Strategic planning is a systematic process of outlining an organisation’s direction.
It helps to clearly understand the objectives and actions required to achieve that future vision and goals that the organisation wishes to fulfill and also helps measure success.
Once you start to use this approach you will refocus on your foundational purpose, your goals, strengths and opportunities. Strategic planning reintroduces you to “the big picture” getting you to develop a clear guide of what your company is heading towards. It serves as a roadmap that defines the direction a company must travel, helping leaders prepare for potential futures.
Key elements of strategic planning
For effective strategic planning, you need to ask yourself the following three questions:
Where is your business now?
This involves understanding your business, including how it operates internally, what drives its profitability, and how it compares with competitors. Keep your review separate from day-to-day work and being realistic, detached, and critical in distinguishing between the cause and effect of how your business operates. You should also write it down and review it frequently.
Where do you want to take your business?
Here, you need to set out your top-level objectives. Work on your vision, mission, objectives, values, techniques, and goals. Where do you see your business in five or ten years? What do you want to be the focus of your business and what are the competitive advantages over your rivals in the marketplace? This step should be the foundation for the final plan and motivate change.
What is required for you to get there?
What changes will you need to make to deliver on your strategic objectives? What is the best way of implementing those changes – what changes to the structure and financing of your business will be required and what goals and deadlines will you need to set for yourself and others in the business? Think about the business as a whole, for example, consider diversification, existing growth, acquisition plans, as well as functional matters in key areas.
A good strategic plan should include the following:
- Analysis of internal drivers – considering a SWOT analysis – identify the strengths, weaknesses, opportunities, and threats.
- Analysis of external drivers – this should cover factors such as market structure, demand levels, and cost pressures, all of which correspond to the opportunities and threats element of a SWOT analysis.
- Vision statement – a concise summary of where you aspire to see your business in five to ten years.
- Top-level objectives – these are the major goals that need to be achieved linked to the vision of your business. These might include attracting a new type of customer, developing new products and services, expanding your business, or securing new sources of finance.
- Implementation – this involves setting out the key actions (with desired outcomes and deadlines) that will need to be completed to attain your top-level objectives. This is more of the action plan.
- Resourcing – a summary of the implications your proposed strategy will have for the resources needed for your business needs. This will reflect financing requirements, as well as factors such as staffing levels, premises, and equipment.
Monitoring the progress of the implementation plan and reviewing the strategic plan regularly will be an ongoing process. The fit between implementation and strategy may not be perfect from the outset and the implications of implementing the strategy may make it necessary to tweak the strategic plan.
You can also use key performance indicators (KPIs) to control the process of introducing strategic changes that are required. Remember that strategic planning can involve making both organisational and cultural changes to the way your business operates.
Once the strategic plan is formulated make sure you implement and review it regularly.