Episode: 6 Essential Ingredients for Effective Strategic Planning

Michael Hyatt:
I have a perspective, it’s not usually the right perspective. It’s only a perspective. And I learned so much by going through this process. Hi, I’m Michael Hyatt and-

Megan Hyatt Miller:
I’m Megan Hyatt Miller.

Michael Hyatt:
And this is Lead to Win, our weekly podcast to help you win at work and succeed at life. And today we’re going to talk about this six essential ingredients for effective strategic planning. Megan, it’s that time of year again when people are gearing up to think about or should be thinking about strategic planning.
We just have gone through the process. We’re not quite finished yet, but we’ve done most of the work. And we also had one of our coaches, John Putnam, who’s amazing by the way, walk a cohort of our clients through the planning process over the course of a few days inside of our strategic design workshop.

Megan Hyatt Miller:
Well, I love this time of year. First of all, it’s back to school. It kind of feels like a mini new year. And it also feels like that because as business owners, we’re thinking about the next year, and I love thinking about the future. So this is a really fun time of year.
I think for a lot of business owners, it gives us the opportunity to dream again. But one of the things that I’m always surprised by as we’re talking with new clients that are coming into our coaching program BusinessAccelerator, or just talking kind of with our audience at large is how few business owners, particularly small business owners, have strategic plans.
That oftentimes people don’t even have a budget, much less a plan and it really causes you to fly blind into the future. And you always say, nobody ever drifted to a destination that they would’ve chosen, right? You never end up somewhere great by accident or not very often.
And that’s really true in business. If you want to go somewhere incredible, if you have a big vision for your business, you need to articulate that and then chart a course to get there or you may not end up making the kind of progress that you want.

Michael Hyatt:
Well, and I think that you have a lot of business owners who have been told that for a long time, who feel the pressure of it, but they didn’t get any schooling on this because it’s not taught.

Megan Hyatt Miller:
Right. Nobody does.

Michael Hyatt:
No, it’s either not taught in business school or it’s taught in a way that’s very academic and theoretical. And I probably have 15 books on strategic planning on my shelf, but I can promise you, they’re all written for multinational, multi-billion dollar corporations that assume that you have a full-time strategic planning department.
And they’re just not relevant to the average small to medium size business owner who’s trying to figure this out and they don’t want to read a book like that because it’s not going to be that relevant and they’re going to fall asleep while they’re doing it. So we’ve tried to make this a little bit more exciting in our process and kind of distill it to the bear essentials.
And today we want to talk about specifically six ingredients that’ll help you create an effective strategic plan. Now this is actually the pre-work that we give to our clients before they show up to the strategic design workshop, but you can gather these on your own. And we’ll tell you about a way that you can do sort of a guided way to do strategic planning.
We’ll talk about that toward the end of the show today, but we want to talk about the ingredients, whether you do it yourself, you’re bringing an outside facilitator, or you go through a more formal process internally. This will give you the ingredients that you need to succeed.

Megan Hyatt Miller:
Yeah. I think this is important because if you were going to go on a great trip, let’s say you were going to take your family to Europe. You would be very intentional about how you prepared for that trip. You wouldn’t just wake up tomorrow morning and throw some stuff in a suitcase for a month and go to Europe.
Maybe if you were a college student, you would, but not if you wanted to have a great trip and not, if you’re going to take your family with you, you would be very thoughtful about that.
And similarly, we think the preparation that you do for strategic planning, the information that you have gathered really gives you the context you need to look into the future and make great decisions. And so this is kind of the setup for success with these six ingredients.

Michael Hyatt:
Okay. Let’s start with ingredient number one, which is the employee survey. This is honestly my favorite part of this. I look forward to this every year because I want to know what people are thinking. And I’ve come to respect, over decades of leadership in the corporate world, I’ve come to respect just the people that are working in the business.
I have a perspective, it’s not usually the right perspective. It’s only a perspective. And I learned so much by going through this process. So why don’t you just kind of talk about what we mean by an employee survey?

Megan Hyatt Miller:
Yeah. Well, this is something that we do. So we really have a pulse on how we’re doing as an organization and as the business owner, as a leader in your business, you’re not getting all the information except through filtered means. It’s coming through your direct reports or other means.
And so having a survey, this is one of the few surveys that we do every year that’s anonymous because we really want people’s most candid feedback. And we just ask questions about their professional experience within the company. So we’re kind of getting to engagement and employee experience issues, but we’re also asking things about opportunities, challenges that they see.
We want their unique perspective from their vantage point that we might not see. And so we ask people to go through the process of taking the survey. And as you said, we learn a ton and it helps to inform our priorities for the coming year.

Michael Hyatt:
Can you think of an example in the past where we got some employee feedback that really shaped the way we developed this strategic plan?

Megan Hyatt Miller:
One of the things that came out of the survey that we recently did was that our employees desires and expectations for how they work is changing. So prior to the pandemic, we were in-person much more.
During the pandemic, of course, like everybody else, we were completely remote and then we’ve come back to kind of a hybrid mentality. What we found is the appetite for flexibility and not just in terms of location, but in terms of when people work has increased.
And so even last year we saw some of those same trends. And so for example, last year we instituted a flex day on Wednesday, which is our no meeting day. And we allow people to start and finish work whenever they want.
They can just kind of set their own hours because synchronous work is not happening for the most part on Wednesdays. And that has been a huge hit. And so now we’re asking ourselves, okay, does that need to further evolve?
And so we’re having conversations as an executive team and we will be having conversations with our directors about the findings of that survey and how people work and do we need to continue evolving our policies around things like remote work, et cetera, and flexibility on time, because that’s what people want.

Michael Hyatt:
That’s really good. Yeah. This is one of the things too, where you often discover whether or not your mission, your values, all the good work you’re doing in the background is actually getting through to the front lines.
Because when people tell you for example, and we haven’t had this happen for years, but people say, well, I just feel disconnected with the vision, or I don’t feel like the leaders are really walking the talk. You want to know that, right?

Megan Hyatt Miller:
Yes, you do.

Michael Hyatt:
There’s no benefit to not knowing that. And if you know that you think, okay, well, we’ve got to have a better communication program, or we got to have more commitment from our leaders to walk the talk or whatever it is, but the facts are friendly.
And the more that you can know based on multiple vantage points or perspectives, the better off you’re going to be. The better off you’re going to be able to address the real issues of the business and not just your perception of the issues.

Megan Hyatt Miller:
Well, another area where we saw this kind of back to the idea of remote work is that we asked our executives on the kind of backside of the pandemic, what they thought about how much we should have people in the office. And the executives were chomping at the bit to get back in the office.
And this is what the data tells us. There’s that big study that Slack did and reported on, I think about a year ago and they showed this, that executives disproportionately want to be in the office, but the rest of the team.
And that’s the kind of thing, if you only have ind of one layer hierarchically who is informing the decision making, you’re really at a disadvantage because it might be very, very different as you move throughout the organization. So that’s where this survey, especially because it’s anonymous is very helpful.

Michael Hyatt:
Okay. So that’s ingredient number one, employee survey. Ingredient number two, relevant financial data. What do you consider relevant?

Megan Hyatt Miller:
Yes. Well, what we usually look at is three to five years of historical data because we’re looking at trends. Are we becoming more profitable or less profitable? What is our year-over-year growth rate and how is that trending over time? We’re looking at things like margin, especially right now, super important.
Are we holding steady, are we losing ground? You’re looking kind of for trends and what are you seeing over time? And I think that that helps to also inform as you’re ultimately moving into the operational part of the planning process and your budgeting and things like that.
How does the vision that you have, for example, for the next year, relate back to your historical performance? You want to have some way of calibrating if it’s within the realm of possibility or not based on what you’ve done.

Michael Hyatt:
Yeah, that’s so good. And I know that when people are considering planning for next year and they’re considering strategic planning for three to five years, it’s easy to say, “Well, how do I do that? Because the year’s not done. We don’t really know how we’re doing.”
And there’s a couple ways to do that and we, again, recommend this to our BusinessAccelerator coaching clients, but number one is it’s important to project the year on a monthly basis.
So in other words, based on where we’re at today, based on what we know today, which is a lot more than we knew months ago when we created our strategic plan for this year, sometimes more than a year ago, informed by those facts, where do we think we’re going to land year end?
So the projections can help us. It’s not going to be a hundred percent accurate, but it’s better than nothing. So you need to integrate that into your regular process where you’re projecting the rest of the year, based on what now you.
Don’t change the budget, but you have a separate projection document. Then the second thing that can also be helpful is to look at the last 12 months compared to the prior 12 months, which will take out the seasonality and give you the ability to compare two full years against each other.
Again, it’s not perfect, but it’s a place to look to see those bigger trends like whether you’re growing or whether you’re experiencing margin compression or some other issue that needs to be addressed.

Megan Hyatt Miller:
Yup, absolutely.

Michael Hyatt:
And we should also hasten to say, it’s not just profit and loss kind of information. There’s also balance sheet issues. How is your capitalization, your debt, what’s your cash position? Where is that trending? Also looking at cash flow statements. What do you project in terms of cash?
Are you projecting enough cash to not only give the owners of the business, maybe you, a reasonable return, but you’re also allowing for sufficient liquidity and sufficient investment capital to take advantage of opportunities and to be able to capitalize or fund the business ingredient. Number three, status of current goals. So we are big advocates of goals.
We have this SMARTER goal system. It’s something that you can find in our goal setting, the full focus goal setting course, but it’s something we’ve taught over and over again, but you got to check in on those goals. You don’t just set them and be done, but now is the time to look at your current goals and how you’re progressing. So you want to talk a little bit about that, Megan?

Megan Hyatt Miller:
Yeah. Well, this is important because in our methodology, when you’re going through this strategic design process, as we call it, you’re not just planning the next year, you’re planning or you’re really recasting your vision for the next three years. And so the reason it matters to look at how are we progressing against our current goals is because that is your slice of that three-year picture in the current year.
Are you making progress toward your vision is really the question that you’re trying to answer. And the way you know if you’re making progress toward your vision is if you’re making progress toward your annual goals, that’s how you’re going to accomplish your vision is one annual goal at a time over a three-year period rinse and repeat.
So we want to have a check in on that and just ask the question, how are we doing? Are we on track with these goals? Are we going to end the year with them accomplished or do we need to recalibrate the plan? And sometimes that happens where maybe you have a big project that is taking longer than you thought, but that’s actually not a bad thing because your vision for it has expanded.
No problem. You’re going to make adjustments in your timeline and your vision and those kinds of things, but you want to have a sense of where you are so you can chart a better course to the future.

Michael Hyatt:
Well, an example of that, in our own plane, we got to one of our goals for this year. I won’t reveal what it was, but it was a goal that we were making actually great progress, but we decided after looking at it that it was a bigger opportunity than we thought.
And so we wanted to give ourselves more runway to set it up correctly. So we made that goal for next year. We moved it out of this year and moved it into next year. And that’s going to happen because the nature of planning is that you don’t have all the information when you need it.
And so you’ve got to make adjustments all along the way. It’s just like a moonshot. You create a flight plan, you have a trajectory, but you’re going to be off course most of the time and you’ve got to make those course corrections as you go. And the same thing is true with goal setting.
Okay. So an employee survey is ingredient number one. Relevant financial data is ingredient number two. The status of current goals, ingredient number three. And then ingredient number four, key product data.

Megan Hyatt Miller:
Yeah. So we want to look at our current product mix and answer the question, what does it look like now? What do you sell the most of? What’s the most profitable? Who are those products serving? How are they creating kind of a flywheel of swords? Are they reinforcing each other and generating leads and cross pollinating and all of that?
How big is your market? What’s working, what’s not? You just want to have a good sense of where you are with your products and your current mix of products and the data surrounding those things, because very likely your vision is going to expand and be updated in this process.
And so much of that has to do with the products themselves. I mean, that’s really how you are engaging with the customers that you’re serving. And you need to be clear on the current status of those things.

Michael Hyatt:
You know, I should have probably mentioned this under financial data, but the other reports that are enormously helpful are a class of product P and L, so that the relative profitability of one product category versus another product category, and this works best when you group products together.
Like in our business, the full focus planner would be something we want to have a product P and L on, our BusinessAccelerator or our courses or our books. These are different product segments that we want to know what the profitability is.
Because really the key to success in a business, if you want to become more profitable, punch the accelerator on those product categories that are the most profitable and maybe take away resources from those that are the least profitable.
So just by changing the product mix and giving more attention to the fastest growing products or the most profitable products, you can completely change the entire profit profile of the company.

Megan Hyatt Miller:
Right. I mean, there’s just a huge opportunity. And I think you can start to see as we go through each of these ingredients, how much better, how much higher quality your planning is going to be if you have the backdrop of all of this context.
You don’t want to start, like it’s a clean slate and nothing’s ever happened before because that’s not true. And you can make much better decisions that are data based decisions if you have this kind of context.

Michael Hyatt:
The other thing to consider too that might be a financial aspect of this whole product ingredient is looking at, what are we seeing trending in terms of costs? Is manufacturing-

Megan Hyatt Miller:
Right. Especially right now.

Michael Hyatt:
Right. Is manufacturing getting more expensive or less expensive? What about timelines? Is it taking longer to produce the same products than it was before because of supply chain issues, but this is the opportunity to discuss all that because it will affect or shape your thinking about the future.
Okay. That brings us to ingredient number five, the status of key stakeholders. So what about your employees? What about your investors? What about your board members? Who’s on your team and what does that team look like?

Megan Hyatt Miller:
Right. You just want to understand what you’re working with. I mean, other than your products, the most important element of succeeding in a business is your team. And in some ways your team is more important because the team is making everything possible. Without them, nothing is animated and brought into the world.
And so you really want to understand what are your talent resources? What are you looking at to make your vision a reality? And how is that changing over time? When you’re thinking about future headcount, for example, you need to know how you got to know? What’s the trend in your year-over-year growth in terms of headcount?
What is your diversity look like? That would be another important point. How do the teams compare with each other? Those kind of things are going to be really helpful as you determine what resourcing am I going to need to accomplish the vision in the future. You’ve really got to understand what resources you have now.

Michael Hyatt:
Another thing to consider too, and again, this probably falls under the heading of financial data in a sense, but it certainly intersects with this point. And that is, if you look at, for example, profitability per team member.
Take your profitability, divided by the number of team members. You could do the same thing with revenue. So you want to make sure that that’s not decreasing over time, because what that means is you’re becoming less efficient.
In some seasons, that may be necessary, but it needs to be a conscious decision that you’re making based on the data and not just something you drift into because you’re not paying attention. Okay. That leads us to the sixth and final ingredient, mission, values and current vision. Why is that important to a strategic plan?

Megan Hyatt Miller:
Well, this is the foundation of your whole business. And I love, love going through this part every year, partly because it’s a deep dive into your mission, values and your current vision and it’s just exciting to reconnect to that in a deep way. This is something we’re reviewing frequently, but still we’re going really in depth here, but also because it evolves over time.
It should evolve. These are our living things. Your mission is something that you should be getting clearer and clearer on over time. Exactly how you add value and why you exist in the world and how you’re going to do business in terms of your values is something that should be more and more honed in over time.
This is something that we have adjusted usually little bit every year, not always a lot, but a little bit. And every version, every iteration gets better and feels more exciting and more incongruity with how we understand ourselves. And then of course the vision, you can only see so far.
And as you get closer to that vision becoming a reality, you need to update your vision and you need to extend your vision and expand it. So this is a fun part of the process, but really critical because everything else flows out of this.
When you begin to think about your annual plan for the next year, it really should be a chunk of your vision. You really should be setting it almost as a milestone on the journey to your three-year vision as your annual plan. And so it’s got to be informed by these things.

Michael Hyatt:
Yeah. I think one of the things we want to do is give you permission to change this from year to year, because it is, as you mentioned, Megan, a process and the closer you get to the destination, the more clarity you have. I mean, it’s just like traveling down a road, the closer I get to the sign, the easier it is to read.
And so that’s true in this case as well. So you’re going to have more clarity. So it’ll be unsettled that this changes. Having said that, it shouldn’t be changing more frequently than once a year, and it’s probably not going to change substantially.
You’re just going to be tweaking language and dialing it in with a little bit more clarity. I think of going to an optometrist and having your eyes checked. They’re asking, A or B, which one is more clear? And that’s just part of the process.
And that’s kind of the part of the process here, but it also leads. And this is one of my favorite things about strategic planning is the conversations it creates with the executive team or the leadership team that’s engaged in this process of strategic planning.
We have some of the best conversations, some of the most vigorous debates around these topics, these core ideology topics, because it’s about who we are, who we’re becoming and where we’re going. And that always leads to really consequential conversations that we inevitably have to cut off because we run out of time.

Megan Hyatt Miller:
That’s so true.

Michael Hyatt:
Okay. So today we’ve talked about six ingredients that will set you up for strategic planning. So whether you do it yourself, or you do it with an outside facilitator, or you do it with another resource that we’re going to share with you here in just a moment, you need these six ingredients.
An employee survey. Number two, a relevant financial data. Number three, status of current goals. Number four, key product data. Number five, status of key stakeholders and number six, mission, values and current vision. Megan, do you want to tell people about the resource that we’ve created that can help them in the process of strategic planning for 2023?

Megan Hyatt Miller:
Yeah. Well, I’m really excited that we’re able to offer this to our larger audience, and that is our Proprietary Strategic Design Workshop that’s now available on demand. So as we mentioned, we had a live version of this that we did recently, and we had so much interest in it that we’ve decided to offer it on demand.
So if this is something that you struggled with in the past, or you feel like you would benefit from a paint by numbers foolproof process, that you don’t have to figure out yourself or bring in a really expensive consultant to facilitate for you. This is the perfect solution as we’re in this time of year, where we’re planning for the next year, we’re planning for the future.
So you just need to go to And for you who are listening today, we have $1,000 off just for being one of our loyal Lead to Win listeners. So dad, any final thoughts?

Michael Hyatt:
Yeah. Strategic planning, it’s critically important if you’re going to shape the future of your company. If you’re not happy with the results you’re getting strategic planning is essential because it will help you to course correct and get back on track.
If you are getting the results you want, it’s also important because you want to keep getting the results you want. So regardless of whether you’re getting the results or not getting the results, you want to get engaged in strategic planning because it’s a lot easier than just hoping that you drift into a better future.
So the strategic design workshop that we’re offering is fantastic. We’ve done it two years in a row and we’ve gotten rave reviews. Each time people have said, it’s a game changer for them. So check it out. It’s probably not for everybody, but if you’re leading a company, you really owe it to yourself to check this out. I think this is a great option.

Megan Hyatt Miller:
Yeah. And just as a reminder, you can find out more information by going to All right. Well, guys, thanks so much for joining us today. I hope you’re excited about the strategic planning journey ahead about the future. It’s that time of year. It’s my favorite time of year and there’s so many good things coming down the pike. So until next week, lead to win.