Strategic planning is necessary to be proactive about a company's future and plot their direction to survive the turbulent business climate. It is all about innovation, the ability to make the right choices and if necessary, plan radical deviations from current business practices. Organizations can normally continue for a limited time within a stable environment and with little or no competition. Today, these conditions do not prevail and if your organization fails it is because it fails to plan.
The discussion that follows provides some general information and guidelines on strategic planning.
Strategic planning deals with these key questions:
- What do we do?
- For whom we do it?
- How can we do it different/better?
- How can we avoid/outsmart the competition?
A strategy is simply a long-term plan of action designed to attain particular goals. The strategic plan covers the entire organization and acts as a road map for carrying out the strategy and achieving the desired long-term results. It makes sure that everyone in the organization is on the same page regarding the future of the organization. Subsequent to the strategic plan, a more detailed business plan can be compiled for the organization or particular products/services. Based on the objective of the business plan, it provides a set of applicable business goals and a substantiated plan for reaching those goals.
Advantages of Strategic planning
- Address critical business performance issues.
- Creates the right balance between the organization's wishes and capabilities.
- Provides organizational direction and clearly defines the desired end state/situation and how it will be accomplished.
- Gains understanding and commitment at all levels.
- It sets priorities that serve as a guide for decision making at lower levels within the organization.
- Brings focus to every one in the organization following the same game plan.
- Communicates to everyone what is important within the organization.
- Clarifies management's value system
Process of Strategic Planning
Strategic planning is an iterative process consisting of thee phases:
- Visualize – where do we want to be?
- Analyze – where are we now?
- Strategize – how do we get from where we are now to where we want to be?
In this phase, the focus should be on where the organization should be going rather than how it should get there. It deals with defining the desired end state and the setting of goals. Vision Statement: The vision statement is an inspirational statement of where the organization wants to be in the future and should be embedded into the organization's culture.
The vision statement:
- Shapes market (external) and organizational (internal) perceptions.
- Defines success.
- Outlines the desired end state.
The vision statement should be SMART (Specific, Measurable, Achievable, Relevant, and Time bound). Management and leaders should be role-models by exemplifying the vision and communicating it regularly to sub-ordinates. The vision statement motivates employees to achieve defined objectives.
Mission Statement: The mission statement identifies the purpose of the organization and the reason for their existence. It should clearly establish:
- What is the principle business?
- What products/services will be provided?
- Which market will be targeted?
- What resources and technologies will be used?
- What are the desired performance levels?
- What will be results/benefits in providing these products/services?
A mission statement is a derivative of the vision and provides a path to realize the vision in line with its values.
Values / Guiding Principles: Values are the beliefs and principles that are shared by people within the organization and control the way they interact with each other and with stakeholders outside the organization. It establishes the organization's culture and provides the framework for decision-making and setting priorities. The organizational values is the foundation for developing organizational norms, guidelines or expectations that prescribe appropriate kinds of behavior by employees in particular situations and control the behavior of organizational members towards one another.
Major Goals: This involves setting targets to fulfill the vision and mission and defines how success is measured in the desired/ideal state. A three to ten year planning horizon can be used in setting goals. The most important/critical issues to accomplish the organization's vision/mission should be the basis of these goals. The first step would be to identify the key strategic areas which represent the most important/critical issues. Each key strategic area need to be briefly described and the goals related to the area defined.
Broad participation within the organization is required in developing goals bases on consensus. Responsibilities for achieving these goals have to be assigned to responsible managers/employees whom should take ownership of them. The priority or each area based on its impact on accomplishing the vision/mission need to be established. The most important or highest ranking key strategic area requires the most effort and resources allocated to it.
This phase includes analyzing and evaluating the current situation and how it came about. It identifies the gap between the present and the desired state as identified in Phase 1 and why it exists. It requires an assessment of the current portfolio of products/services and their position within the life cycle.
Business SWOT Analysis: SWOT Analysis is powerful technique used during this phase to evaluate the Strengths, Weaknesses, Opportunities, and Threats of the organization. During this analysis the internal and external factors are identified that are favorable and unfavorable in achieving the goals of the organization. It uncovers opportunities that you are well positioned to take advantage of. Being aware of your weaknesses can manage and remove threats.
- Strengths: Internal factors within the organization that supports achieving objectives. It is what the organization does well or has a competitive advantage. Also view strengths from the perspective of customers/stakeholders.
- Weaknesses: Internal factors of the organization that is unfavorable in achieving objectives. It prevents the organization from performing well. What could be improved/avoid or avoided? Also consider weaknesses from the perspective of customers/ stakeholders
- Opportunities: External factors that support achieving objectives. Such as changes in technology, loyal customers, and an efficient supply chain. Consider opportunities based on your strengths and/or to eliminate weaknesses.
- Threats: External conditions that are unfavorable in achieving objectives. They are the obstacles that your organization faces such as competition, changes user buying patterns and new regulations.
- Strengths and weaknesses: Consider the internal environment such as assets, resources, people, culture, methodologies, systems, partnerships, etc.
- Opportunities and threats: take a critical look at the external environments such as current markets (customers), competition, technology, supplier markets, labor markets, economy, regulatory environment, etc. The SWOT analysis will identify what has to be done as input to the strategizing phase.
This phase creates the path/roadmap to achieving the goals/objectives that was set in phase 1. It deals with what it is needed to close the gap, monitor progress and how we will know whether that the gap has been closed. It also identifies the required resources to reach the desired end state.
- Develop new/revised strategies.
- Establish critical success factors to achieve goals.
- Prepare detailed action plans to implementation strategies.
Action plans specify the activities/steps that are required to realize strategic objectives and should be practical including:
- What actions should be taken?
- Who is responsible for each action?
- What are the measurable deliverables for each action?
- What are the milestones and timeframe for each action?
- What resources, including capital that will be required?
- What are the measurable deliverables for each action?
While creating the action plans, objectives have to be set for the short/medium-term. They are based on the long-term goals and should be simple to understand, measurable, realistic and achievable. Ownership for achieving these objectives is assigned to responsible managers/employees.
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