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How to Create a Strategic Plan
Looking for a way to take your company in a new and profitable direction? It starts with strategic planning. Keep reading to learn what a strategic plan is, why you need it and how you can strategically create one.
What Is a Strategic Plan?
When it comes to business and finance, strategic planning will help you allocate your resources, energy and assets. When implemented, a strategic plan will begin to move your operations in a more profitable direction. The primary goal of the plan is to ensure you and any other stakeholders are on the same page and striving to reach the same goal.
Creating a strategic plan requires a disciplined effort. Once you put the plan into action, it will influence the segment of customers that you target, how you serve those customers and the experience those customers have.
Assess the Current Infrastructure and Operations
The first step in creating a strategic plan is to carefully assess your existing infrastructure and operations. You can do this through a SWOT analysis, which is an analysis of the company’s strengths, weaknesses, opportunities and threats. The goal here is to pinpoint the resources that you use to carry out your day-to-day operations, to look at your monthly revenue patterns, to list any company challenges related to the customer experience and, most importantly, to look at your marketing methods and ways to improve the overall customer experience.
Creation of Mission Statement and Objectives
The next step is to create a mission statement. You may already have one, but it’s important to note your mission at the top of the strategic plan document you create. This ensures everyone is focused on the same goal. Your mission statement should cover why you started the company and what you intend to accomplish through the products and services that you offer.
In addition to the mission statement, make sure to outline both short- and long-term objectives. List the objectives according to their priority and designate certain managers or employees to be responsible for each one. Also, jot down the resources that will be used to achieve each objective.
Now that you know what you’re trying to achieve and who is responsible for each goal, it’s time to deploy the plan and measure its progress. A weekly meeting is extremely important for all managers and stakeholders provide feedback. Your goal is to determine if the company is headed in the right direction. If not, you’ll need to revise the strategic plan accordingly.
Strategic Plans Are Ongoing
Once your strategic plan helps you achieve several objectives, it’s smart to regroup and set new objectives. As your company grows, you can set new goals to ensure the company keeps moving forward. You can share the success of your strategic plan with potential investors as a way to tap into new capital funding.
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What is strategic planning?
Strategic planning is a process in which an organization's leaders define their vision for the future and identify their organization's goals and objectives. The process includes establishing the sequence in which those goals should be realized so that the organization can reach its stated vision.
Strategic planning typically represents mid- to long-term goals with a life span of three to five years, though it can go longer. This is different than business planning, which typically focuses on short-term, tactical goals, such as how a budget is divided up. The time covered by a business plan can range from several months to several years.
The product of strategic planning is a strategic plan. It is often reflected in a plan document or other media. These plans can be easily shared, understood and followed by various people including employees, customers, business partners and investors.
Organizations conduct strategic planning periodically to consider the effect of changing business, industry, legal and regulatory conditions . A strategic plan may be updated and revised at that time to reflect any strategic changes.
Why is strategic planning important?
Businesses need direction and organizational goals to work toward. Strategic planning offers that type of guidance. Essentially, a strategic plan is a roadmap to get to business goals. Without such guidance, there is no way to tell whether a business is on track to reach its goals.
The following four aspects of strategy development are worth attention:
- The mission. Strategic planning starts with a mission that offers a company a sense of purpose and direction. The organization's mission statement describes who it is, what it does and where it wants to go. Missions are typically broad but actionable. For example, a business in the education industry might seek to be a leader in online virtual educational tools and services.
- The goals. Strategic planning involves selecting goals. Most planning uses SMART goals -- specific, measurable, achievable, realistic and time-bound -- or other objectively measurable goals. Measurable goals are important because they enable business leaders to determine how well the business is performing against goals and the overall mission. Goal setting for the fictitious educational business might include releasing the first version of a virtual classroom platform within two years or increasing sales of an existing tool by 30% in the next year.
- Alignment with short-term goals. Strategic planning relates directly to short-term, tactical business planning and can help business leaders with everyday decision-making that better aligns with business strategy. For the fictitious educational business, leaders might choose to make strategic investments in communication and collaboration technologies, such as virtual classroom software and services but decline opportunities to establish physical classroom facilities.
- Evaluation and revision. Strategic planning helps business leaders periodically evaluate progress against the plan and make changes or adjustments in response to changing conditions. For example, a business may seek a global presence, but legal and regulatory restrictions could emerge that affect its ability to operate in certain geographic regions. As result, business leaders might have to revise the strategic plan to redefine objectives or change progress metrics.
What are the steps in the strategic planning process?
There are myriad different ways to approach strategic planning depending on the type of business and the granularity required. Most strategic planning cycles can be summarized in these five steps:
Identify. A strategic planning cycle starts with the determination of a business's current strategic position. This is where stakeholders use the existing strategic plan -- including the mission statement and long-term strategic goals -- to perform assessments of the business and its environment. These assessments can include a needs assessment or a SWOT (strengths, weaknesses, opportunities and threats) analysis to understand the state of the business and the path ahead.
Prioritize. Next, strategic planners set objectives and initiatives that line up with the company mission and goals and will move the business toward achieving its goals. There may be many potential goals, so planning prioritizes the most important, relevant and urgent ones. Goals may include a consideration of resource requirements -- such as budgets and equipment -- and they often involve a timeline and business metrics or KPIs for measuring progress.
Develop. This is the main thrust of strategic planning in which stakeholders collaborate to formulate the steps or tactics necessary to attain a stated strategic objective. This may involve creating numerous short-term tactical business plans that fit into the overarching strategy. Stakeholders involved in plan development use various tools such as a strategy map to help visualize and tweak the plan. Developing the plan may involve cost and opportunity tradeoffs that reflect business priorities. Developers may reject some initiatives if they don't support the long-term strategy.
Implement. Once the strategic plan is developed, it's time to put it in motion. This requires clear communication across the organization to set responsibilities, make investments, adjust policies and processes, and establish measurement and reporting. Implementation typically includes strategic management with regular strategic reviews to ensure that plans stay on track.
Update. A strategic plan is periodically reviewed and revised to adjust priorities and reevaluate goals as business conditions change and new opportunities emerge. Quick reviews of metrics can happen quarterly, and adjustments to the strategic plan can occur annually. Stakeholders may use balanced scorecards and other tools to assess performance against goals.
Who does the strategic planning in a business?
A committee typically leads the strategic planning process. Planning experts recommend the committee include representatives from all areas within the enterprise and work in an open and transparent way where information is documented from start to finish.
The committee researches and gathers the information needed to understand the organization's current status and factors that will affect it in the future. The committee should solicit input and feedback to validate or challenge its assessment of the information.
The committee can opt to use one of many methodologies or strategic frameworks that have been developed to guide leaders through this process. These methodologies take the committee through a series of steps that include an analysis or assessment, strategy formulation, and the articulation and communication of the actions needed to move the organization toward its strategic vision.
The committee creates benchmarks that will enable the organization to determine how well it is performing against its goals as it implements the strategic plan. The planning process should also identify which executives are accountable for ensuring that benchmarking activities take place at planned times and that specific objectives are met.
How often should strategic planning be done?
There are no uniform requirements to dictate the frequency of a strategic planning cycle. However, there are common approaches.
- Quarterly reviews. Once a quarter is usually a convenient time frame to revisit assumptions made in the planning process and gauge progress by checking metrics against the plan.
- Annual reviews. A yearly review lets business leaders assess metrics for the previous four quarters and make informed adjustments to the plan.
Timetables are always subject to change. Timing should be flexible and tailored to the needs of a company. For example, a startup in a dynamic industry might revisit its strategic plan monthly. A mature business in a well-established industry might opt to revisit the plan less frequently.
Types of strategic plans
Strategic planning activities typically focus on three areas: business, corporate or functional. They break out as follows:
- Business. A business-centric strategic plan focuses on the competitive aspects of the organization -- creating competitive advantages and opportunities for growth. These plans adopt a mission evaluating the external business environment, setting goals, and allocating financial, human and technological resources to meet those goals. This is the typical strategic plan and the main focus of this article.
- Corporate. A corporate-centric plan defines how the company works. It focuses on organizing and aligning the structure of the business, its policies and processes and its senior leadership to meet desired goals. For example, the management of a research and development skunkworks might be structured to function dynamically and on an ad hoc basis. It would look different from the management team in finance or HR.
- Functional. Function-centric strategic plans fit within corporate-level strategies and provide a granular examination of specific departments or segments such as marketing, HR, finance and development. Functional plans focus on policy and process -- such as security and compliance -- while setting budgets and resource allocations.
In most cases, a strategic plan will involve elements of all three focus areas. But the plan may lean toward one focus area depending on the needs and type of business
What is strategic management?
Organizations that are best at aligning their actions with their strategic plans engage in strategic management. A strategic management process establishes ongoing practices to ensure that an organization's processes and resources support the strategic plan's mission and vision statement .
In simple terms, strategic management is the implementation of the strategy . As such, strategic management is sometimes referred to as strategy execution. Strategy execution involves identifying benchmarks, allocating financial and human resources and providing leadership to realize established goals.
Strategic management may involve a prescriptive or descriptive approach . A prescriptive approach focuses on how strategies should be created. It often uses an analytical approach -- such as SWOT or balanced scorecards -- to account for risks and opportunities. A descriptive approach focuses on how strategies should be implemented and typically relies on general guidelines or principles.
Given the similarities between strategic planning and strategic management, the two terms are sometimes used interchangeably.
What is a strategy map?
A strategy map is a planning tool or template used to help stakeholders visualize the complete strategy of a business as one interrelated graphic. These visualizations offer a powerful way for understanding and reviewing the cause-and-effect relationships among the elements of a business strategy.
While a map can be drawn in a number of ways, all strategy maps focus on four major business areas or categories: financial, customer, internal business processes (IBPs), and learning and growth. Goals sort into those four areas, and relationships or dependencies among those goals can be established.
For example, a strategy map might include a financial goal of reducing costs and an IBP goal to improve operational efficiency . These two goals are related and can help stakeholders understand that tasks such as improving operational workflows can reduce company costs and meet two elements of the strategic plan.
A strategy map can help translate overarching goals into an action plan and goals that can be aligned and implemented.
Strategy mapping can also help to identify strategic challenges that might not be obvious. For example, one learning and growth goal may be to increase employee expertise but that may expose unexpected challenges in employee retention and compensation, which affects cost reduction goals.
Benefits of strategic planning
Effective strategic planning has many benefits. It forces organizations to be aware of the future state of opportunities and challenges. It also forces them to anticipate risks and understand what resources will be needed to seize opportunities and overcome strategic issues.
Strategic planning also gives individuals a sense of direction and marshals them around a common mission. It creates standards and accountability. Strategic planning can enhance operational plans and efficiency. It also helps organizations limit time spent on crisis management , where they're reacting to unexpected changes that they failed to anticipate and prepare for.
Information technology is a key part of developing an effective strategic plan. Look at these six free IT strategic planning templates that can help make IT a driving force in a business.
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The art of formulating business strategies, implementing them, and evaluating their impact based on organizational objectives
What is Strategic Planning?
Strategic planning is the art of creating specific business strategies, implementing them, and evaluating the results of executing the plan, in regard to a company’s overall long-term goals or desires. It is a concept that focuses on integrating various departments (such as accounting and finance, marketing, and human resources) within a company to accomplish its strategic goals. The term strategic planning is essentially synonymous with strategic management.
The concept of strategic planning originally became popular in the 1950s and 1960s, and enjoyed favor in the corporate world up until the 1980s, when it somewhat fell out of favor. However, enthusiasm for strategic business planning was revived in the 1990s and strategic planning remains relevant in modern business.
CFI’s Course on Corporate & Business Strategy is an elective course for the FMVA Program.
Strategic Planning Process
The strategic planning process requires considerable thought and planning on the part of a company’s upper-level management. Before settling on a plan of action and then determining how to strategically implement it, executives may consider many possible options. In the end, a company’s management will, hopefully, settle on a strategy that is most likely to produce positive results (usually defined as improving the company’s bottom line) and that can be executed in a cost-efficient manner with a high likelihood of success, while avoiding undue financial risk.
The development and execution of strategic planning are typically viewed as consisting of being performed in three critical steps:
1. Strategy Formulation
In the process of formulating a strategy, a company will first assess its current situation by performing an internal and external audit. The purpose of this is to help identify the organization’s strengths and weaknesses, as well as opportunities and threats ( SWOT Analysis ). As a result of the analysis, managers decide on which plans or markets they should focus on or abandon, how to best allocate the company’s resources, and whether to take actions such as expanding operations through a joint venture or merger.
Business strategies have long-term effects on organizational success. Only upper management executives are usually authorized to assign the resources necessary for their implementation.
2. Strategy Implementation
After a strategy is formulated, the company needs to establish specific targets or goals related to putting the strategy into action, and allocate resources for the strategy’s execution. The success of the implementation stage is often determined by how good a job upper management does in regard to clearly communicating the chosen strategy throughout the company and getting all of its employees to “buy into” the desire to put the strategy into action.
Effective strategy implementation involves developing a solid structure, or framework, for implementing the strategy, maximizing the utilization of relevant resources, and redirecting marketing efforts in line with the strategy’s goals and objectives.
3. Strategy Evaluation
Any savvy business person knows that success today does not guarantee success tomorrow. As such, it is important for managers to evaluate the performance of a chosen strategy after the implementation phase.
Strategy evaluation involves three crucial activities: reviewing the internal and external factors affecting the implementation of the strategy, measuring performance, and taking corrective steps to make the strategy more effective. For example, after implementing a strategy to improve customer service, a company may discover that it needs to adopt a new customer relationship management (CRM) software program in order to attain the desired improvements in customer relations.
All three steps in strategic planning occur within three hierarchical levels: upper management, middle management, and operational levels. Thus, it is imperative to foster communication and interaction among employees and managers at all levels, so as to help the firm to operate as a more functional and effective team.
Benefits of Strategic Planning
The volatility of the business environment causes many firms to adopt reactive strategies rather than proactive ones. However, reactive strategies are typically only viable for the short-term, even though they may require spending a significant amount of resources and time to execute. Strategic planning helps firms prepare proactively and address issues with a more long-term view. They enable a company to initiate influence instead of just responding to situations.
Among the primary benefits derived from strategic planning are the following:
1. Helps formulate better strategies using a logical, systematic approach
This is often the most important benefit. Some studies show that the strategic planning process itself makes a significant contribution to improving a company’s overall performance, regardless of the success of a specific strategy.
2. Enhanced communication between employers and employees
Communication is crucial to the success of the strategic planning process. It is initiated through participation and dialogue among the managers and employees, which shows their commitment to achieving organizational goals.
Strategic planning also helps managers and employees show commitment to the organization’s goals. This is because they know what the company is doing and the reasons behind it. Strategic planning makes organizational goals and objectives real, and employees can more readily understand the relationship between their performance, the company’s success, and compensation. As a result, both employees and managers tend to become more innovative and creative, which fosters further growth of the company.
3. Empowers individuals working in the organization
The increased dialogue and communication across all stages of the process strengthens employees’ sense of effectiveness and importance in the company’s overall success. For this reason, it is important for companies to decentralize the strategic planning process by involving lower-level managers and employees throughout the organization. A good example is that of the Walt Disney Co., which dissolved its separate strategic planning department, in favor of assigning the planning roles to individual Disney business divisions.
An increasing number of companies use strategic planning to formulate and implement effective decisions. While planning requires a significant amount of time, effort, and money, a well-thought-out strategic plan efficiently fosters company growth, goal achievement, and employee satisfaction.
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Why Is Strategic Planning Important?
- 06 Oct 2020
Do you know what your organization’s strategy is? How much time do you dedicate to developing that strategy each month?
If your answers are on the low side, you’re not alone. According to research from Bridges Business Consultancy , 48 percent of leaders spend less than one day per month discussing strategy.
It’s no wonder, then, that 48 percent of all organizations fail to meet at least half of their strategic targets. Before an organization can reap the rewards of its business strategy, planning must take place to ensure its strategy remains agile and executable .
Here’s a look at what strategic planning is and how it can benefit your organization.
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What Is Strategic Planning?
Strategic planning is the ongoing organizational process of using available knowledge to document a business's intended direction. This process is used to prioritize efforts, effectively allocate resources, align shareholders and employees on the organization’s goals, and ensure those goals are backed by data and sound reasoning.
It’s important to highlight that strategic planning is an ongoing process—not a one-time meeting. In the online course Disruptive Strategy , Harvard Business School Professor Clayton Christensen notes that in a study of HBS graduates who started businesses, 93 percent of those with successful strategies evolved and pivoted away from their original strategic plans.
“Most people think of strategy as an event, but that’s not the way the world works,” Christensen says. “When we run into unanticipated opportunities and threats, we have to respond. Sometimes we respond successfully; sometimes we don’t. But most strategies develop through this process. More often than not, the strategy that leads to success emerges through a process that’s at work 24/7 in almost every industry.”
Strategic planning requires time, effort, and continual reassessment. Given the proper attention, it can set your business on the right track. Here are three benefits of strategic planning.
Related: 4 Ways to Develop Your Strategic Thinking Skills
Benefits of Strategic Planning
1. create one, forward-focused vision.
Strategy touches every employee and serves as an actionable way to reach your company’s goals.
One significant benefit of strategic planning is that it creates a single, forward-focused vision that can align your company and its shareholders. By making everyone aware of your company’s goals, how and why those goals were chosen, and what they can do to help reach them, you can create an increased sense of responsibility throughout your organization.
This can also have trickle-down effects. For instance, if a manager isn’t clear on your organization’s strategy or the reasoning used to craft it, they could make decisions on a team level that counteract its efforts. With one vision to unite around, everyone at your organization can act with a broader strategy in mind.
2. Draw Attention to Biases and Flaws in Reasoning
The decisions you make come with inherent bias. Taking part in the strategic planning process forces you to examine and explain why you’re making each decision and back it up with data, projections, or case studies, thus combatting your cognitive biases.
A few examples of cognitive biases are:
- The recency effect: The tendency to select the option presented most recently because it’s fresh in your mind
- Occam’s razor bias: The tendency to assume the most obvious decision to be the best decision
- Inertia bias: The tendency to select options that allow you to think, feel, and act in familiar ways
One cognitive bias that may be more difficult to catch in the act is confirmation bias . When seeking to validate a particular viewpoint, it's the tendency to only pay attention to information that supports that viewpoint.
If you’re crafting a strategic plan for your organization and know which strategy you prefer, enlist others with differing views and opinions to help look for information that either proves or disproves the idea.
Combating biases in strategic decision-making requires effort and dedication from your entire team, and it can make your organization’s strategy that much stronger.
Related: 3 Group Decision-Making Techniques for Success
3. Track Progress Based on Strategic Goals
Having a strategic plan in place can enable you to track progress toward goals. When each department and team understands your company’s larger strategy, their progress can directly impact its success, creating a top-down approach to tracking key performance indicators (KPIs) .
By planning your company’s strategy and defining its goals, KPIs can be determined at the organizational level. These goals can then be extended to business units, departments, teams, and individuals. This ensures that every level of your organization is aligned and can positively impact your business’s KPIs and performance.
It’s important to remember that even though your strategy might be far-reaching and structured, it must remain agile. As Christensen asserts in Disruptive Strategy , a business’s strategy needs to evolve with the challenges and opportunities it encounters. Be prepared to pivot your KPIs as goals shift and communicate the reasons for change to your organization.
Improve Your Strategic Planning Skills
Strategic planning can benefit your organization’s vision, execution, and progress toward goals. If strategic planning is a skill you’d like to improve, online courses can provide the knowledge and techniques needed to lead your team and organization.
Strategy courses can range from primers on key concepts (such as Economics for Managers ), to deep-dives on strategy frameworks (such as Disruptive Strategy ), to coursework designed to help you strategize for a specific organizational goal (such as Sustainable Business Strategy ).
Learning how to craft an effective, compelling strategic plan can enable you to not only invest in your career but provide lasting value to your organization.
Do you want to formulate winning strategies for your organization? Explore our portfolio of online strategy courses and download the free flowchart to determine which is the best fit for you and your goals.
About the Author
Strategic Planning Basics
What is strategic planning.
Strategic planning is an organizational management activity that is used to set priorities, focus energy and resources, strengthen operations, ensure that employees and other stakeholders are working toward common goals, establish agreement around intended outcomes/results, and assess and adjust the organization’s direction in response to a changing environment. It is a disciplined effort that produces fundamental decisions and actions that shape and guide what an organization is, who it serves, what it does, and why it does it, with a focus on the future. Effective strategic planning articulates not only where an organization is going and the actions needed to make progress, but also how it will know if it is successful.
What is a Strategic Plan?
What is strategic management what is strategy execution.
Strategic management is the comprehensive collection of ongoing activities and processes that organizations use to systematically coordinate and align resources and actions with mission, vision and strategy throughout an organization. Strategic management activities transform the static plan into a system that provides strategic performance feedback to decision making and enables the plan to evolve and grow as requirements and other circumstances change. Strategy Execution is basically synonymous with Strategy Management and amounts to the systematic implementation of a strategy.
What Are the Steps in Strategic Planning & Management?
There are many different frameworks and methodologies for strategic planning and management. While there are no absolute rules regarding the right framework, most follow a similar pattern and have common attributes. Many frameworks cycle through some variation on some very basic phases:
- Analysis or assessment, where an understanding of the current internal and external environments is developed
- Strategy formulation, where high level strategy is developed and a basic organization level strategic plan is documented
- Strategy execution, where the high level plan is translated into more operational planning and action items, and
- Evaluation or sustainment / management phase, where ongoing refinement and evaluation of performance, culture, communications, data reporting, and other strategic management issues occurs.
Related: What Are the Nine Steps to Strategic Planning and Management?
A strategy map is a simple graphic that shows a logical, cause-and-effect connection between strategic objectives (shown as ovals on the map). It is one of the most powerful elements associated with the balanced scorecard methodology, as it is used to quickly communicate how value is created by the organization. Strategy mapping can vastly improve any strategy communication effort. Most people are visual learners and so a picture of your strategy will be understood by many more employees than a written narrative. Plus the process of developing a strategy map forces the team to agree on what they are trying to accomplish in simple, easy-to-understand terms. With a well-designed strategy map, every employee can see how they contribute to the achievement of the organization’s objectives.
What Are the Attributes of a Good Planning Framework?
For more information about strategic planning and management in general or for about how we can help you, please contact us directly.
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What is strategic plan management and how does it benefit teams?
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What is strategic plan management?
6 key stages of strategic plan management
What to include in a strategic plan, the benefits of strategic plan management, limitations of strategic plan management.
Tips to becoming an effective and efficient strategic manager
Case Study: Office of Strategy Management at the Chrysler Group
What is strategic plan management and why does it matter? Well, imagine this scenario:
Your company creates its strategic plan . Leadership signs off. Maybe they set aside an hour a month to check in. Business units do their own evaluations and make some course corrections. At the end of the year, everybody evaluates again. Too often, this involves coming to grips with the fact that this is one more year of failing to deliver on the plan!
Does this sound at all familiar?
The problem is not that companies are missing revenue targets or other goals, at least in the short term. It is more in the way they strive for these goals that needs improving.
Organizations whose strategic plans go unrealized may have to go all the way back to the drawing board. Maybe they are missing, or not fully investing in, critical strategic planning steps. Or perhaps they are not asking the right questions. How is the market changing? How do they want to position themselves in that market? What information could confirm or inform the assessment to determine its validity? What are the internal and external landscapes that need to be considered? Only after answering these and other questions can a plan start to take shape.
But the work is not done, yet. Many organizations behave as though the planning is merely checking off the box of annual imperatives. The templates are filled out, decks presented, and the plan is filed away somewhere between offsite storage and the organization’s consciousness. End of story.
However, smart businesses have recognized that both the unexpected and the comfortable familiarity of the day-to-day have a way of drowning out the latest strategic plan. A successful strategic planning process requires a robust and coordinated effort to ensure the plans’ success. And that is where strategic plan management comes in.
Strategic plans need systems of strategic management and strategic leadership .
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What is strategic pan management?
Strategic business management is the iterative process by which an organization creates and sustains a successful strategic plan. This plan takes big-picture thinking and funnels it down to key initiatives.
The plan's purpose if to move the company in the direction it needs to move, year after year, for long-term success. It spans from research and formulation to execution, evaluation, and adjustment. Given the pace of change, strategic management is more relevant and important than ever.
A strategic management initiative might be driven by an internal group — many companies have an internal strategy team — or an outside consulting firm. Ultimately, company leaders need to own executing and sustaining the strategy.
The managing group is responsible for creating and implementing an effective strategic plan. This includes conducting internal/external analyses, formulating the plan, and tying it to the organization’s goals . They create the roadmap, mark long and short-term goals , and create an action plan to bring everything to life.
They also organize and run strategic planning reviews. They coach and advise the executive team. They work with management throughout the organization to communicate, coordinate and evaluate progress against goals.
They tie strategic objectives to day-to-day operational metrics throughout the enterprise. A good strategic management group makes the strategic plan real and compelling to the organization through concrete objectives, results, and timelines.
A lot has been written on corporate strategy. Classic corporate strategy revolves around finding and maintaining a competitive advantage. A company would use frameworks such as Porter’s 5 Forces or BCG’s Growth Share Matrix to make sense of its strengths, competitors, and where it can succeed in the market.
In the past two decades, classic strategy has had to adapt. In some cases this means yielding, to markets and a business environment that has become less stable or predictable.
Strategy has evolved, with more iterative approaches gaining favor and moving away from the 5-year plan, yet the basic steps of strategic management can apply regardless of the approach.
- Determine where/what you want to be. Do you approach strategy from the inside-out — identifying the organization’s capabilities and competitive advantages first — or the outside-in — understanding long-term forces and how they are shaping the market first? Be clear about what assumptions you are making. Are the assumptions based on short-term trends in the industry, longer-term trends for customers, or are they focused on analyzing the competition?
- Gather others to test assumptions. Bring together leaders and others with different perspectives and frames of reference to pressure-test the assumptions. What additional information would validate or clarify an assumption? How might you get that information? How would that adjust the plan? Involving others also creates buy-in.
- Analyze strengths and weaknesses . What capabilities and assets does the company have relative to where it wants to play? You can run a SWOT analysis here to examine your opportunities and successes.
- Formulation of the plan . When you do the homework, you can make choices and trade-offs — where the company wants to go, what it will need to develop to get there, what it will do, and what it will have to abandon. This stage includes convening representatives from key stakeholders, clarifying the vision, developing an overview of the plan including goals and objectives , and outlining responsibilities, resources, and timelines. They also establish benchmarks to measure progress.
- Execution. The strategy group has to stay engaged, keeping contact with the various parts of the organization and making sure they have the resources, clarity, and motivation to keep executing the strategy .
- Monitor, review, and adjust. This step might be the biggest opportunity for differentiating the success and sustainability of a strategic plan. Is reporting and evaluation of results just a check-box formality? An exercise in covering and one-upmanship? Or, is this a frequent check-in where business leaders can talk through what they are doing and surface roadblocks, concerns and new information that might warrant revisiting the plan?
Many organizations cover the first four steps and consider themselves complete. Often they fail because they don’t have the strategic management team at the table right from the beginning to put to action and monitor the plan.
In The Balanced Scorecard , authors David Norton and Robert Kaplan report that 90% of organizations fail to execute their strategies successfully. They contend that because companies have not created a plan for execution, the strategic plan falls flat.
John Kotter , former professor at Harvard Business School and noted expert on innovation says, “Strategy should be viewed as a dynamic force that constantly seeks opportunities, identifies initiatives that will capitalize on them, and completes those initiatives swiftly and efficiently.”
When managing a strategic plan, it is important to check that all of the necessary elements exist. Otherwise, you could end up revising parts of the plan or pivoting more often than you would with these elements.
To keep things running smoothly, each strategic plan document should include the following components:
- The company’s mission statement
- The organizational goals of the plan
- A vision statement
- A roadmap with time frames for each step of the plan
- The methods and tactics you will use to reach these business goals
Why strategies fail in the execution
Leadership deficits or lukewarm commitment.
In this HBR article, Ron Carucci from consulting firm Navalent reports that 61% of executives in a 10-year longitudinal study felt they were not prepared for the strategic challenges they faced after moving into senior leadership roles.
A lack of commitment to the plan is also a contributing factor. In addition, leaders attending to quarterly targets, crisis management, and reconciling budgets often push execution down the priority list.
Lack of metrics
Companies fail to apply metrics to track progress, which leads to ambiguous goals. Without metrics, it is easy to go off-track or to not recognize when conditions have changed and the plan should be revised.
Lack of systemic alignment
When strategies aren’t linked to budgets, strategic “priorities” don’t get resources. Local budgeting often reflects the conflicting objectives or goals for a group or business unit that are not consistent with strategic priorities.
Lack of down-the-line communication leads to confusion and lack of information enterprise-wide. This sparks distrust and negatively impacts commitment. The people closest to the customer are often in the dark. Kaplan and Norton report that on average, 95% of employees are unaware of the strategy.
I nsufficient management capabilities
A study by the Economist found that “only 41% of respondents say their companies have a sufficient number of skilled personnel to implement high-priority strategic initiatives.” In the same study, only 18% reported prioritizing hiring people with the skills to drive strategy implementation.
Lack of robust employee performance and development plans.
Kaplan and Norton report 70% of middle managers and over 90% of frontline employees have no link to the success or failure of execution. W. James McNerney, Jr. Chairman of 3M argued that by improving the average performance of every employee by 15%, irrespective of what his or her role is, a company can achieve and sustain consistently superior performance .
Joseph Hrebiniak, Emeritus management professor at Wharton warns that the strategic plan has to be reconciled with the organization’s talent. “If you don’t have what it takes, you’re going to have to get it, or modify the strategy to be more realistic.” Develop leaders , managers, and employees to meet the strategy.
Resistance to Change
Change is threatening. In an organization, change often corresponds with budget and resource allocations representing shifts in power and influence for the leaders involved. For employees, fear and anxiety about their own competence, status, and job security also contribute to resistance.
Strategic planning management is designed to address the factors that often lead to execution failure. As such, how strategic management is implemented is ultimately unique to each organization. The goal is to provide structure and discipline to ensure success while also being responsive to particular conditions and changing environments.
How does strategic management address the failure points?
- The organization and its people are set up to succeed.
- Leadership is supported in keeping up momentum.
- Everyone in the organization is aware of the strategic plan and how they contribute to it.
- Progress to plan is communicated throughout the organization and to the board.
- Metrics facilitate course correction.
- Budgets enterprise-wide are based on strategy.
- Cross-organization alignment as opposed to silos.
- Robust employee performance and compensation plans are created.
- Calls for commitment to training and education.
- The right people are in the right jobs.
Developing and executing a successful strategy is hard work. Strategic management doesn’t solve everything.
- Complex operations. Global companies with multiple people, multiple products, in multiple countries make enterprise-wide coordination complex.
- Localized ecosystems. A more flexible approach is needed when execution depends on many outside players. For example, a large retailer enters a new market and negotiates terms and commitments with suppliers as they would in the U.S. If the suppliers refuse to play by those rules, the company has to reevaluate its strategy.
- Power struggles. If CEO’s feel managed rather than supported, they will be resistant to an OSM.
- Disempowerment. Possible resentment from middle management who may regard the OSM as taking away their autonomy.
- Not-invented here. When strategy formulation and management is conducted by an outside group, employees may not buy in.
Tips for becoming an effective and efficient strategic manager
- Build trust by focusing on how you can facilitate people’s success. Beware of acting in ways that cast you as a watchdog or the police.
- In discussions around evaluation, lead from what’s going right and discourage blaming.
- Have empathy for executives amid distracting issues and pressures. Do whatever you can to support the CEO.
- Create a multiple outlet/multiple media communications plan to keep stakeholders up to date along the way.
- Enlist trusted colleagues or advisors to give you support and perspective when you need to address complex and challenging situations.
- Learn to think on two-time horizons to avoid becoming reactive during rapid change. Even with in-the-moment actions and initiatives, consider how they serve the North Star of the longer-term strategy, either through building capabilities or gaining useful insight.
Coaching and leadership development opportunities:
- Executive team coaching for the leadership team. Often leadership teams unwittingly find themselves in the weeds. Executive team coaching can help members to support one another in observing from a higher and more strategic vantage point while holding one another accountable for execution.
- Action learning groups for leaders in cross-functional areas. Individual members bring project-specific strategic issues and opportunities to a common table for ideas, support, and accountability. They are crucibles for synergistic learning.
- Periodic conferences for groups across the organization for updates and knowledge-sharing. Employees can give important feedback to leaders about how things are going.
- Training leaders to be coaches of their teams.
- Coaching emerging leaders , equipping them with skills to manage change as strategic planners.
Though companies have varying structures for implementing strategic management, having a discrete functional unit at the corporate level to drive execution activities is key. This case study on the Balanced Scorecard illustrates how strategic management comes into play.
After innovation successes in the 1990s, US automaker Chrysler was in trouble by 2000. High costs and competition led to a deficit of more than $5 billion.
DaimlerChrysler, the parent company, stepped in. Dieter Zetsche became the CEO and introduced the Balance Scorecard (BSC) as part of the turnaround strategy. Bill Russo, vice president of business strategy, and his unit were put in charge of managing the strategy.
First, this “office of strategy management” worked with the executive team to define the new strategy using the Balanced Scorecard as a framework to align and prioritize strategy initiatives. Their efforts produced a scorecard for the enterprise. This was vetted through senior leadership.
Next, the enterprise-wide scorecard cascaded down through the organization to business units and support units. Each created their own scorecards based on what local operations would need to do to support the larger strategy, creating alignment within the organization. Russo’s strategic management group collected and analyzed this data and created processes for the scorecards.
Then the strategic management group led a communication rollout plan to over 90,000 employees. The strategic management group also set the agenda for monthly reviews and strategic planning budget supervision .
Finally, to keep momentum and raise critical issues, before management meetings Russo would brief Zetsche on issues emerging from the scorecard reporting so that things that needed management attention would be on the agenda. Following the meeting, he would follow-up and ensure proper communication was in place.
Throughout the process, the strategic management group was a central resource and clearing house for data:
- Served as a repository of ideas emerging through the organization
- Supported Human Resources for training and education on the process.
- Communicated strategy, targets and initiatives.
- Supported the business units with communications planning and ensuring clear and consistent messaging.
Optimizing your strategic planning management
With so many moving parts and considerations, managing strategic plans can seem daunting. But it is critical in order to see plans through and ensure actions align with goals.
Try the strategies we’ve noted here as you build out and develop your next strategic plan. And remember to continually assess goals and objectives as time goes on.
Betterup Fellow Coach, M.S.Ed, M.S.O.D.
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5 benefits of strategic planning.
By Mary King
20 january 2023.
- 1 1. It makes your organization proactive rather than reactive
- 2 2. It instills a shared sense of responsibility
- 3 3. It increases operational efficiency among leadership
- 4 4. It improves staff satisfaction and retention
- 5 5. It manages expectations and bolsters trust
- 6 Get the template ↓
Many organizations understand the importance of strategic planning, and they’ll invest a great deal of time and money coming up with the strategic plan itself. But once the strategic planning process is complete, it’s really common for that plan to just… well, sit there. Maybe it gets reviewed once a year–an obligatory thing your company or organization simply “has to do.” Or worse, it becomes a glossy (and expensive) document that sits gathering dust on the shelf.
Well, as the leading provider of strategic planning and execution software , we disagree! A strategic plan is the compass for your goals, and we’re here to re-ignite that strategic planning spark. To get you started, you can grab our Free Strategic Plan Template , which you can download as a PDF.
In this post, we are going to look at five of the major benefits of a strong strategic plan, the purpose of strategic planning in the first place, and how it will improve virtually every aspect of your operations – from employee engagement, to plan execution, to leadership.
“If you don’t know where you are going, you are certain to end up somewhere else.” – Yogi Berra
A strategic plan is so much more than words on a page (or a shelf!)
If you have a strategic plan that you (and your employees) reference regularly, then it becomes a living document, a dynamic process that guides, responds to, and helps actualize large-scale dreams.
Here are five benefits of strategic planning.
1. It makes your organization proactive rather than reactive
Why is strategic planning important?
A strategic plan allows organizations to anticipate things that are most likely to happen and prepare accordingly. Through strategic planning, companies can anticipate certain unfavorable scenarios before they happen and take necessary precautions to avoid them. And, if something unfortunate–whether a small scale mishap, or a full blown crisis–does happen, then you already have something in place to ensure you’re able to get back on track.
When a crisis hits, such as the COVID-19 pandemic, having a strategic plan versus not having one can make a huge difference. For example, instead of having to halt construction plans, further disrupt learning, and be stuck in a pattern of only reacting during the pandemic, White Bear Lake Area Schools, MN, leaned on their strategic plan :
“We’ve completed projects already. Construction continued throughout the pandemic, which was really exciting for us. And through it all, our strategic plan has continued to inform our decisions about what type of learning environment we’re building for our students. That’s been invaluable . We’ve had to make decisions on learning models, remote work, distance learning… we’ve been able to root those decisions in asking what does our strategic plan compel us to do, and what opportunities have emerged along the way?” – Dr. Alison Gillespie, the Assistant Superintendent for Teaching and Learning with WBLAS.
Of course, the importance of strategic planning and being proactive is not just for catastrophe prevention, or mitigating poor outcomes. Another benefit of a strategic plan is it also gives you a competitive edge.
When you make being engaged with your strategic plan a habit, an integral part of how your organization operates, it means your overall vision, and the steps required to be there, are front of mind. This will keep your team alert, attentive, and able to keep up with changing trends.
While other strategic plans for other organizations may sit on the shelf, excellent strategic planning is enough to maintain a competitive edge. Staying one step ahead of what everyone else is doing requires a clear idea of what exactly you are doing. Rather than just always reacting to the trends, you want to be anticipatory. Better yet, be the trendsetter.
A strategic plan gives you this ability to be truly proactive – and, therefore, flexible – in your vision.
2. It instills a shared sense of responsibility
A strategic plan helps to define the direction in which an organization must travel, and aids in establishing realistic objectives and goals that are in line with the vision and mission charted out for it. But it also creates a sense of collaboration and collective responsibility.
The key to successful strategic planning is to engage everyone with the plan as early as possible in the planning process, and build in measures and implementation steps that allow you to monitor the results at regular intervals. When you do this, goals become stepping stones to even greater goals, and everyone becomes familiar with the aspirations and pain-points of your overall vision, and their contribution to it.
When everybody has a sense of purpose in their role within the greater organization, they are going to care about the outcomes. Everybody wants to feel important, needed, valued, and heard. One benefit of a strategic plan is that it formalizes this process. It’s really important to make sure everyone implementing a plan feels responsible for their part in it; when people are intrinsically motivated to complete their tasks, this creates energy and momentum on all organizational levels.
For the people involved in the actual strategic planning process itself, it creates a sense of democratic engagement. People are able to bring their own perspectives, thoughts, and ideas to the table, and will be encouraged when they see their strategies and actions come to life. For people carrying out those actions, they will feel more encouraged to be responsible for those outcomes when the goals are attainable and clear. A strategic plan makes those actions clear.
A strategic plan offers both the much-needed foundation from which an organization can grow, but also helps establish the roles and boundaries for everyone, thus improving efficient decision making and creating a greater sense of overall momentum and direction.
Ensuring employees feel engaged and responsible is one of the most important strategic planning benefits.
3. It increases operational efficiency among leadership
When discussing the importance of strategic planning in an organization, we need to consider leadership. One way that an organizational vision can fall short in its implementation is when there isn’t a clear enough idea of what change is needed where, and how complex that level of change needs to be. That’s where we can really see the value of strategic planning. In terms of strategic management, a plan provides leaders with the roadmap to align the organization’s functional activities to achieve set goals.
At Envisio, we aren’t afraid of complex plans. In fact, we love them. Because we exclusively work with publicly accountable organizations, such as local governments, our clients frequently have really complex plans that can span years (sometimes even decades)!
What we’ve learned is that there is no need to shy away from a grand vision; what matters is making sure the strategy to get there is clear.
People in leadership roles are often juggling many different priorities and ideas, and they are overseeing the entire operation. Management discussions, meetings, and decision making can sometimes suffer from not being able to see the forest from the trees–meaning, everyone is capable of losing perspective. A strategic management plan helps carry some of that load for leadership.
A strategic plan also increases operational efficiency in that it helps determine those important, practical, company-wide leadership considerations, such as budget requirements to accomplish set objectives. These practical, operational considerations illustrate why strategic planning is important.
4. It improves staff satisfaction and retention
Research has shown that over the course of COVID-19, local government employees are feeling as though they lack autonomy in their jobs, are feeling burnt out, and are experiencing disconnection from their work and colleagues.
As previously mentioned, a strategic plan can help empower your employees to feel responsible and engaged with their work, but it can also be used to plan initiatives like improved career advancement, perks and benefits, and improving workplace culture.
The reality is that public sector workplaces (local government and beyond) need to find ways to empower and support employees, otherwise these sectors will experience high turnover. Incorporating improved onboarding processes, feedback processes, and building in a process for positive recognition are all things that can be formalized in a strategic plan. Having a strategic plan can also reduce the experience of being “micro-managed,” which can increase senses of autonomy, and therefore satisfaction, in the workplace.
5. It manages expectations and bolsters trust
A strategic plan increases transparency, which helps build trust and eliminate ambiguity–both inside the organization and among key stakeholders. Strategic planning done well is beneficial because it creates more opportunities for collaboration across teams. Working together to see what each department is doing, rather than having disjointed groups, improves trust in the overall direction of the organization. Because so much of strategic planning refers to determining organizational goals, this helps set expectations across the different areas of your organization, and improves the overall functioning of the company.
Public sector work requires a lot of passion and care; it tends to attract value-driven people. Ensuring that the values of the organization are built into the strategic plan communicates to staff a sense of openness, and helps assure them (and remind them) about the overall mission.
One of the other benefits of having a strategy is it shows how information is being managed, in a modernized, quantifiable, secure manner. Being able to back up decisions using data, for example, is an objective, non-partisan way to communicate the rationale behind the moves your organization is making. All of this goes a long way in improving trust – both internally, and externally, to the community being served.
And if you really want to boost trust with your external stakeholders, consider sharing your organizational progress against your strategic plan via a public strategic plan dashboard .
Get the template ↓
Ready to start your strategic planning journey? Check out our strategic planning template!
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Mary King is a professional writer and researcher based in Toronto. She comes to Envisio with a Masters Degree, where she researched the relationship between the disappearance of urban public spaces, and high level decision-making processes in local governments. For nearly a decade, Mary has worked as a community organizer, promoter, and supportive researcher in a variety of nonprofits and think-tanks, and her favorite area of focus was in connecting local artists with marginalized youth. Since 2017, her writings and research on policy, local governance, and its relationship to public art and public space has been presented at conferences internationally. She has also served as both a conference chair and lead facilitator on professional and academic conferences across Canada on how to better bridge academic research with local change-agents, policy makers, artists, and community members. Envisio’s mission of excellence and trust in the public sector maps onto Mary's interest in local government and community mobilization. She loves working at Envisio because she cares about having well organized, strategic, and transparent public organizations and local governments. Mary is also a creative writer and musician and has been supported in her practice by the Canada Council for the Arts. Her stories can be found in literary journals across Canada.
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The Strategic Planning Process in 4 Steps
To assist you throughout your planning process, we have created a how-to guide on the basics of strategic planning which will take you through the planning process step-by-step..
Free Strategic Planning Guide
What is Strategic Planning?
Strategic Planning is a process where organizations define a bold vision and create a plan with objectives and goals to reach that future. A great strategic plan defines where your organization is going, how you’ll win, who must do what, and how you’ll review and adapt your strategy.
Overview of the complete strategic planning process:
Getting started: strategic planning introduction.
The strategic management process is about getting from Point A to Point B more effectively, efficiently, and enjoying the journey and learning from it. Part of that journey is the strategy and part of it is execution. Having a good strategy dictates “how” you travel the road you have selected and effective execution makes sure you are checking in along the way. On average, this process can take between three and four months. However no one organization is alike and you may decide to fast track your process or slow it down. Move at a pace that works best for you and your team and leverage this as a resource. For more of a deep dive look into each part of the planning phase, you will see a link to the detailed How-To Guide at the top of each phase.
1-2 weeks (1 hr meeting with Owner/CEO, Strategy Director and Facilitator (if necessary) to discuss information collected and direction for continued planning.)
Questions to Ask:
- Who is on your Planning Team?
- Who will be the business process owner (Strategy Director) of planning in your organization?
- Fast forward 12 months from now, what do you want to see differently in your organization as a result of embarking on this initiative?
- Planning team members are informed of their roles and responsibilities.
- Planning schedule is established.
- Existing planning information and secondary data collected.
Step 1: determine organizational readiness, set up your planning process for success – questions to ask:.
- Are the conditions and criteria for successful planning in place at the current time? Can certain pitfalls be avoided?
- Is this the appropriate time for your organization to initiate a planning process? Yes or no? If no, where do you go from here?
Step 2: Develop Your Team & Schedule
Who is going to be on your planning team? You need to choose someone to oversee the implementation (Chief Strategy Officer or Strategy Director) and then you need some of the key individuals and decision makers for this team. It should be a small group of approximately 12-15 persons.
OnStrategy is the leader in strategic planning and performance management. Our cloud-based software and hands-on services closes the gap between strategy and execution. Learn more about OnStrategy here .
Step 3: Collect Current Data
Collect the following information on your organization:
- The last strategic plan, even if it is not current
- Mission statement, vision statement, values statement
- Business plan
- Financial records for the last few years
- Marketing plan
- Other information, such as last year’s SWOT, sales figures and projections
Step 4:Review collected data:
Review the data collected in the last action with your strategy director and facilitator.
- What trends do you see?
- Are there areas of obvious weakness or strengths?
- Have you been following a plan or have you just been going along with the market?
Strategic Planning Phase 1: Determine Your Strategic Position
Want More? Deep Dive Into the “ Evaluate Your Strategic Position ” How-To Guide.
Step 1: identify strategic issues.
Strategic issues are critical unknowns that are driving you to embark on a strategic planning process now. These issues can be problems, opportunities, market shifts or anything else that is keeping you awake at night and begging for a solution or decision.
- How will we grow, stabilize, or retrench in order to sustain our organization into the future?
- How will we diversify our revenue to reduce our dependence on a major customer?
- What must we do to improve our cost structure and stay competitive?
- How and where must we innovate our products and services?
Step 2: Conduct an Environmental Scan
Conducting an environmental scan will help you understand your operating environment. An environmental scan is also referred to as a PEST analysis, which is an acronym for Political, Economic, Social and Technological trends. Sometimes it is helpful to also include Ecological and Legal trends as well. All of these trends play a part in determining the overall business environment.
Step 3: Conduct a Competitive Analysis
The reason to do a competitive analysis is to assess the opportunities and threats that may occur from those organizations competing for the same business you are. You need to have an understanding of what your competitors are or aren’t offering your potential customers. Here are a few other key ways a competitive analysis fits into strategic planning:
- To help you assess whether your competitive advantage is really an advantage.
- To understand what your competitors’ current and future strategies are so you can plan accordingly.
- To provide information that will help you evaluate your strategic decisions against what your competitors may or may not be doing.
Step 4: Identify Opportunities and Threats
Opportunities are situations that exist but must be acted on if the business is to benefit from them.
What do you want to capitalize on?
- What new needs of customers could you meet?
- What are the economic trends that benefit you?
- What are the emerging political and social opportunities?
- What niches have your competitors missed?
Threats refer to external conditions or barriers that may prevent a company from reaching its objectives.
What do you need to mitigate?
Questions to answer:.
- What are the negative economic trends?
- What are the negative political and social trends?
- Where are competitors about to bite you?
- Where are you vulnerable?
Step 5: Identify Strengths and Weaknesses
Strengths refer to what your company does well.
What do you want to build on?
- What do you do well (in sales, marketing, operations, management)?
- What are your core competencies?
- What differentiates you from your competitors?
- Why do your customers buy from you?
Weaknesses refer to any limitations a company faces in developing or implementing a strategy.
What do you need to shore up?
- Where do you lack resources?
- What can you do better?
- Where are you losing money?
- In what areas do your competitors have an edge?
Step 6: Customer Segments
Customer segmentation defines the different groups of people or organizations a company aims to reach or serve.
Who are we providing value to?
- What needs or wants define your ideal customer?
- What characteristics describe your typical customer?
- Can you sort your customers into different profiles using their needs, wants and characteristics?
- Can you reach this segment through clear communication channels?
Step 7: Develop Your SWOT
A SWOT analysis is a quick way of examining your organization by looking at the internal strengths and weaknesses in relation to the external opportunities and threats. By creating a SWOT analysis, you can see all the important factors affecting your organization together in one place. It’s easy to read, easy to communicate, and easy to create. Take the Strengths, Weaknesses, Opportunities and Threats you developed earlier, review, prioritize and combine like terms. The SWOT analysis helps you ask, and answer, the following questions: “How do you….”
- Build on your strengths
- Shore up your weaknesses
- Capitalize on your opportunities
- Manage your threats
Strategic Planning Process Phase 2: Developing Strategy
Want More? Deep Dive Into the “Developing Your Strategy” How-To Guide.
Step 1: Develop Your Mission Statement
The mission statement describes an organization’s purpose or reason for existing.
What is our purpose? Why do we exist? What do we do?
- What does your organization intend to accomplish?
- Why do you work here? Why is it special to work here?
- What would happen if we were not here?
Outcome: A short, concise, concrete statement that clearly defines the scope of the organization.
Step 2: discover your values.
Your values statement clarifies what your organization stands for, believes in and the behaviors you expect to see as a result.
How will we behave?
- What are the key non-negotiables that are critical to the success of the company?
- What are the guiding principles that are core to how we operate in this organization?
- What behaviors do you expect to see?
- If the circumstances changed and penalized us for holding this core value, would we still keep it?
Outcome: Short list of 5-7 core values.
Step 3: casting your vision statement.
A Vision Statement defines your desired future state and provides direction for where we are going as an organization.
Where are we going?
- What will our organization look like 5–10 years from now?
- What does success look like?
- What are we aspiring to achieve?
- What mountain are you climbing and why?
Outcome: A picture of the future.
Step 4: identify your competitive advantages.
A Competitive Advantage is a characteristic(s) of an organization that allows it to meet their customer’s need(s) better than their competition can.
What are we best at?
- What are your unique strengths?
- What are you best at in your market?
- Do your customers still value what is being delivered? Ask them.
- How do your value propositions stack up in the marketplace?
Outcome: A list of 2 or 3 items that honestly express the organization’s foundation for winning.
Step 5: crafting your organization-wide strategies.
Your strategies are the general methods you intend to use to reach your vision. No matter what the level, a strategy answers the question “how.”
How will we succeed?
- Broad: market scope; a relatively wide market emphasis.
- Narrow: limited to only one or few segments in the market
- Does your competitive position focus on lowest total cost or product/service differentiation or both?
Outcome: Establish the general, umbrella methods you intend to use to reach your vision.
Phase 3: strategic plan development.
Want More? Deep Dive Into the “Build Your Plan” How-To Guide.
Strategic Planning Process Step 1: Use Your SWOT to Set Priorities
If your team wants to take the next step in the SWOT analysis, apply the TOWS Strategic Alternatives Matrix to help you think about the options that you could pursue. To do this, match external opportunities and threats with your internal strengths and weaknesses, as illustrated in the matrix below:
TOWS Strategic Alternatives Matrix
Evaluate the options you’ve generated, and identify the ones that give the greatest benefit, and that best achieve the mission and vision of your organization. Add these to the other strategic options that you’re considering.
Step 2: Define Long-Term Strategic Objectives
Long-Term Strategic Objectives are long-term, broad, continuous statements that holistically address all areas of your organization. What must we focus on to achieve our vision? What are the “big rocks”?
Questions to ask:
- What are our shareholders or stakeholders expectations for our financial performance or social outcomes?
- To reach our outcomes, what value must we provide to our customers? What is our value proposition?
- To provide value, what process must we excel at to deliver our products and services?
- To drive our processes, what skills, capabilities and organizational structure must we have?
Outcome: Framework for your plan – no more than 6
Step 3: Setting Organization-Wide Goals and Measures
Once you have formulated your strategic objectives, you should translate them into goals and measures that can be clearly communicated to your planning team (team leaders and/or team members). You want to set goals that convert the strategic objectives into specific performance targets. Effective goals clearly state what, when, how, and who, and they are specifically measurable. They should address what you need to do in the short-term (think 1-3 years) to achieve your strategic objectives. Organization-wide goals are annual statements that are specific, measurable, attainable, responsible and time bound. These are outcome statements expressing a result expected in the organization.
What is most important right now to reach our long-term objectives?
Outcome: clear outcomes for the current year..
Step 4: Select KPIs
Key Performance Indicators (KPI) are the key measures that will have the most impact in moving your organization forward. We recommend you guide your organization with measures that matter.
How will we measure our success?
Outcome: 5-7 measures that help you keep the pulse on your performance. When selecting your Key Performance Indicators, begin by asking “What are the key performance measures we need to track in order to monitor if we are achieving our goals?” These KPIs include the key goals that you want to measure that will have the most impact in moving your organization forward.
Step 5: Cascade Your Strategies to Operations
Cascading action items and to-dos for each short-term goal is where the rubber meets the road – literally. Moving from big ideas to action happens when strategy is translated from the organizational level to the individual. Here we widen the circle of the people who are involved in the planning as functional area managers and individual contributors develop their short-term goals and actions to support the organizational direction. But before you take that action, determine if you are going to develop a set of plans that cascade directly from the strategic plan, or instead if you have existing operational, business or account plans that should be synced up with organizational goals. A pitfall is to develop multiple sets of goals and actions for directors and staff to manage. Fundamentally, at this point you have moved from planning the strategy to planning the operations; from strategic planning to annual planning. That said, the only way strategy gets executed is to align resources and actions from the bottom to the top to drive your vision.
Questions to Ask
- How are we going to get there at a functional level?
- Who must do what by when to accomplish and drive the organizational goals?
- What strategic questions still remain and need to be solved?
Department/functional goals, actions, measures and targets for the next 12-24 months
Step 6: Cascading Goals to Departments and Team Members
Now in your Departments / Teams, you need to create goals to support the organization-wide goals. These goals should still be SMART and are generally (short-term) something to be done in the next 12-18 months. Finally, you should develop an action plan for each goal. Keep the acronym SMART in mind again when setting action items, and make sure they include start and end dates and have someone assigned their responsibility. Since these action items support your previously established goals, it may be helpful to consider action items your immediate plans on the way to achieving your (short-term) goals. In other words, identify all the actions that need to occur in the next 90 days and continue this same process every 90 days until the goal is achieved.
Examples of Cascading Goals:
Phase 4: executing strategy and managing performance.
Want More? Deep Dive Into the “Managing Performance” How-To Guide.
Step 1: Strategic Plan Implementation Schedule
Implementation is the process that turns strategies and plans into actions in order to accomplish strategic objectives and goals.
How will we use the plan as a management tool?
- Communication Schedule: How and when will you roll-out your plan to your staff? How frequently will you send out updates?
- Process Leader: Who is your strategy director?
- Structure: What are the dates for your strategy reviews (we recommend at least quarterly)?
- System & Reports: What are you expecting each staff member to come prepared with to those strategy review sessions?
Outcome: Syncing your plan into the “rhythm of your business.”
Once your resources are in place, you can set your implementation schedule. Use the following steps as your base implementation plan:
- Establish your performance management and reward system.
- Set up monthly and quarterly strategy meetings with established reporting procedures.
- Set up annual strategic review dates including new assessments and a large group meeting for an annual plan review.
Now you’re ready to start plan roll-out. Below are sample implementation schedules, which double for a full strategic management process timeline.
Step 2: Tracking Goals & Actions
Monthly strategy meetings don’t need to take a lot of time – 30 to 60 minutes should suffice. But it is important that key team members report on their progress toward the goals they are responsible for – including reporting on metrics in the scorecard they have been assigned. By using the measurements already established, it’s easy to make course corrections if necessary. You should also commit to reviewing your Key Performance Indicators (KPIs) during these regular meetings.
Your Bi-Annual Checklist
Never lose sight of the fact that strategic plans are guidelines, not rules. Every six months or so, you should evaluate your strategy execution and plan implementation by asking these key questions:
- Will your goals be achieved within the time frame of the plan? If not, why?
- Should the deadlines be modified? (Before you modify deadlines, figure out why you’re behind schedule.)
- Are your goals and action items still realistic?
- Should the organization’s focus be changed to put more emphasis on achieving your goals?
- Should your goals be changed? (Be careful about making these changes – know why efforts aren’t achieving the goals before changing the goals.)
- What can be gathered from an adaptation to improve future planning activities?
Why Track Your Goals?
- Ownership: Having a stake and responsibility in the plan makes you feel part of it and leads you to drive your goals forward.
- Culture: Successful plans tie tracking and updating goals into organizational culture.
- Implementation: If you don’t review and update your goaFls, they are just good intentions
- Accountability: Accountability and high visibility help drive change. This means that each measure, objective, data source and initiative must have an owner.
- Empowerment: Changing goals from In Progress to Complete just feels good!
Step 3: Review & Adapt
Guidelines for your strategy review.
Restricting the meeting to reporting on measurements can help you stay on task and keep the meeting within 30 minutes, but if you can commit to a full hour, the meeting agenda should also include some time devoted to working on one specific topic or on one of the quarter’s priorities where decisions need to be made. Once agreed upon, this topic should be developed to conclusion. Holding meetings helps focus your goals on accomplishing top priorities and accelerating growth of the organization. Although the meeting structure is relatively simple, it does require a high degree of discipline.
Strategy Review Session Questions:
- What were our three most important strategic accomplishments of the last 90 days – how have we changed our field of play in the past 90 days?
- What are the three most important ways we fell short of our strategic potential?
- In the last 90 days, what are the three most important things that we have learned about our strategy? (NOTE: We are looking for insight to decision to action observations.)
Step 4: Annual Updates The three words strategic planning off-site provoke reactions anywhere from sheer exuberance to ducking for cover. In many organizations, retreats have a bad reputation because stepping into one of the many planning pitfalls is so easy. Holding effective meetings can be tough, and if you add a lot of brainpower mixed with personal agendas, you can have a recipe for disaster. That’s why so many strategic planning meetings are unsuccessful. Executing your strategic plan is as important, or even more important, than your strategy. Critical actions move a strategic plan from a document that sits on the shelf to actions that drive organizational growth. The sad reality is that the majority of organizations who have strategic plans fail to implement. Don’t be part of the majority! In fact, research has shown that 70% of organizations that have a formal execution process out-perform their peers. (Kaplan & Norton) Guiding your work in this stage of the planning process is a schedule for the next 12 months that spells out when the quarterly strategy reviews are, who is involved, what participants need to bring to the meetings and how you will adapt the plan based on the outcomes of the reviews. You remain in this phase of the strategic management process until you embark on the next formal planning sessions where you start back at the beginning. Remember that successful execution of your plan relies on appointing a strategy director, training your team to use OnStrategy (or any other planning tool), effectively driving accountability, and gaining organizational commitment to the process.
Strategic planning frequently asked questions
Read our frequently asked questions about strategic planning to learn how to build a great strategic plan..
Business Strategic Planning is a process where your business defines a bold vision of the future and creates a plan to reach that future. It helps your business define where you’re going, how you’ll get there, how you’ll grow, and what you must do to reach your desired future.
A great strategic plan determines where your organization is going, how you’ll win, what roles each team member has in the execution, and your game plan for reviewing and adapting your strategy. Elements include a current state analysis, SWOT, mission, vision, values, competitive advantages, growth strategy, growth enablers, a 3-year roadmap, and annual plan with goals, KPIs, and OKRs.
Typically, the average strategic planning process takes about 3-4 months, but depending on your organization, it could take more or less time. Every organization is different, so you should work at a pace that works for you.
There are four overarching phases to the strategic planning process that include: determining position, developing your strategy, building your plan, and managing performance. Each phase plays a unique but distinctly crucial role in the strategic planning process.
Prior to starting your strategic plan, you must go through this pre-planning process to determine your organization’s readiness by following these steps:
Ask yourself these questions: Are the conditions and criteria for successful planning in place now? Can we foresee any pitfalls that we can avoid? Is there an appropriate time for our organization to initiate this process?
Develop your team and schedule. Who will oversee the implementation as Chief Strategy Officer or Director? Do we have at least 12-15 other key individuals on our team?
Research and Collect Current Data. Find the following resources that your organization may have used in the past to assist you with your new plan: last strategic plan, mission, vision, and values statement, business plan, financial records, marketing plan, SWOT, sales figures, or projections.
Finally, review the data with your strategy director and facilitator and ask these questions: What trends do we see? Any obvious strengths or weaknesses? Have we been following a plan or just going along with the market?
Determining your positioning entails conducting a scan of macro and micro trends in your environment and industry, identifying marketing and competitive opportunities and threats, clarifying target customers and value propositions, gathering and reviewing staff and partner feedback for strengths and weaknesses, synthesizing the data into a SWOT, and solidifying your competitive advantages.
Developing your strategy includes determining your primary business model and organizational purpose, identifying your corporate values, creating an image of what success would look like in 3-5 years, solidifying your competitive advantages, formulating organization wide-strategies that explain your base, and agreeing on strategic issues you need to address in the planning process. .
Once you get to the strategic plan development process in the planning process, you must begin developing your strategic framework and defining long-term strategic objectives, set short-term SMART organizational goals, and select the measure that will be your KPIs (key performance indicators.)
The last phase of strategic planning is implementation, execution, and ongoing refreshes. This step entails establishing an implementation schedule, rolling out your plan, executing against your key results, and reviewing process and refreshing your plan quarterly. p>
The ideal execution schedule for your strategic plan will differ from team to team or organization to organization, but generally, you should try to set 4 quarterly reviews, a mid-year executive survey, 12 monthly check-ins, and a year-end plan review and annual refresh.
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- What is strategic planning? 5 steps and ...
What is strategic planning? 5 steps and processes
A strategic plan helps you define and share the direction your company will take in the next three to five years. It includes your company’s vision and mission statements, goals, and the actions you’ll take to achieve those goals. In this article we describe how a strategic plan compares to other project and business tools, plus four steps to create a successful strategic plan for your company.
Strategic planning is when business leaders map out their vision for the organization’s growth and how they’re going to get there. Strategic plans inform your organization’s decisions, growth, and goals. So if you work for a small company or startup, you could likely benefit from creating a strategic plan. When you have a clear sense of where your organization is going, you’re able to ensure your teams are working on projects that make the most impact.
The strategic planning process doesn’t just help you identify where you need to go—during the process, you’ll also create a document you can share with employees and stakeholders so they stay informed. In this article, we’ll walk you through how to get started developing a strategic plan.
What is a strategic plan?
A strategic plan is a tool to define your organization’s goals and what actions you will take to achieve them. Typically, a strategic plan will include your company’s vision and mission statements, your long-term goals (as well as short-term, yearly objectives), and an action plan of the steps you’re going to take to move in the right direction.
Your strategic plan document should include:
Your company’s mission statement
Your company’s goals
A plan of action to achieve those goals
Your approach to achieving your goals
The tactics you’ll use to meet your goals
An effective strategic plan can give your organization clarity and focus. This level of clarity isn’t always a given—according to our research, only 16% of knowledge workers say their company is effective at setting and communicating company goals. By investing time into strategy formulation, you can build out a three- to five-year vision for the future of your company. This strategy will then inform your yearly and quarterly company goals.
Do I need a strategic plan?
A strategic plan is one of many tools you can use to plan and hit your goals. It helps map out strategic objectives and growth metrics. Here’s how a strategic plan compares to other project management and business tools.
Strategic plan vs. business plan
A business plan can help you document your strategy as you’re getting started so every team member is on the same page about your core business priorities and goals. This tool can help you document and share your strategy with key investors or stakeholders as you get your business up and running.
You should create a business plan when you’re:
Just starting your business
Significantly restructuring your business
If your business is already established, consider creating a strategic plan instead of a business plan. Even if you’re working at a relatively young company, your strategic plan can build on your business plan to help you move in the right direction. During the strategic planning process, you’ll draw from a lot of the fundamental business elements you built early on to establish your strategy for the next three to five years.
Key takeaway: A business plan works for new businesses or large organizational overhauls. Strategic plans are better for established businesses.
Strategic plan vs. mission and vision statements
Your strategic plan, mission statement, and vision statements are all closely connected. In fact, during the strategic planning process, you will take inspiration from your mission and vision statements in order to build out your strategic plan.
As a result, you should already have your mission and vision statements drafted before you create a strategic plan. Ideally, this is something you created during the business planning phase or shortly after your company started. If you don’t have a mission or vision statement, take some time to create those now. A mission statement states your company’s purpose and it addresses what problem your organization is trying to solve. A vision statement states, in very broad strokes, how you’re going to get there.
A mission statement summarizes your company’s purpose
A vision statement broadly explains how you’ll reach your company’s purpose
A strategic plan should include your mission and vision statements, but it should also be more specific than that. Your mission and vision statements could, theoretically, remain the same throughout your company’s entire lifespan. A strategic plan pulls in inspiration from your mission and vision statements and outlines what actions you’re going to take to move in the right direction.
For example, if your company produces pet safety equipment, here’s how your mission statement, vision statement, and strategic plan might shake out:
Mission statement: “To ensure the safety of the world’s animals.”
Vision statement: “To create pet safety and tracking products that are effortless to use.”
Your strategic plan would outline the steps you’re going to take in the next few years to bring your company closer to your mission and vision. For example, you develop a new pet tracking smart collar or improve the microchipping experience for pet owners.
Key takeaway: A strategic plan draws inspiration from your mission and vision statements.
Strategic plan vs. company objectives
Company objectives are broad goals. You should set these on a yearly or quarterly basis (if your organization moves quickly). These objectives give your team a clear sense of what you intend to accomplish for a set period of time.
Your strategic plan is more forward-thinking than your company goals, and it should cover more than one year of work. Think of it this way: your company objectives will move the needle towards your overall strategy—but your strategic plan should be bigger than company objectives because it spans multiple years.
Key takeaway: Company objectives are broad, evergreen goals, while a strategic plan is a specific plan of action.
Strategic plan vs. business case
A business case is a document to help you pitch a significant investment or initiative for your company. When you create a business case, you’re outlining why this investment is a good idea, and how this large-scale project will positively impact the business.
You might end up building business cases for things on your strategic plan’s roadmap—but your strategic plan should be bigger than that. This tool should encompass multiple years of your roadmap, across your entire company—not just one initiative.
Key takeaway: A business case tackles one initiative or investment, while a strategic plan maps out years of overall growth for your company.
Strategic plan vs. project plan
A strategic plan is a company-wide, multi-year plan of what you want to accomplish in the next three to five years and how you plan to accomplish that. A project plan, on the other hand, outlines how you’re going to accomplish a specific project. This project could be one of many initiatives that contribute to a specific company objective which, in turn, is one of many objectives that contribute to your strategic plan.
A project plan has seven parts:
Stakeholders and roles
Scope and budget
Milestones and deliverables
Timeline and schedule
Key takeaway: You may build project plans to map out parts of your strategic plan.
When should I create a strategic plan?
You should aim to create a strategic plan every three to five years, depending on your organization’s growth speed. That being said, if your organization moves quickly, consider creating one every two to three years instead. Small businesses may need to create strategic plans more often, as their needs change.
Since the point of a strategic plan is to map out your long-term goals and how you’ll get there, you should create a strategic plan when you’ve met most or all of them. You should also create a strategic plan any time you’re going to make a large pivot in your organization’s mission or enter new markets.
What are the 5 steps in strategic planning?
The strategic planning process should be run by a small team of key stakeholders who will be in charge of building your strategic plan.
Your group of strategic planners, sometimes called the management committee, should be a small team of five to 10 key stakeholders and decision-makers for the company. They won’t be the only people involved—but they will be the people driving the work.
Once you’ve established your management committee, you can get to work on the strategic planning process.
Step 1: Determine where you are
Before you can get started with strategy development and define where you’re going, you first need to define where you are. To do this, your management committee should collect a variety of information from additional stakeholders—like employees and customers. In particular, plan to gather:
Relevant industry and market data to inform any market opportunities, as well as any potential upcoming threats in the near future
Customer insights to understand what your customers want from your company—like product improvements or additional services
Employee feedback that needs to be addressed—whether in the product, business practices, or company culture
A SWOT analysis to help you assess both current and future potential for the business (you’ll return to this analysis periodically during the strategic planning process).
To fill out each letter in the SWOT acronym, your management committee will answer a series of questions:
What does your organization currently do well?
What separates you from your competitors?
What are your most valuable internal resources?
What tangible assets do you have?
What is your biggest strength?
What does your organization do poorly?
What do you currently lack (whether that’s a product, resource, or process)?
What do your competitors do better than you?
What, if any, limitations are holding your organization back?
What processes or products need improvement?
What opportunities does your organization have?
How can you leverage your unique company strengths?
Are there any trends that you can take advantage of?
How can you capitalize on marketing or press opportunities?
Is there an emerging need for your product or service?
What emerging competitors should you keep an eye on?
Are there any weaknesses that expose your organization to risk?
Have you or could you experience negative press that could reduce market share?
Is there a chance of changing customer attitudes towards your company?
Step 2: Identify your goals and objectives
This is where the magic happens. To develop your strategy, take into account your current position, which is where you are now. Then, draw inspiration from your original business documents—these are your final destination.
To develop your strategy, you’re essentially pulling out your compass and asking, “Where are we going next?” This can help you figure out exactly which path you need to take.
During this phase of the planning process, take inspiration from important company documents to ensure your strategic plan is moving your company in the right direction like:
Your mission statement, to understand how you can continue moving towards your organization’s core purpose
Your vision statement, to clarify how your strategic plan fits into your long-term vision
Your company values, to guide you towards what matters most towards your company
Your competitive advantages, to understand what unique benefit you offer to the market
Your long-term goals, to track where you want to be in five or 10 years
Your financial forecast and projection, to understand where you expect your financials to be in the next three years, what your expected cash flow is, and what new opportunities you will likely be able to invest in
Step 3: Develop your plan
Now that you understand where you are and where you want to go, it’s time to put pen to paper. Your plan will take your position and strategy into account to define your organization-wide plan for the next three to five years. Keep in mind that even though you’re creating a long-term plan, parts of your strategic plan should be created as the quarters and years go on.
As you build your strategic plan, you should define:
Your company priorities for the next three to five years, based on your SWOT analysis and strategy.
Yearly objectives for the first year. You don’t need to define your objectives for every year of the strategic plan. As the years go on, create new yearly objectives that connect back to your overall strategic goals .
Related key results and KPIs for that first year. Some of these should be set by the management committee, and some should be set by specific teams that are closer to the work. Make sure your key results and KPIs are measurable and actionable.
Budget for the next year or few years. This should be based on your financial forecast as well as your direction. Do you need to spend aggressively to develop your product? Build your team? Make a dent with marketing? Clarify your most important initiatives and how you’ll budget for those.
A high-level project roadmap . A project roadmap is a tool in project management that helps you visualize the timeline of a complex initiative, but you can also create a very high-level project roadmap for your strategic plan. Outline what you expect to be working on in certain quarters or years to make the plan more actionable and understandable.
Step 4: Execute your plan
After all that buildup, it’s time to put your plan into action. New strategy execution involves clear communication across your entire organization to make sure everyone knows their responsibilities and how to measure the plan’s success.
Map your processes with key performance indicators, which will gauge the success of your plan. KPIs will establish which parts of your plan you want achieved in what time frame.
A few tips to make sure your plan will be executed without a hitch:
Align tasks with job descriptions to make sure people are equipped to get their jobs done
Communicate clearly to your entire organization throughout the implementation process
Fully commit to your plan
Step 5: Revise and restructure as needed
At this point, you should have created and implemented your new strategic framework. The final step of the planning process is to monitor and manage your plan.
Share your strategic plan —this isn’t a document to hide away. Make sure your team (especially senior leadership) has access to it so they can understand how their work contributes to company priorities and your overall strategic plan. We recommend sharing your plan in the same tool you use to manage and track work, so you can more easily connect high-level objectives to daily work. If you don’t already, consider using a work management tool .
Update your plan regularly (quarterly and annually). Make sure you’re using your strategic plan to inform your shorter-term goals. Your strategic plan also isn’t set in stone. You’ll likely need to update the plan if your company decides to change directions or make new investments. As new market opportunities and threats come up, you’ll likely want to tweak your strategic plan to ensure you’re building your organization in the best direction possible for the next few years.
Keep in mind that your plan won’t last forever—even if you do update it frequently. A successful strategic plan evolves with your company’s long-term goals. When you’ve achieved most of your strategic goals, or if your strategy has evolved significantly since you first made your plan, it might be time to create a new one.
The benefits of strategic planning
Strategic planning can help with goal-setting by allowing you to explain how your company will move towards your mission and vision statements in the next three to five years. If you think of your company trajectory as a line on a map, a strategic plan can help you better quantify how you’ll get from point A (where you are now) to point B (where you want to be in a few years).
When you create and share a clear strategic plan with your team, you can:
Align everyone around a shared purpose
Proactively set objectives to help you get where you want to go
Define long-term goals, and then set shorter-term goals to support them
Assess your current situation and any opportunities—or threats
Help your business be more durable because you’re thinking long-term
Increase motivation and engagement
Sticking to the strategic plan
To turn your company strategy into a plan—and ultimately, impact—make sure you’re proactively connecting company objectives to daily work. When you can clarify this connection, you’re giving your team members the context they need to get their best work done.
With clear priorities, team members can focus on the initiatives that are making the biggest impact for the company—and they’ll likely be more engaged while doing so.
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Strategic Planning: The Ultimate Guide To Preparing, Creating, & Deploying Your Strategy
“Why isn’t my strategy working?” Statistics around the failure rates of corporate strategies vary—some put it as high as 9 out of 10 while others say nearly 7 out of 10. It doesn’t matter which number is right; both estimates are higher than they should be. That means the majority of organizations are floundering when it comes to crafting and executing their strategy. Many executives, when faced with these stats, are wondering, “How do I avoid coming up short in my strategy?”
But don’t worry—these abysmal statistics don’t mean you’re doomed to failure. You can be in the small percentage of businesses that actually achieve the goals in their strategic plans, and we’re here to tell you how. (You’re already a step ahead of your competitors simply by taking the time to research the problem!) Over the years, we’ve helped hundreds of clients beat the odds using the steps outlined in the guide below. It covers everything you need to know about strategy planning and execution, from beginning to end, in each of the three critical phases:
- Preparing for strategic planning.
- Creating your strategic plan.
- Putting your strategic plan into practice.
Based on our experience, we know that following this three-phase approach will significantly increase your odds of getting high-quality results. So let’s get started.
What is strategic planning and why is it important?
Strategic planning is an organization's process of defining its direction and long-term goals, creating specific plans to achieve them, implementing those plans , and evaluating the results. On one hand, that definition makes strategy planning sound like a Business 101 concept—define your goals and a plan to achieve them. Unfortunately, the strategic planning process isn’t as straightforward as it seems, especially for large companies.
Some experts say there’s a simple explanation behind the dismal statistics mentioned above: companies are failing to strategize at all. They may talk a good game and be able to explain an innovative new mission, but they cannot articulate the processes and business models that will make it happen. As a result, nothing about their way of doing business—including their priorities, projects, or culture—changes. Months or years later, strategic leaders are left wondering why the company never achieved what was intended.
This absence of a strategic plan demonstrates why having one is so important.
The strategic planning process is about looking forward, outside the immediate future for your organization, to reach a particular set of goals. But as noted in the definition above, it also involves laying out—step-by-step—how you’re going to get there. Without this foundation in place, you’ll either continue on a path to nowhere, or get caught up in a tornado of urgent activities that may not actually benefit your organization in the long term. Neither of these scenarios will give you the competitive edge you hoped for.
There are also plenty of organizations that do take steps to fulfill the requirements of strategic planning, yet still fail to see results. These strategies fail for many reasons, including:
- Lack of communication —This is a big one. Research shows that 95% of most companies’ employees don’t understand their organization’s strategy, and 85% of executive leadership teams spend less than one hour per month discussing strategy.
- Poor research around customer trends, organizational threats, and market opportunities —Companies tend to spend more time on internal issues (resolving conflicts and reconciling budgets) than they do analyzing important external information.
- Lack of management support —Organizations neglect to rally support for middle managers, who are key to making sure strategy is executed on a daily basis.
- Ineffective or inefficient performance evaluations —Organizations dedicate all their time to coming up with a plan, but either forget to follow through by tracking progress or have no organized, reliable way to track performance data.
- Lack of clear priorities —Organizations try to do too much at once and/or fail to identify the right activities that will help them achieve their strategy.
- Insufficient resources —Companies don’t acquire new resources, or shift existing resources, to support identified priorities.
- Disjointed departmental goals and activities —There’s no alignment of departmental goals with organizational strategy. Without everyone working together, goals become more difficult to reach.
Whatever is preventing you from meeting your strategic goals—whether it’s the absence of a strategic plan altogether or an imperfect plan execution—it’s worth your time to address the issue.
Analysis has shown that strategic planning has a positive and significant impact on organizational performance. Most importantly, it enhances an organization’s ability to achieve its goals, but there’s more to it than that. Because strategic planning forces companies to adopt a long-term view, it helps them better prepare for the future, setting them up to initiate influence instead of just responding to situations.
It also strengthens communication between employers and employees. The participation and dialogue that takes place among managers and employees throughout the strategic planning process improves transparency and engagement on everyone’s part.
However, the same team that conducted the above analysis also noted that, for strategic planning to work, it requires some specific ingredients, including formal analysis of the internal and external environment, consideration of several strategic options, and careful consideration around whom to involve during the different steps of the strategic planning process. We’ll go through all these ingredients—and more—in the strategic planning guide that follows.
Chapter 1: Prepare for Strategic Planning
Step 1: Gather your team, set up meetings, and create a timeline.
Get the right people involved..
Let’s get one thing straight right now: If your organization has turned to you (or your department, a colleague, etc.) and requested that you “make a strategic plan and then report back to the leadership team when you’re done”—stop right where you are. That’s not an effective plan. Why? You need to have buy-in across your organization, and so you need leadership involvement from the beginning.
Now let’s talk about the major player needed for this process: The strategic planner. The strategic planner’s job is to align thoughts from the leadership team with a process the organization can use to execute on their strategy. If this is your role (or even if you’re just highly involved in the process), this guide will be immensely helpful as you navigate the coordination of the strategy.
The strategic planner will also need the help of a cross-functional team that involves members of the board or leadership, along with representatives from finance, human resources, operations, sales, and any other critical functions. We’ll discuss this further when we talk through the Office of Strategy Management.
Set up your strategy review meetings.
This is also a good time to think about your strategy review meetings, which are a necessity for staying on track over the long haul. However, try to avoid adding yet another meeting onto everyone’s plates; instead, there may be a current meeting you can replace or redesign to make time for strategy discussion.
For now, decide how often you’ll meet and who should be involved. As for timing, there are three types of strategy review meetings:
- Monthly , where you review progress on projects and initiatives
- Quarterly , where you review progress on strategy and discuss key action items
- Annually , where you review year-to-date performance and adjust the strategy as needed
For each of these, you’ll want to send out calendar invites in advance and make sure people know these meetings are a top priority.
Monthly meetings typically include department heads and subject matter experts. Quarterly review meetings may include department heads and upper management. Annual refresh meetings may include upper levels of management and occasionally board members.
Create a reasonable timeline.
Next, you need to work out a timeline in which you can complete your strategic plan and move through the process. Reasonable is the key word here, as that depends on your organization’s maturity level with regard to strategic planning.
- If you refresh your strategic plan every year, you might be able to work through this process in 4-5 weeks .
- If you’ve never done strategic planning before, 6 months could be more realistic.
Whatever the case, don’t expect this to be done by the end of the week. You’ll be disappointed.
Pro tip It’s important to understand strategy vs. tactics . Strategy is focused on the destination and how you are going to get there, and tactics are focused on the specific actions you plan to take along the way. So while this whole process is focused on your overall strategy (i.e. your long-term goals and how you’ll achieve them), we’ll be placing a lot of emphasis on the smaller steps (i.e. practices, resources, initiatives) you’ll take to get there. Make sure your leadership team knows the difference between strategy and tactics going forward! Sometimes it is smart to keep leadership out of the tactics, but other times, you might need a strong hand to guide the organization through some details.
Step 2: Gather the inputs to your Strategic Plan.
Get appropriate background information for your strategic plan..
Now it’s time to dig into your internal and external information.
- Internal inputs —Do you know if one branch of your business is growing faster than another? If so, does this mean you’ll focus more energy on the faster growing area, or shift to help the underperforming areas? These are key questions you’ll have to assess.
- External inputs —You may find that parts of your business have shifted, or outside factors are playing a role in where your business is headed. For example, in the late 1990s, the music industry evolved from albums to streaming, impacting many businesses who were associated with the industry. Or if you’re in the manufacturing industry and do a great deal of business overseas, political unrest or a trade dispute between your country and the foreign one you operate in could impact your strategy.
Once you’ve gathered up the quantitative data from the sources above, you’ll also want to get feedback from a number of different sources:
- Discuss the above findings with your leadership team and managers to see what their thoughts are about the future of the business.
- Talk with board members, customers, and industry experts to see what they think your organization is doing well and what needs improvement. These suggestions could deal with anything from operations to company culture.
Combined, all of this data will help you get a better grasp on the future of the business.
Don’t reinvent the wheel—use our assortment of strategic planning templates to get your strategy up and running more easily. See our most popular templates here.
A SWOT Analysis stands for Strengths, Weaknesses, Opportunities, and Threats. This exercise offers a helpful way to think about and organize your internal and external data.
- What are your organization’s strong points?
- What are your organization’s weak points?
- Where are your biggest opportunities in the future?
- What are the largest threats to your business?
Sometimes it is helpful to use the SWOT analysis framework to organize your interview questions for your qualitative data gathering.
Porter’s Five Forces is another tool used to find these inputs. It’s a time-honored strategy execution framework built around the competition in your industry. Who are your rivals? What are they doing? You then need to look at the threat of substitutes. Is there another product consumers could purchase instead of your industry’s product, for example, substituting natural gas or solar for coal when it comes to electricity generation?
Now that you’ve prepared for your strategy...
- You have a team of people who can help you with the strategic planning process.
- You have the raw material for strategy evaluation, including internal and external data.
- You can organize your raw data into a SWOT analysis, Porter’s Five Forces, or another strategy planning framework as you begin to create your strategic plan.
Pro tip You may have researched risk assessments, core competencies, scenario planning, or industry scans as part of your strategic planning. If you’re wondering where these tools fit, they’re all relevant to this first stage of strategic planning. They help you prepare to create the strategic plan. If you have worked through one of these tools before, the results can act as inputs to help you in the next stage.
Chapter 2: Create Your Strategic Plan
You now have all the background information necessary to create your strategic plan! But this plan doesn’t live in a vacuum—so we’ll start by revisiting your mission and vision statements and then get into the nuts and bolts of the planning process.
Step 1: Confirm your mission and vision statements.
Mission & vision.
If you haven’t created formal mission and vision statements, this is the time to do so.
- Your mission statement describes what your company does and how it is different from other organizations in your competitive space
- Your vision statement describes a future state of what your organization wants to achieve over time.
Where the mission is timeless, your vision is time-bound and more tangible.
Two tools that will help build your mission and vision statements:
- OAS statement —OAS stands for Objective, Advantage, Scope. Talking through these concepts as they apply to your organization will help formulate a vision that is tangible and interactive. Note that while this exercise may be helpful to you, it is optional. You can read more about creating your OAS statement here .
- Strategic shifts— A second tool some people find helpful is called Strategic Shifts. These are exercises for the leadership team to help them define today’s strategic priorities vs. tomorrow’s . For example, your leadership team may say, “We want to shift from central control to autonomy when it comes to our decision-making capability.” If the whole team can get on the same page with these shifts, it can help tremendously once you define your objectives, measures, and projects.
If you’ve already created mission and vision statements, confirm that both are aligned with your current strategy before proceeding to the next step.
Pro tip During your search for strategic planning tools, you’ve almost certainly come across a Strategy Pyramid (shown below). This pyramid can be visualized in countless different ways, the order of the pyramid isn’t what’s important. The importance lies in ensuring you’ve chosen the elements in the pyramid that work best for your organization, and making sure those components are going to help you achieve strategic success.
Step 2: Build out your five-year plan.
Develop the framework that will hold your high-level priorities..
You can use your OAS or Strategic Shift exercises to help you define your priorities and objectives—but more importantly, you need a way to manage these elements. The way to do that is by selecting and developing a strategy management framework that will bring all your priorities together in one cohesive format.
Using a framework such as Balanced Scorecard (BSC), Theory of Change (TOC), or Objectives and Key Results (OKR) is critical to your strategic success. Many management teams fail at this point simply because of their disorganization!
Note: Choose only oneof these three frameworks, as they have numerous similarities!
The Balanced Scorecard
The Balanced Scorecard , developed by Robert S. Kaplan and David P. Norton, has been one of the world’s top strategy management frameworks since its introduction in the early 1990s. Those who use the BSC do so to bring their strategy to life, communicate it across their organization , and track their strategy progress and performance.
The BSC divides up your objectives by perspectives—financial, customer, process, and people—and themes, like innovation, customer management, operational excellence, etc. (The idea of perspectives is fully developed in Norton and Kaplan’s book The Balanced Scorecard: Translating Strategy into Action .) Here’s an example:
- Financial goals —“What financial goals do we have that will impact our organization?”
- Customer goals —“What things are important to our customers, which will in turn impact our financial standing?”
- Process goals —“What do we need to do well internally, to meet our customer goals, that will impact our financial standing?”
- People (or learning and growth) goals —“What skills, culture, and capabilities do we need to have in our organization to execute on the process that would make our customers happy and ultimately impact our financial standing?”
For an in-depth look at how your organization could use the BSC, check out this Full & Exhaustive Balanced Scorecard Example .
Theory Of Change (TOC)
The Theory of Change is a logic model that describes a step-by-step approach to achieving your vision. The TOC is focused on how to achieve the change you’re looking for , and is popular amongst mission-driven organizations who are describing a change they’re making in the world instead of putting change in their pockets.
The idea behind TOC is that if you have the right people doing the right activities, they’ll affect change on your customers, which will impact your financials, and bring you closer to your vision. A great example of a this theory of change is the nonprofit RARE .
According to the Harvard Family Research Project , the steps to create a TOC are:
- Identify a long-term goal.
- Conduct “backwards mapping” to identify the preconditions necessary to achieve that goal.
- Identify the interventions that your initiative will perform to create these preconditions.
- Develop indicators for each precondition that will be used to assess the performance of the interventions.
- Write a narrative that can be used to summarize the various moving parts in your theory.
Objectives & Key Results (OKR)
OKR was originally created by Intel and is used today in primarily two ways: At the enterprise/department level and at the personal performance level.
- Objectives are goals.
- Key results are quantitative measures that define whether goals have been reached.
The idea is that your defined objectives and measurements help employees, managers, and executives link to and align with overall strategic priorities. Not only does OKR strive to measure whether objectives are successful, but also how successful they are .
Define your objectives, measures, and projects.
The strategic planning frameworks above are all meant, in different ways, to help you organize your objectives, measures, and projects. So it’s critical that these elements are well thought-out and defined.
Here’s how objectives, measures, and projects interact:
You have a high-level goal in mind—your objective. Your measures answer the question, “How will I know that we’re meeting our goal?” From there, initiatives, or projects, are put in place to answer the question, “What actions are we taking to accomplish our goals?”
We’ve defined each of these concepts more thoroughly below with a few business strategy examples:
- Objectives are high-level organizational goals. The typical BSC has 10-15 strategic objectives. Examples include:
- Increase Market Share Through Current Customers (Financial)
- Be Service Oriented (Customer)
- Achieve Order Fulfillment Excellence Through On-Line Process Improvement (Internal)
- Align Incentives And Rewards With Employee Roles For Increased Employee Satisfaction (Learning & Growth)
- Measures help you understand if you’re accomplishing your objectives strategically. They force you to question things like, “How do I know that I’m becoming an internationally recognized brand?” Note that while your measures might change, your objectives will remain the same. You may select 1-2 measures per objective, so you are aiming to come up with 15-25 measures at the enterprise level. Examples include:
- Cost Of Goods Sold
- Customer Satisfaction & Retention
- Percentage Of Product Defects
- Percentage Of Response To Open Positions
- Initiatives are key action programs developed to achieve your objectives. You’ll see initiatives referred to as “projects,” “actions,” or “activities outside of the Balanced Scorecard.” Most organizations will have 0-2 initiatives underway for every objective (with a total of 5-15 strategic initiatives). Examples include:
- Develop Quality Management Program
- Install ERP System
- Revamp Supply Chain Process
- Develop Competencies Mode
Create your strategy map or graphic strategic model.
Whether or not you’re using a Balanced Scorecard as your strategy framework, you’ll benefit from using a graphic model to represent your strategic plan. While many people use a strategy map (shown in the example below), you could also use icons or a color-coding system to visually understand how the elements of your strategy work together.
If you’re just becoming familiar with how strategy mapping works, this article will teach you exactly how to read one—and what you need to do to create one.
Now that you’ve created your strategic vision...
- You have a fully-defined mission and vision to use as you move forward with your strategy implementation process.
- You have chosen a strategic framework that will hold your five-year strategic plan.
- You have defined objectives, measures, and projects, and you know how they work together.
- You have a graphic representation of your strategic model.
Pro tip Feeling the strategic fatigue? It’s okay! This is a tiring process—so be careful to tailor everything in this section to what those in your organization will tolerate. Putting your strategic plan into practice (our final step) is the key to making it all work during the strategy implementation plan, and getting these details 80% right in a timely fashion is much more important than getting them 100% right in a year.
Chapter 3: Put Your Strategic Plan Into Practice
You’ve made it this far—now you have to be sure you launch correctly! To do so, you need someone from the Office of Strategy Management to push that process, ensure resources are aligned to your strategy, put a solid strategy communication program in place, and get technology to keep you organized.
Step 1: Launch your strategy.
Ensure the office of strategy management (osm) is pushing things forward..
The Office of Strategy Management is comprised of a group of people responsible for coordinating strategy implementation. This team isn’t responsible for doing everything in your strategy, but it should oversee strategy execution across the organization. Typically, the OSM lives in the finance department—or it could be its own separate division that reports directly to the CEO.
Create your internal and external strategy communication plan.
Internal— Be sure all elements of your strategy—like strategy maps or logic models—are contained within a larger strategic plan document. (If you use strategy software , the strategic plan document will likely be contained there.) A great way to be sure your leadership team has a firm grasp on your strategy is to ensure they each have a copy of this document, and they can describe the strategy easily to someone who wasn’t involved in the creation process .
More broadly, the strategy must be communicated throughout your organization. You should be shouting it from the rooftops to keep it top-of-mind across your organization. People won’t give it a passing thought unless you engage them—so every department head should be charged with explaining how their team fits into the strategy and why it matters. For actionable tips, check out this article that highlights how you can effectively communicate your strategic plan across your organization.
External— You also need to be sure you have a plan for communicating your strategy outside the organization—with board members, partners, or customers (particularly if your organization is municipal or nonprofit). Think through how it will be shared, and which parts of it are relevant to outside parties.
Align your resources to your strategy.
In the short term—which would be your next budgeting cycle or something similar—work to structure the budget around the key components of your strategy. You don’t need to completely rewire your budget, but you do need to create direct linkages between how your resources are allocated and how those efforts support your strategy. Over time, the areas that contribute less directly to strategic goals will become clear, and you can work on gradually aligning everything you fund.
But even if your budget only extends through the fiscal year, consider how you’ll align your strategy to projects in the future. For future resource allocation, link your operations (what some refer to as the “work planning process”) to your strategy. Your expectation should be that the process of aligning your resources to your strategy can happen within year two of your strategic planning execution.
Step 2: Evaluate your strategy.
At this point, your strategy has been launched: Now you need to know whether or not you’re making progress! Here’s how to do that.
Create reports to highlight your results.
Ten years ago, you may have evaluated your strategy annually. But in today’s business environment, that’s not a feasible option. At a minimum, you should be reporting on your entire strategy on a quarterly basis, or breaking down your strategy into pieces and reporting on one of those pieces each month.
The report you use should highlight progress on your measures and projects, and how those link to your objectives. The point is to show how all these elements fit together and relate to the strategic plan as a whole.
Hold regular strategy meetings.
Report on strategy progress via the quarterly or monthly review meetings you scheduled early in the process.
It’s important to note that throwing together an impromptu meeting to go over results isn’t going to get you anywhere. Instead, your strategy review meetings should be meticulously organized and accompanied by an agenda. (See this article for a sample agenda.)
Your meetings should revolve around three key issues:
- What is your organization trying to accomplish? This may include reiterating your mission and vision to add context around the conversation.
- Are you making progress toward these goals? You might review key metrics and the status of initiatives and milestones.
- What actions need to be taken to continue making progress? If metrics are off-track, for example, what can be done to get back on course.
Encourage candid dialogue and make sure the discussion stays focused.
Pro tip You may want a facilitator for the first few meetings, and you may want to script a few open discussions where a goal owner explains why they are behind schedule (red) on their goal, and the business leader offers support, not criticism. This will generate the atmosphere you need for everyone to start reporting honestly and working together to achieve the organization’s goals.
Deploy strategy reporting software (if you haven’t already).
To make strategy execution work, reporting is unavoidable. While you might be able to track your first strategy meeting in Excel or give your first presentation via PowerPoint, you’ll quickly realize you need some kind of software to track the continuous gathering of data, update your projects, and keep your leadership team on the same page.
If you want to learn more about the major areas of responsibility you should be covering in your strategy management process—and how strategy software can help with that— take a look at our ClearPoint tour .
Here are two additional helpful pieces of content as you move forward:
Pro tip You’ve probably seen reference to the “Plan, Do, Check, Act” framework before. If you want to integrate this checklist, this is the time to do so. Here’s a breakdown on what it means:
- Plan refers to creating your strategic plan.
- Do refers to making progress on or executing on the plan.
- Check refers to the reporting and monitoring process.
- Act refers to taking action through projects, work plans, or the budgeting process to continue to manage and execute on the strategy.
Chapter 4: The Benefits Of Strategic Planning (& Challenges You Should Be Aware Of)
Done right, strategy planning can benefit your business tremendously, but a certain degree of stick-to-itiveness is required to get the job done. (As we noted at the beginning of this guide, organizations that actually meet their strategic objectives are in the minority. Don’t worry, though, yours can be one of the success stories.) But those that develop a disciplined approach to both planning and execution have been shown to improve performance significantly.
Why is strategic planning so effective? Because it fosters healthy organizational practices that drive better outcomes. Engaging in strategic planning will benefit you in multiple ways:
1. You have quality data available to support better decisions.
Setting goals and choosing the relevant metrics to track progress toward achieving them means you always have meaningful data to reference. That naturally leads to faster, more efficient decision-making, especially when that data is readily accessible to employees at every level. Timely, valid, and actionable information is especially valuable in situations where organizations need to react quickly, so they can make the best decisions possible for all their stakeholders.
2. You allocate resources more effectively.
In Chapter 3, we discussed structuring the budget around the key components of your strategy. Doing so helps ensure resources are allocated correctly, and in a way that aligns with your goals. Tying the budget directly to goals also makes it easy to adjust when necessary, if circumstances change and new goals are prioritized over old. For example, a local government may have had a goal to develop a green infrastructure plan at the beginning of 2020, but then had to pivot with the onset of COVID-19. To support a new goal of developing a COVID-19 response plan, they could simply review the resources used by current projects, evaluate those projects’ priorities and budget needs in comparison to the new goal, and reallocate funds as necessary.
3. You maintain focus.
Having a strategic plan brings your main focus points to the forefront, so you don’t have to dig into the details of everything your organization is doing. That means there’s no time wasted analyzing irrelevant and extensive data points in strategic meetings; instead, everyone stays focused on what is most important or where improvements need to be made.
4. You improve communication and build employee engagement.
Strategic planning is intended to create a single, focused vision of where an organization is headed. When that shared vision is communicated clearly and consistently, it inspires employees to take ownership over their role in the plan, and they are typically more motivated to do their best work. High engagement will directly impact your organization’s financial health and profitability.
3 Things To Consider Before You Embark On A Strategic Plan
Having helped hundreds of organizations—for-profit, nonprofit, and local governments included—navigate through the strategic planning and implementation process, we’ve seen firsthand the many challenges that arise along the way. There’s no “typical” scenario, but there are some common pitfalls that have the power to make or break your chances of success. Below are three things you should be aware of going into the process.
1. Everything about strategic planning takes time.
Don’t expect your plan to materialize after a few meetings. The initial planning activities usually unfold over the space of several months, but strategy execution itself is an ongoing process. Anticipate devoting extensive time and effort in particular to:
- Choosing the appropriate planning model . Before you can even begin to articulate your strategy, you need to choose a strategy framework that fits your organization’s needs. All models can be customized to suit the way your business works, but this is a key decision that will shape all your efforts going forward.
- Creating a plan that everyone agrees on. It’s crucial for your leadership team to support the plan’s objectives if you want it to be adopted. Making sure everyone on the team has been heard and gaining a consensus is a time-consuming process.
- Getting “buy-in” for the plan. Research shows that, on average, 95% of an organization’s employees don’t understand its strategy—there’s no surer way to guarantee failure than to neglect communicating your goals to your employees. You must continuously keep your strategy top-of-mind in a creative and meaningful way over the long term to gain the buy-in you need to succeed.
2. There is a danger of “analysis paralysis.”
Data and analytics are an integral part of strategic planning. And while it may be tempting to use all your available metrics, charts, and graphs for every business decision, doing so unnecessarily can be a detriment to the decision-making process. It’s easy to find yourself drilling deeper into data when perhaps only a high-level view of the information is needed. Avoid squandering time and energy on excessive analysis by making sure the right people are focusing on the right data and actions:
Leadership should focus on organization-wide goals and progress. Teams should focus on the individual projects and daily tasks that are helping to accomplish those goals (and the data that goes with them).
3. Having a plan doesn’t mean your organization will execute on it.
Good planning is only half the battle; the lion’s share of forward progress is in executing that plan. But the execution stage is where many organizations stumble. They aren’t prepared for the work involved with follow-through, both in terms of the time commitment and the tools necessary to support performance improvement. Strategy consultants are excellent guides for plan creation, but most offer no guidance on how to carry it out; as a result, organizations are left floundering.
It’s imperative to have a system in place that will measure and monitor your progress toward goals during the execution phase. Performance management tools like ClearPoint allow organizations to track a variety of metrics related to strategic projects, helping to maintain focus over the long term. And our team of strategy implementation experts is always available to provide guidance on every aspect of execution, from setting up an efficient management process to using our reporting tools optimally.
With the right plan in place, tools to support it, and committed leadership, every organization has a good chance of seeing their strategy come to life.
You’ve made it through these steps….
...but be sure to place a great deal of emphasis on rightsizing this process for your own organization.
Did you recently do a SWOT analysis and create new vision and mission statements? Don’t do it again. Do you already manage with a robust set of KPIs? Use them. Do you currently create reports for your board and management team? Modify them or use a strategy evaluation framework to make sure they’re focused and move on. Rather than doing everything, it’s more important to realize there is overlap between these steps. Understand how they all fit into your own strategic planning process, and then move forward with the sections you’re missing. And if you have any questions along the way, get in touch with us. We live and breathe strategic planning and are here to help!
Ted is a Founder and Managing Partner of ClearPoint Strategy and leads the sales and marketing teams.
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The Big Lie of Strategic Planning
- Roger L. Martin
A detailed plan may be comforting, but it’s not a strategy.
Strategy making forces executives to confront a future they can only guess at. It’s not surprising, then, that they try to make the task less daunting by preparing a comprehensive plan for how the company will achieve its goal. But good strategy is not the product of endless research and modeling; it’s the result of a simple process of thinking through how to hit a target and whether it’s realistic to try. Discomfort is part of the process. If you are entirely comfortable, you’re probably stuck in one or more of the following traps.
Planning arguably makes for more thorough budgets, but it must not be confused with strategy.
Costs lend themselves wonderfully to planning, because the company controls them. But for revenue, customers are in charge. Planning can’t make revenue magically appear.
Self-referential strategy frameworks.
Even managers who avoid the first two traps may end up using a framework that leads them to design a strategy entirely around what the company controls.
A company can avoid those traps by focusing on customers, recognizing that strategy is about making bets, and articulating the logic behind strategic choices.
All executives know that strategy is important. But almost all also find it scary, because it forces them to confront a future they can only guess at. Worse, actually choosing a strategy entails making decisions that explicitly cut off possibilities and options. An executive may well fear that getting those decisions wrong will wreck his or her career.
The natural reaction is to make the challenge less daunting by turning it into a problem that can be solved with tried and tested tools. That nearly always means spending weeks or even months preparing a comprehensive plan for how the company will invest in existing and new assets and capabilities in order to achieve a target—an increased share of the market, say, or a share in some new one. The plan is typically supported with detailed spreadsheets that project costs and revenue quite far into the future. By the end of the process, everyone feels a lot less scared.
This is a truly terrible way to make strategy. It may be an excellent way to cope with fear of the unknown, but fear and discomfort are an essential part of strategy making. In fact, if you are entirely comfortable with your strategy, there’s a strong chance it isn’t very good. You’re probably stuck in one or more of the traps I’ll discuss in this article. You need to be uncomfortable and apprehensive: True strategy is about placing bets and making hard choices. The objective is not to eliminate risk but to increase the odds of success.
In this worldview, managers accept that good strategy is not the product of hours of careful research and modeling that lead to an inevitable and almost perfect conclusion. Instead, it’s the result of a simple and quite rough-and-ready process of thinking through what it would take to achieve what you want and then assessing whether it’s realistic to try. If executives adopt this definition, then maybe, just maybe, they can keep strategy where it should be: outside the comfort zone.
Comfort Trap 1: Strategic Planning
Virtually every time the word “strategy” is used, it is paired with some form of the word “plan,” as in the process of “strategic planning” or the resulting “strategic plan.” The subtle slide from strategy to planning occurs because planning is a thoroughly doable and comfortable exercise.
Focus your energy on the key choices that influence revenue decision makers—that is, customers.
Strategic plans all tend to look pretty much the same. They usually have three major parts. The first is a vision or mission statement that sets out a relatively lofty and aspirational goal. The second is a list of initiatives—such as product launches, geographic expansions, and construction projects—that the organization will carry out in pursuit of the goal. This part of the strategic plan tends to be very organized but also very long. The length of the list is generally constrained only by affordability.
The third element is the conversion of the initiatives into financials. In this way, the plan dovetails nicely with the annual budget. Strategic plans become the budget’s descriptive front end, often projecting five years of financials in order to appear “strategic.” But management typically commits only to year one; in the context of years two through five, “strategic” actually means “impressionistic.”
This exercise arguably makes for more thoughtful and thorough budgets. However, it must not be confused with strategy. Planning typically isn’t explicit about what the organization chooses not to do and why. It does not question assumptions. And its dominant logic is affordability; the plan consists of whichever initiatives fit the company’s resources.
Mistaking planning for strategy is a common trap. Even board members, who are supposed to be keeping managers honest about strategy, fall into it. They are, after all, primarily current or former managers, who find it safer to supervise planning than to encourage strategic choice. Moreover, Wall Street is more interested in the short-term goals described in plans than in the long-term goals that are the focus of strategy. Analysts pore over plans in order to assess whether companies can meet their quarterly goals.
Comfort Trap 2: Cost-Based Thinking
The focus on planning leads seamlessly to cost-based thinking. Costs lend themselves wonderfully to planning, because by and large they are under the control of the company. For the vast majority of costs, the company plays the role of customer. It decides how many employees to hire, how many square feet of real estate to lease, how many machines to procure, how much advertising to air, and so on. In some cases a company can, like any customer, decide to stop buying a particular good or service, and so even severance or shutdown costs can be under its control. Of course there are exceptions. Government agencies tell companies that they need to remit payroll taxes for each employee and buy a certain amount of compliance services. But the proverbial exceptions prove the rule: Costs imposed on the company by others make up a relatively small fraction of the overall cost picture, and most are derivative of company-controlled costs. (Payroll taxes, for instance, are incurred only when the company decides to hire an employee.)
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Costs are comfortable because they can be planned for with relative precision. This is an important and useful exercise. Many companies are damaged or destroyed when they let their costs get out of control. The trouble is that planning-oriented managers tend to apply familiar, comfortable cost-side approaches to the revenue side as well, treating revenue planning as virtually identical to cost planning and as an equal component of the overall plan and budget. All too often, the result is painstaking work to build up revenue plans salesperson by salesperson, product by product, channel by channel, region by region.
But when the planned revenue doesn’t show up, managers feel confused and even aggrieved. “What more could we have done?” they wonder. “We spent thousands upon thousands of hours planning.”
There’s a simple reason why revenue planning doesn’t have the same desired result as cost planning. For costs, the company makes the decisions. But for revenue, customers are in charge. Except in the rare case of monopolies, customers can decide of their own free will whether to give revenue to the company, to its competitors, or to no one at all. Companies may fool themselves into thinking that revenue is under their control, but because it is neither knowable nor controllable, planning, budgeting, and forecasting it is an impressionistic exercise.
Of course, shorter-term revenue planning is much easier for companies that have long-term contracts with customers. For example, for business information provider Thomson Reuters, the bulk of its revenue each year comes from multiyear subscriptions. The only variable amount in the revenue plan is the difference between new subscription sales and cancellations at the end of existing contracts. Similarly, if a company has long order backlogs, as Boeing does, it will be able to predict revenue more accurately, although the Boeing Dreamliner tribulations demonstrate that even “firm orders” don’t automatically translate into future revenue. Over the longer term, all revenue is controlled by the customer.
Giant Opportunities Encourage Bad Strategy
Companies in many industries prefer a small slice of a huge market to a large slice of a small one. The thinking is, of course, that the former promises unlimited growth potential. And there’s a certain amount of truth to that. But all too often, the size of the opportunity encourages sloppy strategy making. Why choose where to play or how to win when there’s a huge market to conquer? Anybody is a potential customer, so just go out and sell stuff.
But when anyone could be a customer, it is impossible to figure out whom to target and what those people actually want. The results tend to be an offering that is not captivating to anybody and a sales force that doesn’t know where to spend its time. This is when crisp strategy making and clear thinking about opportunities are most important.
When you’re facing a huge growth opportunity, it is smarter to think sequentially: Determine what piece of the overall market to tackle first and target it precisely and relentlessly. Once you’ve achieved a dominant position in that segment, expand from there into the next, and so on.
The bottom line, therefore, is that the predictability of costs is fundamentally different from the predictability of revenue. Planning can’t and won’t make revenue magically appear, and the effort you spend creating revenue plans is a distraction from the strategist’s much harder job: finding ways to acquire and keep customers.
Comfort Trap 3: Self-Referential Strategy Frameworks
This trap is perhaps the most insidious, because it can snare even managers who, having successfully avoided the planning and cost traps, are trying to build a real strategy. In identifying and articulating a strategy, most executives adopt one of a number of standard frameworks. Unfortunately, two of the most popular ones can lead the unwary user to design a strategy entirely around what the company can control.
In 1978 Henry Mintzberg published an influential article in Management Science that introduced emergent strategy, a concept he later popularized for the wider nonacademic business audience in his successful 1994 book, The Rise and Fall of Strategic Planning. Mintzberg’s insight was simple but indeed powerful. He distinguished between deliberate strategy, which is intentional, and emergent strategy, which is not based on an original intention but instead consists of the company’s responses to a variety of unanticipated events.
Planning typically isn’t explicit about what the organization chooses not to do and why. It does not question assumptions.
Mintzberg’s thinking was informed by his observation that managers overestimate their ability to predict the future and to plan for it in a precise and technocratic way. By drawing a distinction between deliberate and emergent strategy, he wanted to encourage managers to watch carefully for changes in their environment and make course corrections in their deliberate strategy accordingly. In addition, he warned against the dangers of sticking to a fixed strategy in the face of substantial changes in the competitive environment.
All of this is eminently sensible advice that every manager would be wise to follow. However, most managers do not. Instead, most use the idea that a strategy emerges as events unfold as a justification for declaring the future to be so unpredictable and volatile that it doesn’t make sense to make strategy choices until the future becomes sufficiently clear. Notice how comforting that interpretation is: No longer is there a need to make angst-ridden decisions about unknowable and uncontrollable things.
A little digging into the logic reveals some dangerous flaws in it. If the future is too unpredictable and volatile to make strategic choices, what would lead a manager to believe that it will become significantly less so? And how would that manager recognize the point when predictability is high enough and volatility is low enough to start making choices? Of course the premise is untenable: There won’t be a time when anyone can be sure that the future is predictable.
Bringing Science to the Art of Strategy
- A.G. Lafley, Roger Martin, Jan W. Rivkin, and Nicolaj Siggelkow
Hence, the concept of emergent strategy has simply become a handy excuse for avoiding difficult strategic choices, for replicating as a “fast follower” the choices that appear to be succeeding for others, and for deflecting any criticism for not setting out in a bold direction. Simply following competitors’ choices will never produce a unique or valuable advantage. None of this is what Mintzberg intended, but it is a common outcome of his framework, because it plays into managers’ comfort zone.
In 1984, six years after Mintzberg’s original article introducing emergent strategy, Birger Wernerfelt wrote “A Resource-Based View of the Firm,” which put forth another enthusiastically embraced concept in strategy. But it wasn’t until 1990, when C.K. Prahalad and Gary Hamel wrote one of the most widely read HBR articles of all time, “The Core Competence of the Corporation,” that Wernerfelt’s resource-based view (RBV) of the firm was widely popularized with managers.
RBV holds that the key to a firm’s competitive advantage is the possession of valuable, rare, inimitable, and non-substitutable capabilities. This concept became extraordinarily appealing to executives, because it seemed to suggest that strategy was the identification and building of “core competencies,” or “strategic capabilities.” Note that this conveniently falls within the realm of the knowable and controllable. Any company can build a technical sales force or a software development lab or a distribution network and declare it a core competence. Executives can comfortably invest in such capabilities and control the entire experience. Within reason, they can guarantee success.
The problem, of course, is that capabilities themselves don’t compel a customer to buy. Only those that produce a superior value equation for a particular set of customers can do that. But customers and context are both unknowable and uncontrollable. Many executives prefer to focus on capabilities that can be built—for certain. And if those don’t produce success, capricious customers or irrational competitors can take the blame.
Escaping the Traps
It’s easy to identify companies that have fallen into these traps. (See the exhibit “Are You Stuck in the Comfort Zone?”) In those companies, boards tend to be highly comfortable with the planners and spend lots of time reviewing and approving their work. Discussion in management and board meetings tends to focus on how to squeeze more profit out of existing revenue rather than how to generate new revenue. The principal metrics concern finance and capabilities; those that deal with customer satisfaction or market share (especially changes in the latter) take the backseat.
Are You Stuck in the Comfort Zone?
Probably: You have a large corporate strategic planning group. Probably Not: If you have a corporate strategy group, it is tiny.
Probably: In addition to profit, your most important performance metrics are cost- and capabilities-based. Probably Not: In addition to profit, your most important performance metrics are customer satisfaction and market share.
Probably: Strategy is presented to the board by your strategic planning staff. Probably Not: Strategy is presented to the board primarily by line executives.
Probably: Board members insist on proof that the strategy will succeed before approving it. Probably Not: Board members ask for a thorough description of the risks involved in a strategy before approving it.
How can a company escape those traps? Because the problem is rooted in people’s natural aversion to discomfort and fear, the only remedy is to adopt a discipline about strategy making that reconciles you to experiencing some angst. This involves ensuring that the strategy-making process conforms to three basic rules. Keeping to the rules isn’t easy—the comfort zone is always alluring—and it won’t necessarily result in a successful strategy. But if you can follow them, you will at least be sure that your strategy won’t be a bad one.
Rule 1: Keep the strategy statement simple.
Focus your energy on the key choices that influence revenue decision makers—that is, customers. They will decide to spend their money with your company if your value proposition is superior to competitors’. Two choices determine success: the where-to-play decision (which specific customers to target) and the how-to-win decision (how to create a compelling value proposition for those customers). If a customer is not in the segment or area where the company chooses to play, she probably won’t even become aware of the availability and nature of its offering. If the company does connect with that customer, the how-to-win choice will determine whether she will find the offering’s targeted value equation compelling.
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If a strategy is about just those two decisions, it won’t need to involve the production of long and tedious planning documents. There is no reason why a company’s strategy choices can’t be summarized in one page with simple words and concepts. Characterizing the key choices as where to play and how to win keeps the discussion grounded and makes it more likely that managers will engage with the strategic challenges the firm faces rather than retreat to their planning comfort zone.
Rule 2: Recognize that strategy is not about perfection.
As noted, managers unconsciously feel that strategy should achieve the accuracy and predictive power of cost planning—in other words, it should be nearly perfect. But given that strategy is primarily about revenue rather than cost, perfection is an impossible standard. At its very best, therefore, strategy shortens the odds of a company’s bets. Managers must internalize that fact if they are not to be intimidated by the strategy-making process.
What Is Strategy?
- Michael E. Porter
For that to happen, boards and regulators need to reinforce rather than undermine the notion that strategy involves a bet. Every time a board asks managers if they are sure about their strategy or regulators make them certify the thoroughness of their strategy decision-making processes, it weakens actual strategy making. As much as boards and regulators may want the world to be knowable and controllable, that’s simply not how it works. Until they accept this, they will get planning instead of strategy—and lots of excuses down the line about why the revenue didn’t show up.
Rule 3: Make the logic explicit.
The only sure way to improve the hit rate of your strategic choices is to test the logic of your thinking: For your choices to make sense, what do you need to believe about customers, about the evolution of your industry, about competition, about your capabilities? It is critical to write down the answers to those questions, because the human mind naturally rewrites history and will declare the world to have unfolded largely as was planned rather than recall how strategic bets were actually made and why. If the logic is recorded and then compared to real events, managers will be able to see quickly when and how the strategy is not producing the desired outcome and will be able to make necessary adjustments—just as Henry Mintzberg envisioned. In addition, by observing with some level of rigor what works and what doesn’t, managers will be able to improve their strategy decision making.
As managers apply these rules, their fear of making strategic choices will diminish. That’s good—but only up to a point. If a company is completely comfortable with its choices, it’s at risk of missing important changes in its environment. I have argued that planning, cost management, and focusing on capabilities are dangerous traps for the strategy maker. Yet those activities are essential; no company can neglect them. For if it’s strategy that compels customers to give the company its revenue, planning, cost control, and capabilities determine whether the revenue can be obtained at a price that is profitable for the company. Human nature being what it is, though, planning and the other activities will always dominate strategy rather than serve it—unless a conscious effort is made to prevent that. If you are comfortable with your company’s strategy, chances are you’re probably not making that effort.
- Roger L. Martin is a former dean of the Rotman School of Management, an adviser to CEOs, and the author of A New Way to Think (Harvard Business Review Press, 2022).
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The Importance of Strategic Planning
Every successful business has a plan and knows where it is heading in the future. Setting a plan with goals, target dates, and a purpose should be finalized before embarking on a business. Taking the time on an ongoing basis to review the company's past performance, and predict its future performance, gives it a road map to follow.
Without strategic planning , which is knowing the current state of your business and where you want it to go, most businesses will fail. A strategic plan allows you to see what is important, how to get there, the pitfalls to avoid, and the noise to ignore. Below we discuss some of the reasons why strategic planning is important and how to implement it.
- Strategic planning is crucial for a business as it creates a map for a business to follow and course correct when need be.
- The first part of a strategic plan is the business plan, which outlines the purpose of the business, budgets, goals, and the mission statement.
- Making time to evaluate your business on an ongoing basis will allow you to determine how well your results are adhering to your plan. This will allow you to make adjustments or double-down on how the business is being run.
- Communicating your strategic plan to your employees is critical so that everyone is on the same page and working towards the same goals.
- Reviewing and following up on your business will highlight strengths and weaknesses in your business so that you can continue with what works well and eliminate what is hindering the growth of your business.
Making a Business Plan
The very first strategic planning most businesses do is a business plan . When you first start your business, you will likely have prepared a mission statement , a budget, and a marketing and promotion plan. The business plan is a good first step, but it needs to be reviewed and updated as the business continues and grows. If you shove it in a drawer and let dust gather on it, it won't serve as the foundation of your business, as it was meant to.
Using Goal-Based Planning
How you go about conducting strategic planning will depend on many variables, including the size of your business, the time frame included, and your personal preferences. The most common style of plan is goals-based. In this type of plan, you set goals for the business (financial and non-financial) and map out the steps needed to meet those goals.
For example, if your goal is to have $100,000 in revenues next year, the steps to get there might include bringing in five new clients a month and attending three trade shows. Whatever the goals you set for your business, they should be concrete and measurable so that you know when you reach them. Another method of strategic planning is mission-based.
When you first started your business, you likely developed a mission or values statement, outlining the purpose of your company and its overall reason for being. A mission-based strategic plan ties each part of the plan into the mission, to ensure that the company is always operating in the service of that mission.
For example, if your mission statement is to be recognized as a leader in the financial services sector and to help families become financially independent, your strategic plans should address how you will meet those goals.
It can be difficult to find the time to plan your business. Other, more pressing priorities, like trying to bring in revenue , may grab your attention; however, carving out time regularly will help you keep on top of your business.
Blocking off a few hours a day or week to focus on your plan should be part of your business operations. During that time, you can examine the prior week's financial performance and update any marketing initiatives to make sure that your business is on track with your initial plan. If it's not, then you'll need to make adjustments to get back on track.
Regardless of how often you plan, make sure that you set it in stone in your day planner. Block off the time and don't let anything else get in the way. Turn off your cell phone and, if at all possible, go somewhere away from your office to plan in order to minimize distractions.
As a business owner, you will most likely have employees. It is critical to inform them of your strategic plan so that they are on the same page and working towards the same goal as you.
Including your staff in your strategic plan will instill a feeling of responsibility in their jobs that will help ensure productivity.
For example, if you have a sales team and your strategic plan involves bringing in five new clients a month, your sales team needs to be aware of this so that they know the goal to achieve. If they don't, perhaps they would be under the assumption that bringing in two new clients a month is excellent, when in actuality, it is only 40% of your goal. Without clear communication to your employees, your business will be a boat set adrift without any course to follow.
A critical part of the planning process is reviewing your previous plan and comparing it to your actual results. Were you able to bring in five new clients last month? If not, why not? Tweak the plan going forward to account for changes in your business or the general economic climate. The more experience you get with the planning process and with the operational side of your business, the more accurately you will be able to plan.
Once you have had your business running for a while and block out time to follow up on your strategic plan, you will be able to determine where the strengths and weaknesses in your business lie. This would allow you to correct course, perhaps changing your business plan and goals slightly to focus on your strengths, while allowing you to eliminate your weakness, making your business stronger and increasing the likelihood of achieving your goals.
The Bottom Line
Planning out the future of your business is the best way to ensure success. Creating an initial plan and communicating that plan to your employees will ensure that everyone is working towards the same goal.
Taking out time to review your business's results and comparing them to your plan will help ensure that the right policies and procedures continue whereas those that are not benefiting the company will be removed. It may seem awkward and difficult at first to create a strategic plan, but with practice, you will be able to move your business in the right direction.
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Looking for a way to take your company in a new and profitable direction? It starts with strategic planning. Keep reading to learn what a strategic plan is, why you need it and how you can strategically create one.
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