Strategic planning is the process of defining an organization’s strategy, and it comprises all efforts and decision-making to pursue the determined strategic plan. The process of strategic planning includes setting strategic goals, planning for their execution, allocating the required resources. It facilitates the coordination between defining and implementing the organization’s strategy. The process is led by senior management with the help of strategists who assist with in-depth industry or competitor analysis. The result of strategic planning efforts is a map of an organization’s goals and an action plan for achieving them.
What Is a Strategic Plan?
A strategic plan is a document describing an organization’s strategy and directions on how to implement it. It usually includes an analysis of the business environment and actionable steps on how to achieve the set company goals. Strategic plans are developed several years ahead and are updated periodically. Strategic planning techniques such as SWOT Analysis are employed during the development of the plan.
What Is the Purpose of Strategic Planning?
Strategic planning’s main function is to help in setting realistic company goals based on substantial analysis of the business domain. A strategic plan allows to narrow down key company attributes such as mission, vision, and values, as well as long-term goals, actionable plans, and benchmark metrics. The process of setting common goals and objectives requires strategic thinking where information is not only used to accumulate action steps, but also to foresee its impact on the company in the future.
What Are the Benefits of Strategic Planning?
Strategic planning benefits organizations by clarifying their development path and laying out measurable objectives for everyone to work towards. A list of the main benefits of strategic planning is available below.
1.Strategic planning makes organizations more proactive.
2. Strategic planning encourages company-wide communication.
3. It promotes feedback exchange and encourages new ideas and thoughts.
4. Sets common goals, standards and creates a sense of accountability.
5. Leads to a better understanding and allocation of capacity.
6. Strategic planning makes companies aware of their strengths and weaknesses.
7. It helps companies identify potential opportunities and challenges.
What Are the Steps in Strategic Planning?
Strategic planning’s life cycle goes through a number of stages where ideas, feedback, industry information, and market analysis are used as a basis for determining an organization’s direction.
1. Situation Analysis
Situation analysis refers to the process of defining the present state of the organization including strengths, weaknesses, opportunities, and threats. At this stage, you should gather and assess all existing information and use it to determine your position. Methods such as SWOT or PEST analysis are commonly used to clarify your company’s present state.
2. Future State Vision
Envisioning the future state of your organization should be incorporated into your vision. This future vision should include the state of your processes, communication, values, partnerships, reputation, growth, etc.
3. Prioritize Vision Elements
Once you have identified your business goals and prioritized them into long- and short-term objectives, you’ll be able to plan their execution more accurately. A good practice when breaking down long-term goals into short-term ones is to focus on up to five priorities for the next year. To prioritize your long-term goals and break them down into executable initiatives/projects, you can use goal-setting techniques such as OKRs or SMART goals.
4. Develop Communication Objectives
The next step in your strategic planning is to translate the yearly goals you have determined into more manageable and concrete objectives. The result of this stage should outline the actual steps towards achieving the set goals.
5. Develop Strategies and Tactics
Shortlist a few strategies for achieving the goals you determined. Create a list of steps to support each one of the strategies you develop.
6. Prioritize Strategies and Tactics
Seek common agreement and mutual understanding of the strategic goals across your organization. Review meetings are an ideal way to gather feedback and come to an agreement regarding the goals to pursue on a company level and actionable steps on a team level.
7. Define Metrics, Timelines and Responsibilities
Establishing specific benchmark targets, setting up a timeline, and clearly defining responsibilities are crucial steps in strategic planning. The success of a plan execution will be determined by the progress of the initiatives/projects towards such criteria. A best practice is to measure and analyze your goals and performance on a quarterly basis to ensure that your efforts are getting you closer to the set vision. Alternatively, you can employ goal-setting methods such as the objectives and key results framework, where each goal is tied to at least 3 performance benchmark criteria (key results), making it easier to measure your pogress.
8. Develop Strategic and Tactical Plans
The stage refers to the actual writing of a strategic plan. By summarizing your goals, actionable plans, assigning responsibilities and laying out a timeline, you’ll be able to encompass all the data and analysis captured so far. Using a Strategy Map diagram is an ideal way to document the strategic goals and tactical plans as well as to identify improvement opportunities.
The implementation phase of strategic planning involves the process of communicating the plan documentation. You can use Kanban boards to map your business processes reflecting the strategic goals and objectives, assign responsibilities and create a timeline. It’s important to monitor and measure your performance on a quarterly basis. To help you with this, periodically review important KPIs and track the progress of your actionable projects in real-time. You can also use strategy performance frameworks such as Balanced scorecards to track and monitor the execution of your strategic plan.
What Is a Strategy Map?
A strategy map is a visual representation of an organization’s strategy. The graphic itself shows all the strategic plans along with actionable steps in a meaningful way where items are interconnected. The purpose of a strategy map is to demonstrate how value is created. It also improves alignment with the strategic goals where everyone can see how they contribute to the high-level goals. A good strategy map encourages feedback, so everyone agrees on what the actionable steps of the strategic plan are.
What Makes Strategic Planning Successful?
The success of strategic planning requires a concise structure of your goals and action plans. The key factors for successful strategic planning are listed below.
- Consistency: Ensure you use consistent terms when defining your goals to avoid confusion and improve the focus.
- Ownership: Ensure senior management is engaged in goal-setting only while action plan development is outsourced to leaders with experience in execution.
- Formality: Strategic planning needs to be based on an in-depth analysis of internal factors and the external business environment.
- Communication: Strategic planning should be easily communicated into an action plan to ensure proper execution.
- Control: Identify observable measures to monitor and control the execution and evaluate the efficacy of the tactical steps.
When Should Strategic Planning Be Done?
The best time to develop your strategic plan overlaps with the formulation of your strategy. In other words, as soon as you set a direction, path, or goal you’d like to reach, strategic planning will help you coordinate this goal and the implementation efforts.
Strategic planning is an important driver for emerging companies. Once you have developed your goal from the start, scope, timeline, and success criteria, all your action plans and day-to-day activities will be synchronized with the set goal.
In the scenario where companies operate without a strategic plan in place, it’s never too late to develop one. Setting up a strategy for your company’s development in the next few years will streamline all operational efforts. In the process, you will also review the current status of your company and determine internal factors such as company weaknesses and strengths.
If your company has a few years of exposure and you have developed a strategic plan in the past, it is important to review it on a yearly basis. Key insights such as understanding what has or hasn’t worked in the past year, or how the business environment has changed, will help you keep sustainable growth and will foster your relevancy on the market.
Where Should Strategic Planning Be Used?
Strategic planning relies heavily on input from across the entire organization. Senior management has to formulate the strategy itself and communicate the strategic plan with the organization’s departments. However, to derive the strategy itself, feedback and input are needed from all teams.
For instance, the financial department provides key financial data and annual reports, technical teams can provide relevant information about the technical state and advise on new trends in the field, marketing teams gather information about the number of customers for a given period, etc.
All of the insights should be utilized when creating a strategy for the next few years ahead. The next step is for each department to create its own specific projects and initiatives that support the strategic goals.
What Are the Most Common Mistakes in Strategic Planning?
Strategic planning can be the key to your organization’s growth and success, but if not developed properly, it can turn into a waste of time and resources. Here’s a list of the most common mistakes in strategic planning:
- Too many strategic goals.
- Unrealistic strategic goals.
- Lack of measures for success.
- Lack of commitment and focus.
- Poor communication.
Strategic Planning Templates and Examples
There’s a variety of strategic planning templates that you can apply to identify your objectives. Key factors to determine the most convenient approach are timelines you’d like to impose for the implementation of the plan, the complexity of your organizational structure, the level of communication, etc. Find three examples of strategic planning examples below.
1. Strategic planning using the objectives and key results (OKRs) framework requires that you determine a set of objectives or goals and define up to 7 key results or tactics on how to achieve the goal. The objectives should be concrete and action-oriented while the key results should be realistic and measurable.
2. Strategic planning using the Hoshin Planning approach is a 7-step process that connects strategic planning with execution. The actual steps are listed below:
- Develop an organizational vision.
- Define key objectives or mission.
- Break down objectives into annual goals.
- Distribute the annual goals across the organization.
- Implement the goals.
- Conduct monthly reviews to ensure proper plan execution.
- Conduct annual reviews to verify the end results.
3. Strategic planning using the Balanced Scorecard strategy management framework helps you focus your team efforts on the strategic goals. The approach requires the definition of organizational objectives, measures to help to achieve the objectives, and initiatives – the actionable steps to accomplishing your goals.
What Are the Tools for Strategic Planning?
Originating at the beginning of the 1960s, strategic planning has accumulated an abundance of tools, approaches, and methods for its implementation. You can find a list of the most prominent models for strategic planning below:
1. SWOT Analysis
2. PEST Model
4. Strategy Map
5. Balanced Scorecard
6. Hoshin Planning
How Does Strategic Planning Affect Time Management?
Strategic planning has a direct impact on time management and the two are highly interdependent. Once a strategic plan is fully developed and approved, it comes the time for its implementation. This is where strategic planning intersects with time management.
To properly execute the strategic plan, tactics and actionable steps are essential. However, if there’s a lack of focus and commitment, the timelines set in the plan can easily be stretched and the present year’s goals can turn into next-year objectives. So, when executing the plan, it’s imperative to consider the timetable and people’s focus on the actual tasks.
Another best practice to successfully implement a strategic plan without suffering from time challenges is to use timelines. Timelines can help you monitor and control your schedule, document planned tasks for a specific time period, assign work, manage responsibilities to avoid burn-out, or plan tasks for the near future.