What is Strategic Planning? | ReadyToManage

Although we may have a vague idea about what strategic planning is broadly about (after all, it involves having some kind of strategy or plan for the future) the following definitions may help to put ?flesh on the bones.?

Strategic planning is?

• A process that results in a company having a clear ?North Star? ? that is, a well-defined picture of where the company is going and how it intends to get there.
• A process for aligning all the ?assets? of the company, both financial and human resources.
• A review of existing plans and programs to determine whether they continue to be appropriate in light of the rapidly changing environment.
• A tool for communicating the company?s plan to its various audiences (e.g., the board of directors, employees, suppliers, customers, shareholders, rating agencies/stock analysts).
• A tool for gaining a competitive advantage in today?s increasingly competitive world.

There are likely to be a number of significant differences in looking to carry out strategic planning activity in a business with only five or ten employees and one with a thousand or more. First and foremost, in the small business, strategy may be the part-time task of only one person (or sometimes a small team of two or three). This changes as a company grows because strategy becomes more complex and needs the input from multiple departments such as marketing, sales, operations and finance for instance. As a result, strategy may involve the CEO and all department heads and in some cases there may even be a dedicated corporate strategy department (although it may go by a number of different names).

The second key difference is that the smaller company obviously has simpler processes and fewer assets and/or fewer resources to invest in the strategic planning effort, in terms of both time and money. This may well restrict or constrain the number of strategic options that can viably be researched or considered. This may create some unwanted limitations but at least makes the actual process itself simpler and quicker to complete in a small organization versus the large one.

Of course, there is no one perfect strategic planning model for every organization to use. Each enterprise (depending on its size and type) should therefore ideally develop its own approach. This is often done by selecting a commonly used theoretical approach to strategy and then modifying it as they go along in developing their own planning process. The following strategic planning models provide two alternatives from which organizations might select an approach and begin to develop their own way of doing things.

Model 1???A Simple/Smaller Enterprise Strategic Planning Process

This process is typically followed by organizations that are smaller (in turnover or people), have limited time, and may have done little formal strategic planning in the past.

1. Identify the enterprise purpose or mission and vision. These are usually statements which describe why the organization exists, i.e. its fundamental purpose (the mission) and where it is trying to go (in destination terms ??the vision). Both of these statements should describe how customer needs are intended to be met and with what resources.
2. Select the goals and objectives the enterprise should reach if it is to accomplish its mission and vision. Strategic goals or objectives are general statements about what needs to be accomplished, addressing the major issues or constraints that are likely to face the organization.
3. Identify specific approaches or tactics that should be executed to reach each goal. Tactics can take some time to agree upon because there is often more than one way to reach a strategic goal. However, these detailed ?how-to? statements are important to communicate with employees for complete clarity about what is to be done once they are agreed.
4. Identify specific operational action plans to implement each strategy and tactical plan. These are the specific activities that each major function, department or team should implement with specific timeframes highlighted. These operational action plan statements should be clearly worded and readily measurable (usually with key performance indicators (or KPI?s) nominated and explained, where necessary).
5. Build in Monitoring and Review mechanisms. This will specify when the strategic plan as a whole will be reviewed, (monthly, quarterly etc) and how adjustments will be made according to relative success or changes in the external environment.

Model 2 ??Goal-Based Strategic Planning

This process is typically followed by organizations that are larger in scale, have a little more time to devote to the strategic planning process and are able to dedicate at least ?steering? resources to developing and disseminating the plan (and modify it as necessary).

1. Carry out an external/internal assessment to identify ?SWOT? factors that are likely to apply to the enterprise (Strengths, Weaknesses, Opportunities, and Threats) and/or ?PESTLE? factors (Political, Economic, Social, Technological, Legal and Environmental).
2. Conduct a strategic analysis of the results from the above step to identify and prioritize major issues/goals or the enterprise as a whole.
3. Design major over-arching strategies (or programs) to address the issues/goals identified.
4. Design/update the enterprise vision, mission and values as necessary to best fit the analysis and over-arching strategies developed above.
5. Establish action plans (tactics, operational plans, investment needed, asset and human resource needs, as well as specific roles and responsibilities for implementation across all functions, departments and teams).
6. Publish the strategic plan in written form for all functions and departments allowing them to review it, add detail to it and even make minor changes before developing their own functional or departmental plans so that they are fully consistent with it (or aligned).
7. Develop a corresponding annual operating plan for the year ahead (given that the strategic plan is likely to be looking at a three to five year time frame).
8. Develop and authorize the appropriate budget for the next year so that funds can be allocated or investment sought where this is necessary. There may therefore need to be both an expense or cost budget and a capital budget that can be used to monitor actual results.
9. Ask operational functions and departments to execute the plan and to measure progress in particular ways that are specified in the strategic plan (usually around program quality, time taken, costs, etc.).
10. Monitor/review/evaluate/update the overall strategic plan on at least a quarterly basis, based on actual progress and feedback (from regular reports and key performance indicators).

Summary

Strategic planning may seem like a very formal process to be used only by the largest of organizations. However, an enterprise of any size can benefit from the activity by selecting either a basic five-step process or a slightly more complex ten-step process and then modifying it to fit their needs.

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About Dr. Jon Warner

Dr. Jon Warner is a prolific author, management consultant and executive coach with over 25 years experience. He has an MBA and a PhD in Organisational Psychology. Jon is Editor-in-chief of ReadyToManage, Inc. and can be reached at Jon.Warner@ReadyToManage.com

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Source: http://blog.readytomanage.com/what-is-strategic-planning/

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