You’ve got to construct your strategic plan

Two months ago we discussed the importance of strategic planning to the successful business enterprise (“You Can't Get There Without a Road Map,” November 2006, p. 14). But most of that discussion centered on the development of the company's vision and mission. These can be expressed as broad statements, to be sure, without which more concrete steps cannot be undertaken to achieve the company's strategy. I even suggested that vision and mission development are more reflective of a company's strategic “thinking,” while the steps undertaken to fulfill the corporate mission and achieve its vision are perhaps a better use of the term “planning”

This month, I'd like to spend some time on the more concrete aspects of the company's strategy to fulfill mission and achieve vision—specifically, “goals” and “objectives.” Goals are quantifiable way stations we aspire to as we attempt to fulfill our mission—an example might be to assume the dominant position in our chosen market by 2011. Objectives are shorter-term (but equally measurable) activities required to reach one's goals. To achieve the goal of dominance, for example, might require that we reach a 90% customer satisfaction level in 2007.

There are reasons why most companies fail to achieve their planning goals and, interestingly, it depends more on the company's and CEO's ability to execute than the substance of the strategy itself. Bad management can't get even the best of plans to work, while good management can at least partially salvage even a badly constructed plan.

But more on that later. Let's focus for now on developing goals and objectives. You have your vision—what you want your world to look like in an ideal state. You have your mission—what it will take to achieve your vision. How do we develop goals and objectives to make it happen?

We start by establishing some longer-term goals. It's really not all that different from setting personal goals. How many of us don't have, as our personal vision, a reasonable level of financial comfort? And how many of us don't recognize that our mission in achieving financial comfort is doing effective financial planning and management? Where do the goals come in? One goal—at least in our younger years—might have been to assemble sufficient cash to afford a down payment on the home of our choice. That longer-term goal would then be supported by short-term objectives—e.g., maintaining a system of automatic payroll deductions directly deposited into a dedicated house account. Or we might set up yearly savings milestones.

There is a concept called “nesting” that applies to this. Our mission nests within our vision. Our goals nest within our mission. Our objectives nest within our goals. Each level of the plan provides a foundation for the next. Objectives are the short-term building blocks whereby we accomplish goals. Goals are the means by which we fulfill our mission. And an appropriately described mission will get us that much closer to realizing our vision.

Goals are usually described with nouns. A goal is a desirable situation or status, not a function. For example, 90% resident satisfaction is a goal, not how we achieve that 90%. Too many strategic plans set as their goals the engagement in some admittedly beneficial activity. A goal might be stated, for example, as providing quality care. That's not a goal. It's a means of achieving a goal.

Objectives can be, and usually are, enunciated by verbs. Objectives are the specific measures or processes undertaken to reach the goal. And it will usually take more than one objective to achieve a stated goal. Look again at our facility goal of customer satisfaction. This is not likely to be achieved with a single annual objective; it will take any number of them—for example, regularly surveying residents for current levels of satisfaction; establishing a quality management program; establishing and empowering a quality committee within that program; determining, in priority order, the key determinants of customer dissatisfaction; establishing a database for benchmarking. All are functions and/or processes (verbs) that will have to be launched as objectives to achieve the goal.

Now, let's apply this to the nursing home operator. Let's say part of your vision is to be the facility of choice for referring physicians within your geographic area. Within that vision “nests” part of your mission, namely, having a reputation for quality of care. What goals have you and your associates established within that mission statement? One goal might well be to be an upper decile provider in your area with respect to quality indicators (e.g., pressure sores, restraint use, pain management). Another goal might be a relatively stable staff, with turnover, particularly among nurse aides, no higher than 50%.

The need for data in working toward this becomes obvious. What is your current incidence of pressure ulcers? What is your current turnover? How will your staff monitor progress? How will you brief the owner or board of directors on progress? You do it all with data. The late business guru Peter Drucker once pointed out that “people think that they measure what they get. In fact, they get what they measure.” Measuring the wrong stuff is one of the primary reasons strategic plans fail.

Data will let you know if your objectives are not achieving your goals. Data will also let you know if your goal is beyond reach, no matter how conscientious your objectives. A strategic plan is not static. It is a work in constant process. That doesn't mean you have to revisit your vision and mission statement yearly (although they clearly should be reviewed periodically, particularly if the environment within which you operate has undergone major change). But you certainly need to assess annually (if not more frequently) the viability of your goals and the degree to which their subordinate objectives are moving you toward achieving them.

Given your labor market, perhaps 50% turnover just isn't achievable, at least not within a foreseeable time frame. Or it might be achievable, but the objectives you have chosen to get there don't appear to be having an effect. In either case, it's time for a strategic change in direction. Only data will let you know that.

Some of this sounds so obvious, doesn't it? Well, if it's so obvious, why are only 10 to 30% of strategies successfully executed? According to the experts who cite this statistic, Robert Kaplan and David Norton, authors of The Strategy-Focused Organization: How Balanced Scorecard Companies Thrive in the New Business Environment, the reasons for failure can be grouped under four headings: the vision barrier, the people barrier, the resource barrier, and the management barrier.

Let's start with the vision barrier. Kaplan and Norton note that although vision and mission statements make sense to those who write them, as few as 5% of regular employees understand them. For those on whose shoulders rest the success of the strategic plan, its overriding vision and mission statements must be described in words that are both understandable and motivational. Describe what the company is all about in terms your associates can relate to, and do so in a way that facilitates team building.

Nothing can bind a staff more closely than a commonly accepted view of the company's vision and mission (and, conversely, nothing can be more disruptive than differing—if not contradictory—views of these).

Equally disconcerting is the Kaplan/Norton estimate that only 25% of managers have incentives linked to strategy (the people barrier) and only 40% link budgets to strategy (the resource barrier). What does that say about the commitment of most companies to strategic planning?

It says “lip service,” at best. It's bad enough that incentive structures all but ignore the strategic plan. If your compensation is not linked to achieving your ostensible goals, it's obvious that little attention will be paid to them. And for budgets to be unrelated to strategy renders strategic planning a paper exercise, at best.

Similarly discouraging is the Kaplan/Norton estimate that 85% of executive teams spend less than one hour per month discussing strategy. (And to be a complete cynic, I'm willing to bet that a good part of that hour is spent trying to figure out in which dusty filing cabinet the strategic plan document was stuffed.) Now, particularly in long-term care, it is understandable that much of management's time is spent fighting fires. It is equally understandable, however, that the more time spent on meaningful strategy, the fewer fires we will have to put out.

There is an investment, of course, that has to be made in strategic planning, and returns on this can take a while. The impact of strategy in curtailing the need for crisis management will not become noticeable for a year or so. Perhaps that is an investment most managers assume they can't afford.

Personally, I would add a fifth barrier to the four described by the Kaplan/Norton team: the data barrier. It's not that long-term care communities don't have data. It is probably more the case that they are data-rich, but information-poor. Take nursing home operators, for example. They have quality measures, including clinical indicators derived from the MDS. They have financial and utilization data, compliance and quality assurance measures, plus plenty of other “stuff,” be it from human resources, other departments, payment sources, etc. But for the most part, none of this has been woven into the fabric of management and planning, particularly strategic planning. It has not been used to construct either the company's strategy or the “balanced scorecard” whereby one can measure progress toward implementing that strategy.

Long-term care operators work, admittedly, in one of the most demanding environments imaginable. Much of that environment is beyond their control, whether in terms of financing, human resources, or even survey and certification. However, managing their communities is within their control—and a failure to plan is a failure to manage.

To send your comments to Dr. Willging and the editors, e-mail


Paul R. Willging, PhD, was involved in long-term care policy development at the highest levels for more than 20 years. For 16 years as president/CEO of the American Health Care Association, Dr. Willging went on to cofound the successful Johns Hopkins Seniors Housing and Care postgraduate program (cosponsored by the National Investment Center for the Seniors Housing & Care Industries), and later served as president/CEO of the Assisted Living Federation of America. He has enjoyed an equally long-lived reputation for offering outspoken, often provocative views on long-term care.

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