planning process, per recent Vistage research. That means there are thousands of permutations to the planning process. Across the board, research has identified three of the most common areas of opportunity for CEOs to improve strategic planning processes.

1. Mission, vision and purpose

A company’s mission is what it does, its vision is where it is going, and its purpose is the proverbial ‘why’ behind its existence. While most organisations have this developed to some degree. It’s important to consider how effective it is, how deeply it resonates within the organisation and to what degree it comes to life.

Vistage Research revealed a majority (59%) of CEOs agreed or strongly agreed that their strategic plan laddered back to a well-articulated mission, vision and purpose. However, when analyzing the same CEOs, only 15 percent of third-party strategic experts felt the same. This illustrated a significant (and problematic) gap between how well leaders believe their strategic plan captures the company’s ethos and how well it does.

CEOs should reflect on — and seek to learn — how well every employee from intern to C-Suite understands and relates their work to the company’s mission, vision and purpose. When done well, they serve as more than a string of words. Providing well-defined guiding principles employees of all levels can rely on and look to when making decisions.

2. Defining competitive advantage

Over one-third (36 percent) of CEOs believe or strongly believe their strategic plan clearly outlines the company’s competitive advantage in the marketplace. However, just 8 percent of third-party experts rated the CEOs as highly. Regardless of industry, CEOs have to be able to articulate what makes their business unique.

Every organisation’s messaging and positioning must be driven by its differentiators. This helps to break through and resonate with customers in our increasingly noisy world. Furthermore, CEOs need a strong pulse on the overarching landscape to make their capabilities align with customers’ evolving needs.

CEOs should conduct regular and frequent reviews of the industry they operate in. Making sure they have a clear understanding of why customers should choose them over the competition.

3. Metrics and KPIs

There’s an important distinction between solely tracking rear-looking data points and predictive analytics that offer expectations for future performance. When asked how good their metrics are, nearly half (48 percent) of CEOs said they are proficient in this area. However only 15 percent of third-party experts agreed with that sentiment. CEOs need to ensure their KPIs are measured frequently so they can quickly implement changes as needed based on performance. In our ever-changing world, CEOs can’t solely make informed and thoughtful decisions for the future based on what worked in the past.

In all three areas listed above — mission, vision and purpose, defining competitive advantage, and metrics and KPIs — CEOs felt confident in their ability to deliver. However, when they were evaluated by third-party experts, the stark gap in perception points to a larger problem. People are unlikely to fix what they don’t know is broken.

If a leader doesn’t realise their strategic plan isn’t rooted in a clear and cohesive mission, they’re unlikely to put additional time, energy and resources into improving it. Similarly, suppose a leader thinks their strategic plan has a clearly defined competitive advantage or strong metrics/KPIs. In that case, they may fail to consider ways they can up-level and grow in the future.

It’s critical for leaders to regularly reflect on their strategic planning process and actively seek ways in which they can improve. A CEO who uses the same standard planning every year may feel they’re doing just fine. However they also may be missing key opportunities to drive greater impact across their organisation.

This article first appeared in Inc. and features in the Vistage Research Centre.