Here's the plan: don't be intimidated when creating a strategic blueprint for your bank. Strive for an uncomplicated approach--with a simple outcome.

There's an old saying that if you don't watch where you're heading, you'll wind up where you're going. It's a good forewarning for anyone seeking the road to success, but particularly appropriate for a bank culture without a practical, easily applicable strategic plan.

"Community banks are all over the landscape with strategic planning," claims John Owens, director of financial services for the Fort Lauderdale office of RMS McGladrey Inc., a company that provides consulting to the financial services industry. "Some feel four hours a year is enough planning, and others have written plans bagger than the Atlanta phone book."

On average, though, most community banks spend less than 30 minutes a month discussing strategy. Owen believes that's because many people are inherently frightened of strategic planning and avoid what they think is a complicated process. But the most effective plans, he says, are the simplest.

"What they provide is focus, and focus is power," says Owens.

First, he's adamant that you must involve the board of directors.

"One of the challenges, and one of things board members are responsible for by regulation is strategic direction," he says. "It also ensures they're on the same page."

The key elements of a bank's plan should revolve around your knowledge of the bank. In other words, understand your people, your processes and your market.

"Ninety percent of community bank presidents would tell you that their employees are the bank's most important asset," says Owerts. "Yet most don't have performance management systems, train only on-the-job and spend very little time on corporate cultural surveys."

Also, he says, employing only the most efficient processes will lead to better staff morale, and ultimately help you deal with your customers in the best manner.

As for the competition, it's not enough to be on top of their rates, you need to know where they're going strategically. And above all, keep focused on your plan.

"That doesn't mean it should be written in concrete or you'll miss strategic targets of opportunity," says Owens. "But you should go back to it often and really know the plan."

Northeast Bank, Minneapolis

The leadership team for Northeast Bank in Minneapolis, Minn., keeps their bank's strategic plan from collecting dust by meeting and reviewing it quarterly.

"Different people on the team have responsibility for certain action plans, so we constantly do updates," explains Sue Sjoselius, senior vice president of marketing. "That information is driven back down through the organization via newsletter, employee meetings, etc., so everyone is really aware of what our strategic plan is about."

That wasn't always the case. Sjoselius has worked for Northeast, a community bank with three locations and $300 million in assets, for 19 years. There was usually an annual planning meeting and goal setting. But it wasn't until the year 2000, when they hired RMS McGladrey Inc., that they developed a more systematic approach.

"Now it's not just 'Oh, let's grow the bank this much,'" says Sjoselius. "It's looking at the total systems of the bank, from the customer all the way through."

Initially, there were several weeks of in-depth market research and employee focus groups. The team used that data and the consultant's recommendations to write a formal plan.

"It's allowed us to clearly define who we are," says Sjoselius. "What our current business strategy is, what our marketing position is, where to compete geographically and how to compete. It allowed us to really develop key marketing goals and strategies."

Along with a detailed action plan for marketing, there are action plans for several other areas, all updated quarterly:

Quality service: The marketing director and the human resources director work to keep a "superior, exceptional customer service level."

Human resources: The human resources director is solely responsible for the recognition, retention, education and development of employees.

Operations: The executive vice president focuses on the difficult task of keeping "high touch" along with "high technology."

"It's tough for a community bank because we're always watching our budget," she says, "Yet we have to be able to offer the technology services our higher-end customers need while not losing sight of what makes us successful, the relationship we have with the customer."

There are also action plans for investment services, Community Reinvestment Act and the capital plan. The committee discusses new branch development opportunities annually.

For now, the team "has decided against formal off-site annual planning meetings for expense reasons. Instead, they decided to hire an outside consultant every three to five years to "shake things up a little bit."

"We have a lot of staff longevity, which is wonderful but challenging when it comes to innovative thinking," claims Sjoselius. "An outside person can help break us out of our mental models."

Machias Savings Bank Machias, Maine

Every October, the senior managers and the board of directors for Machias Savings Bank (assets: $429 million) go some-place fun for a weekend retreat. It's a long weekend, beginning on a Thursday, but there's a lot of strategic planning to be done.

"We do a nice retreat because it's a reward and also an opportunity to network with each other," explains Traci Sanborn, vice president of marketing and branch administration for the Machias, Maine-based bank.

Sanborn begins organizing the whole strategic planning process in June. By October, she's got it all laid out. The first meeting sets the stage by examining past progress and where they stand in terms of their vision, mission and six critical outcomes: effective management; growth and sales; revenue enhancement and expense control; productivity; asset quality; and profitability.

"In the outcomes, we have what we need to accomplish in three to five years to make our vision reality," says Sanborn. "Our outcomes haven't changed over two years, but we do have different performance targets."

Each outcome is assigned a member of senior management, called the champion. During the retreat, two outcomes a day are discussed. They're first examined by the indicators of success.

"First we look at the 2004 performance targets we told the board we'd do," says Sanborn. "Those range from one to 10 items, depending on area."

For example, under effective management, do the employees and managers have SMART: Specific, Manageable, Attainable, Realistic Timetable job expectations? Are employees being well informed and is employee turnover decreasing?

Then they set performance targets for the next year for each outcome.

"We'll discuss how much deposit growth we expect over the next three years, and then further define it for the upcoming year," she explains, "say, $100 million in three years, but $40 million in 2005."

The strategic plan is written up in booklet form. Senior management bring the plan to the branches during a "road trip." Every branch and department hears what took place at the retreat and hears the goals for 2005.

"We try to let the branch department managers know about it in November so they can start work on their yearly plan," she explains. "We just give them a snapshot of the strategic plan, focusing on the upcoming year with them."

In the two years since Machias Savings Banks started this systematic approach, bank employees have taken giant steps toward achieving their vision. They want to become the #1 community bank in asset size among the peer groups of Maine. In 2002 they were #18. By the end of 2003 they were #5.

Sanborn credits part of that success to sharing the strategic plan with the whole bank, and part to consultant Mary Baker, of Baker Company from Nashville, Term., for her direction as a communicator.

"We've developed a good relationship with Mary for management and strategic thinking," says Sanborn. "She gives me ideas on which approaches to take, and how to open communications with senior management and the board."

How to create a strategic plan

Mary Baker has a four-step process to bringing an organization back in focus, once they recognize that its in trouble. She's used to dealing with confusion and conflicting priorities, commonplace reactions in an organization without a plan. She's also used to the land mines along the way.

"There are pitfalls and banters that can occur at almost every stage," says Baker. "At the beginning there's usually someone who's been through the strategic planning process before, but saw no damages. I have to help them avoid the negatives and design a process so they won't repeat mistakes."

The first step in her process is to collect and analyze data, both externally and internally. Externally, you need to dig into customer satisfaction and the depth of the relationship.

"Done well, data collection helps you find out why people aren't banking with you."

Then look around you. Conduct company benchmarking of like and unlike businesses.

"Ask critical questions about their customer services, how they run their business and turn different departments into revenue producing business."

Internally yon have to gather the numbers and check trends over the last five years. Also, look into employee satisfaction.

Meanwhile, for step two, you've created a planning group comprised of the board of directors and senior management to analyze the data.

"Take them through a visioning process, and ask 'What assumptions can we make from our data?'" she says. "If they're clear about the mission, they can say, 'If this is what we do, what's the vision we have for our customers over the next free years?'"

Now it's time for step three, setting the outcome.

"You ask the question, 'How do we get from where we are today to what we want to be?'" advises Baker. "Answering that question is the third phase of the process."

Target the critical areas you want to address and the results you expect. From that you can map out a three- to five-year plan with very specific, timed action steps or performance targets. Once you agree on performance targets, managers can create their action plans.

The final phase consists of implementation and ongoing accountability.

Implementation: Review the plan on a quarterly basis at an executive level, with managers reviewing their sections weekly.

Accountability: The executive teams are responsible for reviewing the strategic plan and determining if goals and objectives are being met.

"If they're not on target, they need to decide why and what to do," says Baker. "Did we learn that we weren't being realistic, or have we allowed ourselves to divert focus?"

This, then, becomes the work of the organization.

Northrim Bank, Anchorage, Alaska

The senior management from Northrim Bank (assets: $738 million) in Anchorage, Alaska, can also be found offsite on retreat in October. The cross-section of department heads adds up to about 14 people, and they spend two days discussing key challenges, customer research and the competitive situation. But the written strategic planning the first document to come out of that retreat, the budget is.

"It may be backwards, but we start with the budget process before going into a written plan that may be cut," explains Lori Philo-Cook, CFMP, senior vice president and marketing director. "I feel it's really important that everyone in the bank is involved in strategic planning, and the foundation is the budget we develop."

A marketing department brainstorming session follows the retreat. That's followed up by meetings with each key area marketing supports to determine what's been effective or what's changed in their market and department.

"So the budget goes out first, and everything everyone needs is in that budget," says Philo-Cook. "Once that document is done, the marketing department meets with the president, the chief operating officer, the chief financial officer and the head of accounting."

It's a long grueling meeting, she says, while they decide what to approve and what to cut. Although she claims, "We have a lot of credibility going into it as a result of all our planning, and that's a whole lot better approach than padding it with extra anticipating cuts."

By November they've moved on to the written strategic and action plans.

"I used to do the overall goals and specific goals for everyone, but found they weren't really reading them through," she says, "so now I update what's been done and give goals of what to improve or change."

She then reviews and edits everyone's individual action plans to help them with the big picture view. The final result is a notebook-sized written plan that includes an overall calendar for major projects, employees' schedules and those for customer and community events.

"This year we've had some turnover from military people," says Philo-Cook. "Without the written plan we'd be lost, because it's so helpful for new people to come in and know exactly who we are and what to do."

Strategic Plan Checklist

Use this tool to review your strategic plan. Answer each question with a "yes" or "no."

Does the plan detail the bank's strengths, weaknesses, opportunities and threats? [] Yes [] No

Does the plan build on the bank's Strengths and address its weakness? [] Yes [] No

Does the plan realistically, appraise the bank's markets, customers and competition? [] Yes [] No

Do the mission and vision statements give a clear direction to the bank? [] Yes [] No

Are goals and objectives clearly spelled out and measurable, both in time and dollars? [] Yes [] No

Does the plan support the mission, vision and goals of the bank? [] Yes [] No

Does the plan provide a framework for decision-making? [] Yes [] No

Does the plan focus attention on the bank's major issues? [] Yes [] No

Does the plan help coordinate the bank efforts? [] Yes [] No

Does the current structure of the bank support the plan? [] Yes [] No

Are the action plans specific, assigned, measured and monitored? [] Yes [] No

Are the action plan items prioritized and budgeted? [] Yes [] No

Are risks and returns noted, measured and balanced? [] Yes [] No

Is the plan realistic in terms of effort, timing and cost to implement [] Yes [] No

Has the plan been properly communicated to and accepted by all stakeholders? [] Yes [] No

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Janet Bigham Bernstel specializes in writing about marketing and financial services industry issues. She works in Jupiter, Fla.