Essentials of Strategic Planning: Setting the Stage for Sustainable Banking at the Speed of Sound 

by Edward A. Krei

I was recently contacted by a financial institution asking me to assist in revitalizing their strategic planning process. The bank had purchased a $200 “how-to” binder covering strategic planning for banks. There wasn’t much material that was truly unique to banking, and what was there was dated. More than half of the material included in the binder addressed visioning, mission statements, goals, values statements, and the like. There was an entire chapter devoted to getting the planning participants to bond—to “feel the love.” 

These are all very important aspects of long-term planning. But the banker wanted me to focus on more mundane, tangible issues: how to translate the plan into measurable, manageable action steps and changes in his organization and his institution. 

As a starting point, he asked if I could, as he put it, “give me a list of 20 key thoughts about strategic planning” that would help him get more out of his planning process. I don’t usually do lists with 20 bullet points—too many items and too much stuff. But, I did as he asked and jotted down 20 things from which he could pick a handful of items that would be most meaningful to him and his planning participants.

Now keep in mind that I had not seen this bank’s business plan, nor had I interviewed the banker about the unique aspects of his bank or the strengths and weaknesses of his planning process. Anyway, here’s the list of 20:

The Process
  1. You and the planning participants must recognize that there is nothing you can do that is more important than taking time to back away from the day-to-day “stuff” and think long term. Communicate this to all of your staff and board.
  2. Periodically ask yourself, “is what I am doing today going to help get me to where I want to be long-term?” And determine whether your plan will be for a three-year or five-year horizon.
  3. Remember that strategic planning is more than budgeting and financial forecasting; it’s a time to really dissect your business, your core systems, your products, your delivery, your competition, your challenges, and your opportunities. 
  4. The goal of strategic planning is essentially to determine what your bank will look like as a successful banking business and, as importantly, what it will take to get there and how you will monitor and report progress. 
  5. Have a clear understanding of the expectations of major shareholders and be realistic about your performance expectations.
The Retreat
  1. Retreat or not to retreat? Retreats are productive—and they don’t have to be in Maui. What’s important is to remove yourself from the daily distractions and commit full-time to thinking about the long-term success of your bank.
  2. Determine in advance who should participate in the retreat, including what level of participation you want from the board. Sounds simple, but may be tricky. Optimum group size is between eight and 20. Use a facilitator when you want outside input or perspective. And engage a facilitator who works with financial institutions. Avoid the generic planning consultants.
  3. Consider using a pre-retreat survey to get the participants thinking about the issues. Use separate surveys for the board and bank managers. If possible, compile the responses (and present anonymously, if necessary) and disseminate to participants prior to the retreat. Encourage participants to visit with their staff members to get “bottom up” input on the issues.
  4. We can’t be reluctant to address the most sensitive issues—even if they are emotional or sensitive. Ask the hard questions (and I don’t mean questions about pre-ordering “beef or chicken” for dinner). If appropriate, consider having the board retreat separately to discuss sensitive issues and then bring in management.
  5. Clearly identify your impact areas—the five or so most important challenges and opportunities facing your bank over the next three years.
  6. Ask yourself, “Are we satisfied that we are directing our time and resources to the most important issues first?”
  7. Make sure you are able to measure and manage what’s really important.
  8. Take ample time to assess the effectiveness of your organizational structure, depth of management, and succession planning. Do you have the right people in the right positions doing the right things? Is your organizational structure effective for the size and complexity of your bank today and in three years? Do you have clear accountability at all levels?
The Document
  1. Establish clear implementation action steps, including staff accountabilities, timetables, and measurement criteria for each key activity.
  2. Have a clear understanding how the plan will be documented, approved, and communicated throughout the bank. The plan doesn’t have to be voluminous, but it does have to clearly identify the key issues driving success.
Reporting and Monitoring
  1. Establish a timeframe and format to review status and progress of the implementation of the plan at the appropriate levels of the organization, including the board of directors. 
  2. Be adaptable—you can (and must) be nimble and flexible—and use this to your competitive advantage when opportunities and challenges in your markets or competitive environment change. 
  3. The end of the retreat is when the implementation of the plan really begins....
  4. Remember that real leaders “model the way.” It’s what you do, not just what you say.
  5. Always look for opportunities to celebrate even small successes with your staff.
I know that’s a lot to chew on. But I hope one or two of these points may help you re-think your strategic plan, energize your staff, and channel your resources to address your most important challenges and opportunities ahead—AND have some fun!! If so, it won’t be long before your bank will be performing at the speed of sound.

Ed Krei, managing director of The Baker Group, is a specialist in investment portfolio and asset/liability management and strategic planning for community financial institutions. He will be presenting on “Setting the Stage for Sustainable Banking at the Speed of Sound” at the Seattle Bank’s 2006 Management Conference on May 18 – 19 in Seattle.