Strategic Planning
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.
Additional Resources
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- CIO strategy
strategic planning
- Stephen J. Bigelow, Senior Technology Editor
- Mary K. Pratt
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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Strategic Planning in Diversified Companies
- Richard F. Vancil
- Peter Lorange
The widely accepted theory of corporate strategic planning is simple: using a time horizon of several years, top management reassesses its current strategy by looking for opportunities and threats in the environment and by analyzing the company’s resources to identify its strengths and weaknesses. Management may draw up several alternative strategic scenarios and appraise them […]
The widely accepted theory of corporate strategic planning is simple: using a time horizon of several years, top management reassesses its current strategy by looking for opportunities and threats in the environment and by analyzing the company’s resources to identify its strengths and weaknesses. Management may draw up several alternative strategic scenarios and appraise them against the long-term objectives of the organization. To begin implementing the selected strategy (or continue a revalidated one), management fleshes it out in terms of the actions to be taken in the near future.
In smaller companies, strategic planning is a less formal, almost continuous process. The president and his handful of managers get together frequently to resolve strategic issues and outline their next steps. They need no elaborate, formalized planning system. Even in relatively large but undiversified corporations, the functional structure permits executives to evaluate strategic alternatives and their action implications on an ad hoc basis. The number of key executives involved in such decisions is usually small, and they are located close enough for frequent, casual get-togethers.
Large, diversified corporations, however, offer a different setting for planning. Most of them use the product/market division form of organizational structure to permit decentralized decision making involving many responsibility-center managers. Because many managers must be involved in decisions requiring coordinated action, informal planning is almost impossible.
Our focus in this article is on formal planning processes in such complex organizations. However, the thought processes in undertaking planning (as described in the opening paragraph) are essentially the same whether the organization is large or small. Therefore, even executives whose corporate situation permits informal planning may find that our delineation of the process helps them clarify their thinking. To this end, formalizing the steps in the process requires an explanation of the purpose of each step.
Three Levels of Strategy
Every corporate executive uses the words strategy and planning when he talks about the most important parts of his job. The president, obviously, is concerned about strategy; strategic planning is the essence of his job. A division general manager typically thinks of himself as the president of his own enterprise, responsible for its strategy and for the strategic planning needed to keep it vibrant and growing. Even an executive in charge of a functional activity, such as a division marketing manager, recognizes that his strategic planning is crucial; after all, the company’s marketing strategy (or manufacturing strategy, or research strategy) is a key to its success.
These quite appropriate uses of strategy and planning have caused considerable confusion about long-range planning. This article attempts to dispel that confusion by differentiating among three types of “strategy” and delineating the interrelated steps involved in doing three types of “strategic planning” in large, diversified corporations. (Admittedly, although we think our definitions of strategy and planning are useful, others give different but reasonable meanings to these words.)
The process of strategy formulation can be thought of as taking place at the three organizational levels indicated in Exhibit I: headquarters (corporate strategy), division (business strategy), and department (functional strategy). The planning processes leading to the formulation of these strategies can be labeled in parallel fashion as corporate planning, business planning, and functional planning. We have to define these notations briefly before constructing the framework of the planning process:
Exhibit I Structure of a divisionalized corporation
- Corporate planning and strategy —Corporate objectives are established at the top levels. Corporate planning, leading to the formulation of corporate strategy, is the process of (a) deciding on the company’s objectives and goals, including the determination of which and how many lines of business to engage in, (b) acquiring the resources needed to attain those objectives, and (c) allocating resources among the different businesses so that the objectives are achieved. (See the sidebar, “Objectives and Goals,” for definitions of objectives and goals as used in this article.)
Objectives and Goals
It is worth differentiating between objectives and goals, since these terms are used separately here.
Objectives are general statements describing the size, scope, and style of the enterprise in the long term. They embody the values and aspirations of the managers, based on their assessment of the environment and of the capabilities and health of the corporation. For example, the financial objective of a large, diversified, multinational corporation might be to rank in the top 10 % worldwide in compound rate of growth in earnings per share.
Goals are more specific statements of the achievements targeted for certain deadlines. At the corporate level these statements are likely to include such aspects as sales, profits, and EPS targets. Annual budgets constitute goals at all levels in the organization.
- Business planning and strategy —Business planning, leading to the formulation of business strategy, is the process of determining the scope of a division’s activities that will satisfy a broad consumer need, of deciding on the division’s objectives in its defined area of operations, and of establishing the policies adopted to attain those objectives. Strategy formulation involves selecting division objectives and goals and establishing the charter of the business, after delineating the scope of its operations vis-à-vis markets, geographical areas, and/or technology.
Thus, while the scope of business planning covers a quite homogeneous set of activities, corporate planning focuses on the portfolio of the divisions’ businesses. Corporate planning addresses matters relevant to the range of activities and evaluates proposed changes in one business in terms of its effects on the composition of the entire portfolio.
- Functional planning and strategy —In functional planning, the departments develop a set of feasible action programs to implement division strategy, while the division selects—in the light of its objectives—the subset of programs to be executed and coordinates the action programs of the functional departments. Strategy formulation involves selecting objectives and goals for each functional area (marketing, production, finance, research, and so on) and determining the nature and sequence of actions to be taken by each area to achieve its objectives and goals. Programs are the building blocks of the strategic functional plans.
Obviously, these levels of strategy impinge on each other to some extent—for example, the corporation’s choice of business areas overlaps the scope of division charters, and the delineation of the markets by the division can dictate, at the department level, the choice of strategy in the marketing function. But the distinction remains valid and useful.
Three-Cycle System
An important point to note about the planning process is that it requires formal interaction among the managers at different times. The more formal aspects—business planning, functional planning, and budgeting—are a way of organizing the interaction among managers at different levels in the hierarchy; one way of conceptualizing the planning process is as a series of meetings where executives are trying to arrive at decisions about actions to be taken. In each meeting, obviously, the basic question being addressed is the same: “What should we do?”
A detailed answer to that question is best developed by breaking it into a series of more specific questions dealt with in several meetings. These questions include: What are the objectives and goals of our company? What sort of environment can we expect to operate in? What businesses are we in? What alternative strategies could we pursue in those businesses? What other businesses should we enter? Should we make entry through an acquisition or through our research? What is the best combination of existing and new businesses to achieve corporate goals? What programs should the divisions undertake? What should each division’s operating budget be?
The series of agreements among individuals in the corporate hierarchy begin on a very broad level and then are framed in progressively more detailed terms. The options are numerous in the early stages of this ordering process but narrow gradually to the final choice: a set of specific goals (budgets) for each responsibility center in the corporation. Initially, only a small group of corporate executives is involved in the process; later, more and more managers at lower levels become involved. The process eventually engages all the managers who must be committed to making the strategy work.
The reason companies adopt a complex planning process such as that shown in Exhibit II is made clear by the example of a multibillion-dollar, diversified corporation, headquartered in Europe and multinational, which had a well-established budgeting process but found “negotiating” the final budget in the closing months of each year to be difficult. The company was divisionalized, but it had decentralized very little initiative for examining strategic options.
Exhibit II Steps in the planning process
Top management, increasingly uneasy over its ability to resolve all the strategic issues implicit in the budget, decided to ask the divisions to prepare formal five-year plans for its approval before drawing up the final corporate budget. The controller’s department was to coordinate the preparation of the detailed plans. The company moved from a one-cycle planning system to a two-cycle system, as shown in Exhibit III. The result was a flood of paper work and very little strategic thinking on the division managers’ part.
Exhibit III Examples of one-, two-, and three-cycle planning processes
When top management reviewed the first set of five-year plans—a 20-pound packet of neat notebooks—it decided the results were unacceptable. It made suggestions to the divisions and requested a new set. This process was repeated no fewer than five times during the summer and early fall before all sides reached agreement and the budgeting could proceed.
After this experience corporate management agreed that the procedure needed much improvement. So in the following year the company installed a three-cycle system. The first step required no comprehensive financial projections; instead, each division manager was asked to identify three or four strategic issues for presentation and discussion at headquarters. Agreement on those issues set the stage for orderly functional planning and budgeting, which had been so cumbersome before.
An important point to note about Exhibit II is its demarcation vertically, by cycles, and also horizontally, by activities at the three managerial levels. The degree of involvement at these levels is different in each planning cycle.
In the first cycle, corporate executives and division managers are primarily involved. A division manager draws his functional subordinates into discussions about the unit’s strategy, but the functional managers’ role usually remains informal. At this point the division manager regards the strategy as “his”; then, seeking the head office’s endorsement, he formalizes it for better communication.
Once the division’s strategy is set, the second cycle begins; here functional managers play a much more important part. In both that cycle and the budgeting cycle, they have the primary responsibility for developing detailed programs and budgets. The division manager and his staff are involved more or less actively in these two cycles, while top management limits itself to a review of division proposals.
Exhibit II, of course, makes no pretense of depicting the planning process as it is universally practiced; it is only illustrative. Nor is the process as neat and orderly as it appears here. For one reason, the process does not start from scratch each year; the previous year’s efforts feed into the first cycle. Moreover, while managers plan, the world keeps turning; so during a cycle events may oblige them to hold many meetings involving two levels.
First Cycle
The first cycle of a formal planning process serves a dual purpose: (1) to develop a tentative set of agreements between corporate management and the division managers about overall strategy and goals, and thereby (2) to provide focus for the more detailed planning in the next cycle. The process of reaching these initial agreements requires three discrete activities: establishing corporate objectives, drawing up division charters, and setting corporate goals. The ensuing discussion centers on these activities in a hypothetical (but representative) corporation whose fiscal year corresponds with the calendar year.
Establishing Corporate Objectives
In the initial dialogue between corporate and division management—starting in early February—the two groups form a statement of the corporation’s purpose and objectives. Naturally, its scope and the degree of detail provided vary greatly from one company to another. Company X prepares a detailed statement, starting this year with the general assertion that it is a “systems-oriented, high-technology, multinational, and socially conscious company.”
The principles set out mainly for strategic planning include breakthrough strategies (such as “seek projects, internal or external, waiting for application rather than invention”), resource management (such as “continuous emphasis on market orientation as opposed to product orientation”), financing (“utilization of the borrowing power of subsidiaries to escape the provisions of the debentures and foreign investment regulations”), public relations (“genuine concern for the quality of life, inside and outside the company”), acquisitions, joint ventures, licensing (“export and import technology in the form of licenses or joint ventures, including third countries”), and so on.
The preparation of such a statement gives division managers guidance as they begin strategic planning for their businesses. So as a minimum the statement must include the intended company policies for allocating resources among the divisions. In effect, such policies constitute a statement of strategy for the entire corporation—although many businessmen are uncomfortable using the term “strategy” in such an abstract sense. Therefore, the delineation of an explicit statement of corporate strategy is often deferred until the final step in the first cycle.
Whether corporate strategy should be enunciated early or late in the planning process depends primarily on the degree of diversity in the company’s businesses. In general, the more diverse the corporation, the less feasible it is to develop an explicit, cohesive strategy for its businesses and, therefore, the more desirable it is to make the resource allocation policies explicit at an early stage. On the other hand, less diversified companies frequently delay preparing a strategy statement until the division heads have developed strategic proposals for their own businesses. Many large corporations are divisionalized, but not so many are highly diversified. The more common practice is to delay the definition (or redefinition) of corporate strategy until it can be stated in fairly explicit terms.
Drawing Up Division Charters
In mid-March headquarters calls on each division manager to (a) write or review the “charter” of his division, specifying the scope of its activities and his objectives for the business as he defines it, and (b) propose a strategy for the business and a tentative set of goals for the coming year.
Giving the initiative to the division manager at this step challenges him to think strategically about the scope of his activities and then propose a charter broad enough to permit him to contribute significantly to achieving corporate objectives. Formalizing this step in the planning process is an important device by which corporate management widens the horizons of division heads. An explicit charter also serves two secondary purposes: (1) it increases the likelihood of clear agreement between the top executives and the division manager about the scope of his activities, and (2) it reduces the risk of redundant efforts or competition between divisions.
Establishing a division’s charter is not a discrete activity; it is inextricably connected to the task of identification and analysis of alternative strategies that exploit the charter selected. Obviously, the decision based on this analysis is crucial because the long-term performance of any division is a function of the strategy it adopts, and the performance of the company as a whole is likewise a function of the strategies of its particular businesses.
Although the initiative for identifying and analyzing strategic options lies with the division manager, guidelines that headquarters gives him for presentation of his proposals affect the way he pursues the task. Increasingly common is a request by corporate management that when he proposes a strategy and specifies goals, at the same time he also present a statement of the alternative strategies which he has evaluated and rejected. The intent is not to permit the head office to second-guess the division manager’s thinking, but to ensure that he used strategic thinking in arriving at his recommendations.
In mid-May, four to ten weeks after headquarters presents its request for division proposals, the unit’s manager presents his recommendations to the corporate management group. The presentation consists at least of an integrated proposal for the division’s charter, its objectives, the strategy to be pursued, and tentative goals. The recommendations may also include a general statement of the action programs that would be developed to implement the strategy (developed in more detail in the second cycle) and a crude estimate of the resources that would be required. Detailed financial data are usually not included at this step because such information is not necessary to evaluate the strategy and because the effort of preparing it may go to waste if the recommendations are modified.
In the ensuing discussions, which extend over several meetings in late spring, corporate management and each division chief work toward reaching an agreement about the appropriate division strategy and goals.
Setting Corporate Goals
By the middle of June top management has prepared an explicit statement of corporate strategy and goals. In some companies this document is, in effect, a set of decisions on how resources are to be allocated among the divisions, as well as a forecast of the results expected from each. In most cases, however, the statement is not intended to constitute a final resource allocation decision; rather, it is designed to provide feedback to the division managers about the corporate implications of the agreed-on business strategies. The presentation and discussion of corporate strategy and goals are also commonly used as a device to initiate the second cycle of the planning process.
The sum of the recommended division goals is likely to be inadequate to achieve the goals envisioned by headquarters for the entire organization. In trying to close this “planning gap,” corporate management has only three choices:
1. It can improve division performance by pressing, during the review of division recommendations, for more aggressive strategies and more ambitious goals.
2. It can divert company resources into more promising businesses. This move may give rise to an acquisition program.
3. It can decide that the corporate goals are unrealistic and scale them down.
The fact that the corporation’s goals normally are more or less the sum of those division goals sought by top management implies that headquarters is concerned with rather minor adjustments of this portfolio of goals. If so, the first cycle of formal planning has the salutary effect of providing an annual “mid-course correction” to the trajectory of the combined businesses. Momentum is a factor in the continued success of a diversified corporation—as with a rocket headed for the moon—and a wise chief executive does not dissipate it needlessly. Rather, he nudges the bundle of energies represented by his division managers, trying to make minor adjustments early enough to be nondisruptive and at the same time affect the corporation’s position several years ahead.
Occasionally—perhaps inevitably—a major corporate shift is necessary, affecting one of its businesses. Care must be taken to isolate the effect on the remaining businesses. In late spring a couple of years ago, for example, top management of a major diversified corporation went through its usual review of division strategic plans. One operation, created to develop a substantial new business for the corporation, presented its usual story: “Buying market share in this high-technology business is very expensive, break-even is still two or three years away, and additional investment of several hundred million dollars is required. But the eventual profits will be enormous.”
The division’s management concluded that it was progressing about as expected and that its strategy was sound, and it recommended continued aggressive investment. With minor modifications, top management approved the proposal. Three months later the company abruptly announced that the business would be discontinued and the investment written off.
Poor planning? Obviously, the decision to enter the business was a mistake. But implementation of that decision, and the planning done to minimize the investment exposure without compromising the chances for success, were probably sound. There are two important lessons here about the process of corporate planning:
1. Strategic decisions—like this divestment—are not made in accordance with some precise timetable. They are made whenever top management reaches the conclusion that interference in a unit’s affairs is necessary.
2. Formal planning procedures are not intended to facilitate strategic decisions such as this—if only because a division manager rarely recommends the disposal of his operation. Rather, formal corporate strategic planning has the more modest, if no less crucial, purpose of seeking to optimize the collective thrust of the continuing businesses.
Approving a division’s strategic plan but closing the unit three months later is not hypocrisy or poor planning. The ax is much more merciful than the slow strangulation of providing inadequate resources. In the meantime, until the ax falls, division management must prove the viability of its business. For its part, headquarters must not fail to recognize the difference between a sound plan and a sound business. A sound plan deserves approval, but only top management can decide whether the business is sound enough to continue implementation of that plan.
Second Cycle
The second planning cycle also has two purposes. First, each division head and his functional subordinates should reach tentative agreement on the action programs to be implemented over the next few years. Second, the involvement of functional managers in the long-range planning process should deepen and sharpen the strategic focus of the business and thus provide a better basis for the even more detailed budgeting task to follow.
The division manager in Company X initiates the functional planning process in the middle of June after reaching tentative agreement with top management about his organization’s charter, objectives, strategy, and goals. In the first planning meeting with subordinates, he briefly reviews the corporate/division dialogue that has just concluded and describes the approved division objectives and strategy.
At this time he usually does not make explicit the sales or profit goals, even though tentative agreement on targets has been reached. There are two reasons for dealing in generalities at this point. First, being specific might constrain the thinking of the functional managers, who have the chance in this cycle to make a creative contribution toward achieving the division’s objectives. Second, division goals will become final only when corporate management has approved the unit’s programs and allocated resources to implement them.
Long-range planning by functional managers is conceptually a simple process, being limited by the tentative agreements reached in the first cycle. It is operationally more complex than the planning activity in the first cycle, however, since it requires substantially more detailed plans and involves many more people. The purpose of such “programming”—so called because the activity focuses on specific programs—is to translate the division’s externally oriented business strategy into an internally directed, coordinated set of activities designed to implement it. Inasmuch as the resources available for implementation are always limited, programming must help ensure their optimal use.
Obviously, the scope, magnitude, and duration of a program depend on the nature of the goal. In the broadest sense, a product division of a diversified corporation might be conceived of as a “program.” The division manager’s goal may be stated in simple financial terms and extend over several years, and his discretion may be constrained only by a charter for his product line and the availability of corporate resources. In such a situation, the division program may be international in scope, almost unlimited in breadth of product line, and may involve hundreds of millions of dollars in expenditures. At the other end of the spectrum, the sales manager for a district in the northeast region of that division may have been charged with improving market penetration by 10 % over the next 18 months. His actions also fulfill the definition of a program.
Formalized Programming
The need to formalize the programming process grows as functional interdependence in the business increases and as more time is required to evaluate the effectiveness of alternative functional plans. Formalization is designed to improve the specification of programs and the matching of programs and goals.
The charter and strategy for the business and the objectives and goals that top management has set for it limit the functional manager’s strategic planning. Within those constraints, however, he may still enjoy very broad discretion concerning the best course to take. His challenge is to devise more effective ways to combine the available resources in order to achieve his goals. A useful way to look at the specification of programs is in terms of the chronology for involvement of the functional departments. In a typical manufacturing enterprise there are four types of programs to be developed:
- Existing revenue programs. An example is the development of a set of marketing programs for the existing product lines.
- New revenue programs. Planning the development and introduction of new products is an example.
- Manufacturing programs. Typically, sales forecasts by product line are furnished to the manufacturing function, which develops the programs necessary to meet the revenue goals in the marketing programs.
- Support programs. Managers of other functional support activities, such as administration, may also get involved in the development of programs.
The programming process, even when formalized, is inevitably haphazard because it requires repeated interaction among the departments. The intended result is a plan that is integrated like the two sides of a coin. On one side is the set of action programs and on the other a coordinated statement of the resources needed by each functional manager to execute his part of the program.
A major purpose of the formal programming process is to review the ongoing programs to see whether they can be expected to fulfill the goals for which they were designed. Or, if more effective programs have been devised, the existing ones must be modified or discontinued. At the same time, some “old” programs may be nearing completion, and new ones will need approval if the goals are to be met. Programming also involves coordination of functional activities to ensure that the selected programs can be implemented efficiently. Each functional department must understand the implications of a set of programs for its own activities, and the department manager must accept the tasks assigned him and the resources to be made available to him.
In our mythical Company X, after much analysis and discussion the division manager and his functional subordinates finally agree by the end of August on a set of programs to recommend to headquarters. This time, in contrast to the first, a more elaborate presentation is in order and a large number of managers—corporate and division, line and staff—may attend.
Third Cycle
The third cycle of the formal planning process needs little explanation. Naturally, throughout the planning process top managers and division executives often discuss the allocation of resources among the divisions. But it becomes the focus of attention in the last step of the second cycle, when the divisions have completed their program proposals and sent them to the head office for approval. At this point (mid-September at Company X), decisions on allocation of resources can be made, subject to final approval when the detailed budgets are submitted (in mid-November). These general points are worth making here:
- Resource allocation is almost always a very informal, unstructured process, heavily dependent on the skill in advocacy and political weight of the executives concerned. Since it is also a continuous process, by the end of the second cycle the risk of serious mismatch between programs and resources is unlikely—if headquarters/division communications have been good.
- Although programs may have an expected life of several years, resources are usually allocated for only one year at a time. Whether top management will make a commitment to meet next year’s needs will depend on the scale and timing flexibility of the program in the competition for resources.
- Although resource allocation to projects is based on a perception of the desirability of each, corporate planning attempts to ensure that each also fits into a portfolio of undertakings.
Raising the Odds
The formal long-range planning process in large, diversified corporations is both simple and complex. Conceptually, the process is very simple—a progressive narrowing of strategic choices—although it may involve many steps along that path. Operationally, the process is far more complex than the activities we have described because the formal part of the process is only the tip of the iceberg. Good strategic planning can take place only when qualified managers engage in creative thinking—and creativity, by definition, cannot be produced on a schedule.
Yet there is little doubt that formalizing the planning process is worthwhile; it ensures that managers at all levels will devote some time to strategic thinking, and it guarantees each of them an audience for his ideas. While formal strategic planning cannot guarantee good ideas, it can increase the odds sufficiently to yield a handsome payoff.
- RV Mr. Vancil is professor of business administration at the Harvard Business School and chairman of its Control Area faculty. His most recent HBR article was “Inflation Accounting—The Great Controversy” (March–April 1976). His book, Strategic Planning Systems, will be published next January by Prentice-Hall.
- PL Peter Lorange is the president of IMD International in Lausanne, Switzerland, where he is also a professor of strategy and holds the Nestlé Chair.
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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.
Insufficient communication
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.
Meredith Betz
Betterup Fellow Coach, M.S.Ed, M.S.O.D.
How organizational effectiveness enhances how you work and grow
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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?
What is a Strategy Map?
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?
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Strategic Planning in Business
Table of Contents
What is business strategic planning, the strategic planning process in 3 steps, what is a business strategic plan, key components of a business strategic plan, business strategic plan example, strategic plan vs. business plan.
Strategic planning is key for success in business. By planning strategically for the future, a business can achieve its goals. It’s easier said than done, but the more you know about strategic planning, the better chance you have at succeeding.
Business strategic planning is the process of creating a business strategy and an accompanying business strategic plan to implement a company’s vision and achieve its goals over time. The main goal of strategic planning is to take a company from its current state to its desired state through a series of business actions.
The business strategic planning process usually consists of defining business goals, doing a SWOT analysis to assess the company’s business environment and developing a business strategy. The leadership team is in charge of business strategic planning, as it has a very important impact on the overall direction of a company.
To oversee the execution of a business strategic plan, managers need to manage time, costs and tasks. ProjectManager is a project planning tool that allows managers to plan, schedule and manage their team’s work. Plan your work with professional tools such as Gantt charts, kanban boards, task lists and calendars. Then track your progress in real time to stick to your strategic plan. Get started for free.
Strategic planning is very important, but it doesn’t need to be overly complex. Let’s simplify this process by breaking it down into three simple steps.
1. Set Business Goals
A business goal is simply an accomplishment that a company wants to achieve in the short, medium or long term. Business goals can take many forms such as increasing sales, revenue, customer satisfaction levels and brand positioning, among many other things.
2. Conduct a SWOT Analysis
The goal of a business strategy is to leverage the strengths of a business and minimize the impact of its weaknesses. Those two things are internal factors. The strengths of a company can become competitive advantages that can lead to business growth. There are many types of business strengths and weaknesses such as scale, speed, or R&D, just to name a few.
Threats and opportunities refer to external factors such as competitors or an untapped market. A successful business strategy considers all of these factors to define how a product or service will be created, marketed and sold, and a SWOT analysis is a great starting point.
3. Develop a Business Strategy & Strategic Plan
Once you’ve completed your SWOT analysis, you can create a business strategy that’s designed to help position your company in the market. Your business strategy guides how you produce, market and sell your product or service based on internal and external analysis.
Then, you’ll need a strategic plan to explain how you plan to execute that business strategy.
A business strategic plan is an implementation plan that’s meant to turn a business strategy into action items that can be executed over time. Business strategic plans are usually executed over the course of 3-5 years.
How to Develop a Strategic Plan
To develop a strategic plan, you should ask yourself the following three questions.
- Where Is the Business Now? Gather as much information on your business as possible including internal operations and what drives its profitability. Compare the business to competitors and note the similarities and differences in detail. This isn’t a day-to-day operational study, but a broader look at the business in context to itself and its environment. But don’t go crazy; stay realistic in terms of your business goals. Be detached and critical in your analysis.
- Where Do You Want to Go? Now it’s time to decide what your top-level objectives are for the future. Start with a vision statement , objectives, values, techniques and goals. Look forward to five years or more to forecast where you want the business to be at that time. This means figuring out what the focus of the business will be in the future. Will that focus differ from what it is now, and what competitive advantages do have you in the marketplace? This is where you build the foundation and initiate changes.
- How Can You Get There? Once you know where you are and where you want to go, it’s time to plan. What are the changes to the structure, financing, etc., necessary for the business to get there? Decide on the best way to implement those changes, the timeframe with deadlines and how to finance it. Remember, this is looking at the business at large, so consider major endeavors such as diversification, existing growth, acquisition and other functional matters. A gap analysis can be a big help here.
Once you’ve answered the above questions and have a way to achieve the long-term goals laid out in the strategic plan, the next step is making sure you have the right person to manage all of its moving parts. They must be analytical, a creative thinker and able to grasp operational detail.
That doesn’t mean the strategic plan is led by one person. It’s best to not do it alone; seek other opinions. The people in your organization, from bottom to top, are all great resources to offer perspectives from their standpoints. Don’t forget to take in the advice of stakeholders, including customers, clients, advisors and consultants.
To create a strong strategic plan, one must first have a strong understanding of the business that is to expand. How does the business work? Where does the business stand in relation to competitors in the marketplace? A strategic plan is built on the bones of the following foundational elements:
- Mission Statement: The mission statement describes what your company does.
- Vision Statement: The vision statement explains where your company expects to be in the future.
- Core Values: Guiding principles that shape your company’s organizational culture.
- Business Objectives: Consider using the SMART goal-setting technique . This simply means setting up specific, measurable, attainable, relevant and time-bound objectives that your company wants to achieve.
- SWOT Analysis: External and internal factors that make up your company’s business competitive environment.
- Action Plan: A plan outlining steps that will be taken to achieve the business objectives of your organization.
- Financials: A section that shows the financial performance expectations and the resources that will be required to implement the action plan.
- Performance Measurements: Performance indicators that will be used to measure the effectiveness of the action plan.
Never forget to check your strategic plan against reality. In addition to being achievable, it must be practical for your business environment, resources and marketplace.
Now let’s look at a simple business strategic plan example. This is a strategic plan for a small construction company.
1. Mission, Vision & Core Values
- Mission Statement: To build residential spaces that provide wellbeing for our clients.
- Vision Statement: To offer the best construction experience for our clients and expand our brand throughout the globe.
- Core Values: Sustainable innovation and respect for the environment.
2. Business Objectives
- Business Objective 1: Grow operating margin from 15% to 20% over the next year.
- Business Objective 2: Reduce operating costs by 5% over the next quarter
- Business Objective 3: Increase the number of new contracts generated by 10% over the next year
3. SWOT Analysis
- Strengths: Available financing, brand visibility and know-how.
- Weaknesses: Lack of PPE, human capital and expertise in construction areas such as plumbing, electrical work and masonry, which requires subcontractors.
- Opportunities: Lack of environmentally-friendly construction companies in the market.
- Threats: Larger construction companies compete for contracts in the area.
4. Action Plan
- Business Objective 1: To grow operating margin, new employees with plumbing, electrical work and masonry experience will be hired to cut down subcontractor costs. This must be done by the end of the first quarter.
- Business Objective 2: To reduce operating costs, the company will acquire property, plant and equipment. By doing this, the company will no longer rent equipment from third parties, which will reduce operating costs significantly in the medium and long term.
- Business Objective 3: To increase the number of new contracts generated, the leadership team will invest more in the PR, marketing and advertising departments. The company will also invest in key positions for the construction bidding process such as contract estimators.
- Financials: This section will explain in detail what are the costs associated with the work items in the action plan as well as the expected financial benefits for the company.
Strategic Plan Template
Our free strategic plan template helps leadership teams gather important information about their business strategy, which makes it the perfect tool to start shaping a strategic plan for your business or project.
A strategic plan is a type of business plan, but there are distinctions between the two. Whereas a strategic plan is for implementing and managing the strategic direction of a business, a business plan is more often the document that starts a business.
A business plan is used primarily to get funding for the venture or direct the operation, and the two plans target different timeframes in business history. A strategic plan is used to investigate a future period, usually between three-to-five years. A business plan is more routinely a year out.
A Different Intent
A strategic plan offers a business focus, direction and action to help the business grow from the point it presently resides to a greater market share in the future. A business plan, on the other hand, is more focused on offering a structure to capture and implement ideas that initially define a business.
With a strategic plan, existing resources are prioritized to increase revenue and return on investment. The business plan is different in that it’s seeking funding for a venture that doesn’t yet exist. Where a strategic plan is building a sustainable competitive advantage in the future, a business plan is designed to take advantage of a current business opportunity.
So, a strategic plan is communicating direction to teams and stakeholders in order to achieve future goals. A business plan isn’t talking to staff, which is likely nonexistent or minimal at this point. It’s speaking to banks and other financial supporters.
Strategic planning, like any planning, requires keeping a lot of balls in the air. That means having the right tool to plan, monitor and report on all the various tasks and resources. ProjectManager is online project management software that gives you control over every aspect of creating and implementing a strategic plan. Try it today with this free 30-day trial.
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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.
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Strategic Planning
What is strategic planning.
What is a strategic plan? Strategic planning in management is the process of documenting and establishing the direction of your small business—by assessing both where you are and where you’re going . So, what is the purpose of a strategic plan? And what does an effective strategic plan consist of? A company’s strategic plan consists of it’s:
- Long-term goals
- Action plans
A well-written strategic business plan can play a pivotal role in your small business’s growth and success because it tells you and your employees how best to respond to opportunities and challenges.
In recent years, many small business owners have been focusing on long-term planning. In fact, in 2020, there were three business areas that small businesses focused on strategy for, including:
- 46% in sales
- 41% in advertising
- 36% in customer service
If you haven’t been focusing on a long-term business planning process, it’s not too late to think differently. Your future success depends on effective organizational strategic planning. It’s also important to remember that a strategic planning process model involves your entire business. The discussions that result can lead to meaningful changes in your business. The purpose of strategic planning is to also analyze your business and set realistic goals and objectives. This leads to the creation of a formal document that lays out the company’s views and strategic goals for the future.
Ready to learn more about strategic management and planning? Keep reading through the next sections.
The 3 Step Strategic Planning Process
What are the 3 steps in strategic planning? When it comes to the strategic planning process, think of it as having three phases:
- Development
- Review and updating
The goal of developing a strategic plan is to ensure everyone in the business is aligned when it comes to your small business’s goals and objectives, as well as to create a formal strategic plan document.
1. Discussion Phase
The discussion phase is meant to gather as much information, opinions, and input as possible. Set up a regularly scheduled meeting with the employees and any other staff in your business who will be involved with strategic planning. Make sure you have an agenda and clear expectations of what you want to accomplish in each meeting. This will keep discussions on track and help prevent distractions. In the first few meetings, try to answer questions that will help you define the business’s current status, such as, “Where are we now?” and “Where are our competitors?” Once you have a good idea of where the business is, you can focus in on specific details in future meetings.
In addition to regular meetings with your employees at your business, you can also gather information from people outside your company, like:
External people will have a unique perspective on not only your business, but also the industry you’re operating in. Getting their opinions on where they think the industry is going and what they think will change in the future can help you put together your strategic plan and determine where you want your business to be down the road.
You can also conduct a SWOT analysis. SWOT stands for strengths, weaknesses, opportunities and threats.
When you’re conducting a SWOT analysis, you and your employees will examine what your business does well, where it can improve, any future opportunities to pursue that could help facilitate growth and success, and any competitors or external factors that could prevent the business from succeeding.
Your strengths should be pretty easy to identify. When you’re discussing your business’s weaknesses, don’t be afraid to be candid. Every business has weaknesses and things to work on. Any weakness you and your employees note means it’s something you’ll aim to improve on in the future with a detailed initiative outlined in the strategic plan.
Opportunities available to your business may be pretty clear, while identifying threats to your business can be more difficult. Speaking with people outside of the company should give you a good idea of where the industry could be heading and if there are any major competitors or challenges coming. If you can identify a number of threats and challenges to your business early on, it puts you in a better position to address them if and when you encounter them down the road.
2. Development Phase
After you’ve collected all of the information, it’s time for the development phase. This is when you’ll start putting together your business’s strategic plan. A strategic plan consists of five key components:
- A vision statement
- A mission statement
- Goals and objectives
- An action plan
- Details on how often the strategic plan will be reviewed and updated
Decide with your employees what you will use to create the strategic plan. Are you going to purchase software to help you create and house the plan? Or are you going to create the plan yourself and save it in the cloud for easier access?
When you’re creating goals and objectives for your business, make sure they’re realistic and measurable. Work with your employees to create goals and objectives for at least the next one to three years. And discuss how these goals and objectives will be measured and tracked.
For example, if you have a goal of increasing sales by 10% in the next year, you can track this by measuring sale numbers. Equally important is having an action plan to achieve these goals and objectives. If you’re trying to increase your sales by 10% in a year, you can pursue more marketing and social media outreach as part of your action plan. If an action plan doesn’t help your business achieve its goals, the plan needs to be rewritten.
3. Review and Updating Phase
A critical part of the strategic plan should address how often it will be reviewed and updated. Designate someone to be responsible for reviewing, updating, and sharing any changes with the rest of the company. Whether it’s you or another employee, you’ll want to make sure everyone in the business is aware of the changes and how they affect the overall strategic plan.
The strategic plan is meant to be a fluid document; don’t fall into the trap of creating the document and letting it sit on a shelf for years. If you developed meaningful objectives and action plans, they should help with regularly checking the strategic plan. For example, if your action plan requires you to put in sales numbers every quarter to track revenue, you could take that time to review the rest of the plan.
You can also set an alert to check the strategic plan on a regular basis. Whether it’s every few months, every quarter, or every year, a recurring alert can help you review and update the document.
When you’re reviewing your strategic plan, you may find that you’re not on track to meet an objective or goal that you previously set up. Don’t panic. Reassess the situation and, if you need to, discuss the issues with your employees. Figure out what went wrong and why your business isn’t on pace; maybe the goal was too ambitious or not realistic. Change the goal or objective and update the action plan to help you get back on track.
You also may find that your small business has met a goal or objective earlier than you thought you would. If so, you can create a new goal or objective to work toward, or try to maintain the progress you’ve already made. Discuss the ideas with your employees to see what they think is possible.
Strategic Plan Examples
Strategic plans can vary, depending on the type of business you operate or the industry you’re in. Here are a few examples of different strategic plans:
Strategic Planning Examples for Business
A strategic plan for a business will include the company’s mission and vision statement, as well as its goals and objectives and the action plans to achieve them.
The strategic plan is different from a business plan. The business plan is typically used to help start the business and acquire the necessary funds to open the doors. A strategic plan outlines the strategy for growth and success in the future by using existing resources.
The Canadian Soccer Association’s strategic plan for 2014 to 2018 is full of information and details. It includes an examination of the organization’s current status and what the focus in the future will be. It includes the goals and objectives of the Canadian Soccer Association, as well as the strategies it’ll use to achieve them.
According to a recent report, the top challenges for small businesses in 2021 are:
- 23% said a lack of capital and/or cash flow
- 15% said they anticipate marketing and advertising struggles
- 19% said they expect challenges with recruiting and retaining employees
Nonprofit Strategic Plan Examples
A strategic plan for a nonprofit organization will include the same key components. A nonprofit strategic plan may focus more on the internal and external factors that can pose any threats or challenges to the organization. Because the structure of a nonprofit organization can change rapidly due to different factors, the strategic plan takes this into account and aims to address possible changes ahead of time.
The Minnesota Council of Nonprofits’ strategic plan for 2010 through 2014 outlines the organization’s:
- Community it serves
- Goals for the four-year period
Each goal includes an in-depth description of why it’s important to the Minnesota Council of Nonprofits, as well as the strategies involved to achieve those goals. The plan also lists the people responsible for working on the strategic plan.
IT Strategic Plans
The IT industry is constantly changing. This means a strategic plan for an IT business should identify and address the changes in the future as well as possible. While other business strategic plans may focus on the next three to four years, it’s not uncommon for an IT strategic plan to look at the next year to year-and-a-half.
When it comes to developing, reviewing, and updating your IT strategic plan, it’s important to involve your business’s Chief Information Officer. This person’s knowledge and skill set is useful in putting together a strategic plan for your tech business. In addition to the Chief Information Officer, you and your employees can look at whether you need to upgrade any part of your infrastructure to meet the goals and objectives you’ve outlined in your strategic plan.
Because of the rapidly changing circumstances, you may be reviewing your IT strategic plan more frequently than with other businesses. Adjust your plan as necessary to put your business on the best path to success. The plan also should include details on how to make a decision when it comes to investing in new equipment or technology.
Marketing Strategic Plans
A marketing strategic plan’s goal should be to generate sales for the business. Whether it’s increasing sales numbers by 15% or increasing the number of customers in the next quarter, a marketing strategic plan helps businesses generate more revenue and increase their customer base.
A marketing strategic plan can include marketing technology, software, or web-based platforms to help track your business’s progress toward its goals. The plan also could address the specific types of marketing the business will pursue—for example, whether your business will pursue traditional print advertising or digital ads.
Because a marketing strategic plan aims to increase your business’s exposure and numbers through different techniques and methods, it’s a good idea to include the budget in the document. This way, you and your employees will work toward the marketing goals and objectives you want to achieve without spending too much money.
Strategic Planning Template Checklist
Should you use strategic planning models or templates? Yes, in fact, a good strategic plan template, sometimes called a strategy mapping template is like a checklist. The template will include different sections for you to complete and help you cover a variety of topics. Using a thorough template will help ensure you have a comprehensive strategic plan for your business.
You can use computer software for your strategic planning template, or you can create your own with Microsoft Word or Excel. You can also download our Strategic Plan Example Template to use.
- What does a strategic plan include? At the top of your template, label it “Executive Summary” and provide an overview of your business. Include the time period you’re looking at for your business’s strategic plan; for example, if the strategic plan provides a three- to five-year outlook.
- Underneath this section would be information on “Your Company.” This is where you’ll put in your mission statement, vision, values, and information on leadership.
- A section on “Research” will include information on your clients and customers, competitors and the industry.
- You can also create a section on “Products and Services,” which will detail any products you sell, pricing strategy, delivery systems and capabilities, and suppliers.
- A section of your template should focus on “Measurable Goals.” These should be realistic goals or objectives that you want your business to achieve within the time period you set. Don’t forget to include details on how the progress of each goal or objective will be measured.
- Whether you include it within the Measurable Goals section or as a stand-alone group in the template, don’t forget about your “Action Plans.” This provides an overview of how you and your employees are going to achieve your business goals and operational plans.
- You also can put your SWOT analysis into the template. List the identified strengths, weaknesses, opportunities, and threats with your business. Remember to be honest and candid. When you are reviewing your strategic plan in the future, you can reference the initial SWOT analysis and check to see what has changed.
- The last section should detail “Reviews and Updating.” Explain how often the plan should be checked (every few months, quarterly, annually, etc.). Provide a list of people who should be responsible for reviewing and updating the strategic plan, as well as communicating any changes with the broader business.
Why Is Strategic Planning Important?
The strategic planning process can take some time, but it’s beneficial for everyone involved. As the small business owner, you’ll have a better idea of the organizational goals and objectives you’ll want to accomplish and a path to do that. For your employees, the process can foster an increase in productivity—contributing to the success of the business.
Communicating Your Strategic Plan
In a business environment, strategic planning requires you to involve your employees. Your employees are involved in the day-to-day operations and can provide you with a unique view of the company. Employees can share with you what they think is and isn’t working with the business today, which can inform your planning for the future.
In addition to your employees, it’s beneficial to reach out to people outside of your company to get their opinions. Like your employees, vendors have a unique perspective on your industry. Talk to them about the business, and get their thoughts on how they think the business landscape can change in the future.
The U.S. Small Business Administration recommends that the strategic planning process be a flexible one. When you meet with your employees and any people outside of the company, remember that the discussions should encourage new ideas and thoughts.
Increase Productivity
Involving your employees in the strategic planning process also means they receive a sense of accountability that can increase productivity. Whether they contributed in the process or were informed of the business’s long-term goals and objectives after the strategic plan was created, they’ll be more likely to want to help you achieve those targets.
Identifying Strengths and Weaknesses
As part of the strategic planning process model, you’ll examine and analyze your entire business. You’ll take a look at what your business does well and the areas where it still needs to improve. By identifying your business’s current strengths and weaknesses, the process gives you and your employees an opportunity to improve in the future and become a durable business by minimizing risks.
Although you may have a good idea about what your business excels at and areas that need to be improved upon, don’t forget to involve your employees. They may tell you something you didn’t think of.
Setting the Direction of the Business and Fostering a Proactive Environment
By the end of the strategic planning process, you and your employees should have a clear direction of where you want the business to go in the future. These discussions and the planning process itself help put the business in the best position to succeed in the future.
Strategic planning gives you and your business time to figure out how to grow over the next few years and how to address new opportunities and challenges. Think about the challenges or issues your business may face in four or five years and plan accordingly, so your business doesn’t stumble down the road.
Strategic Planning Misconceptions
There are many strategic planning misconceptions. From not having enough time or thinking it only benefits larger businesses, to fearing you’ll put your business on the wrong path, there are a variety of reasons why business owners may be wary of strategic planning. But don’t be alarmed; strategic planning can help your business—big or small—and the benefits far outweigh any perceived negatives.
Regardless of the size of your business, a strategic plan is beneficial. Whether you are a small business or a large corporation with hundreds or thousands of employees, strategic planning helps you make sure the company is headed in the right direction.
But how do you know if you’re steering the company in the right direction? The beginning phases of strategic planning focus on research and discussions. The decisions you make during strategic planning aren’t based on assumptions; they’re based on research and information you’ve gathered while talking with your employees and people outside of your company.
The strategic planning process may seem daunting at first, but when you understand what’s involved and how to do it, it’s not that complicated. It takes time, but the amount you invest in the process pays off when everyone in your company works toward accomplishing the goals and objectives you’ve laid out.
The process doesn’t stymie creativity either. When you meet with your employees for strategic planning, you’re asking everyone to have a discussion and brainstorm ideas. The strategic planning process puts everyone’s minds together to think of creative ideas.
If you go through the strategic planning process once, don’t think you won’t have to do it again. The strategic plan is a living document; it should change over time. It’s not uncommon for business owners to create a strategic plan with their employees and rarely—or never—revisit the document. Reviewing and evaluating your strategic plan regularly will help keep you accountable and on track to achieve your goals and objectives.
What Makes Strategic Planning Successful?
Successful strategic planning involves a team effort among you and your employees, as well as among you and your vendors and other outside people. The more you engage your employees with strategic planning, the better they’ll understand the strategy you want to have for your business.
Strategic planning concepts also need to be flexible. While it’s necessary to have goals and objectives for your business, you also have to be able to adapt to changes. For instance, 44% of small businesses without a website, plan to create one in 2021 to adapt to the growing online shopping trend brought on by COVID-19.
When strategic planning is successful, everyone in your business is on the same page with the business’s direction and goals. Each individual understands what makes the business stronger and what needs to be worked on. And it’s more likely that each person wants to contribute to the business’s growth and success.
When Should Strategic Planning Be Done?
When it comes to strategic planning, you want to start it sooner rather than later . It doesn’t necessarily have to be done in the first few days or weeks of the company’s life—you may want to be in business for a few months to give yourself a better idea of what is and isn’t working.
But even if you’ve owned your business for a long time, it’s not too late to get started on strategic planning. It’s never a bad time to sit down and think about the current status of your company and where you want to be in the next five to 10 years. When you’re ready, gather your team together and schedule regular meetings dedicated to strategic planning.
Where Do Strategic Plans Go Wrong?
Strategic planning is an ongoing commitment. Even if you go through an initial round of strategic planning and it leads to the development of your business’s first strategic plan, it’s still not finished. The plan has to be implemented.
Strategic plans also can go wrong if the goals and objectives you set are unrealistic. Every business owner wants to see their business grow and succeed, but if you set an overly ambitious growth rate, it could discourage you and your employees.
A successful strategic plan requires commitment. Your entire team needs to be focused on the business and carrying out the strategic plan. If the strategic plan isn’t being used regularly or as the foundation of the business, you and your employees can lose sight of the company’s direction and goals.
The top three reasons strategy implementation fails:
- Poor communication
- Lack of leadership
- Using wrong measures
Reviewing and Updating Your Strategic Plan
A strategic plan is a living document. Don’t spend the time to create a strategic plan and then put it on the shelf to collect dust. Live by it. And regularly update your strategic plan. How often you should update your strategic plan depends on how your business works.
If your business works in a fast-paced industry and can be affected by changing outside factors, you should review and update your strategic plan on a more frequent basis. For example, if your business operates within the ever-evolving tech industry, you will probably want to check on your strategic plan after each quarter.
At the very least, you should review your strategic plan every year. When you review your strategic plan, you’re looking at the assumptions made and checking to see where your business stands in relation to those assumptions. What you thought would be challenges and threats to your business a year ago may not be the same now.
Don’t be afraid to change any part of the strategic plan. In fact, only 77% of small business owners are somewhat or very confident in their ability to execute their strategy but 95% still fall short of meeting all their goals. Updating your plan can help you stay on track with your goals. And if outside factors are having a bigger impact on your business than you initially thought, you may have to change your objectives or goals.
The regular review is a good opportunity to check back in with your employees. Your employees helped you create the business’s strategic plan and they’re as invested in the success of it as you are. Give them a summary of where the business currently stands. Talk with them to see if things have improved or if they still have concerns with the business—or if any of their initial concerns have changed.
After you review the strategic plan, share any changes with your team. Even if you didn’t make any changes, it’s a good opportunity to give the rest of your company your thoughts on the business’s status and confirm that things are on the right track. You also can encourage your employees to continue working hard to achieve the goals and objectives in the strategic plan.
Focusing on the long-term strategy of your business is also essential. Long-term strategic planning is as important as having a business plan and can lead to the success of your business. You and your employees will understand the current status of the company, productivity will increase as everyone works toward achieving the business goals, and you’ll put yourself in a better position to address any potential issues that may come up in the future.
Next Steps: You’re busy. We get it. So why not let us do some work for you? By signing up for the weekly Small Biz Ahead Newsletter , you’ll receive hand-picked articles, How-Tos and videos covering the latest in small biz tools and trends. We’ll do the research while you spend your time where it counts: managing and growing your business.
This was helpful and have grown to work better as a manager.
That’s great to hear, Samuel! Thanks for commenting!
I gained great knowledge. Thanks for teaching us about strategic planning and its benefit.
You’re welcome! We’re glad you found the article helpful.
I really needed this.
We’re glad the article was helpful!
Hi, the article is well written and worth reading. Thank you for sharing the valuable information. Please keep sharing more.
We’re glad you liked it, John! You can read more about Strategic Planning in the articles below:
https://sba.thehartford.com/business-management/strategic-planning-process/ https://sba.thehartford.com/business-management/key-components-of-strategic-plan/ https://sba.thehartford.com/business-management/develop-a-strategic-plan/
Very innovative and thought provoking…..interesting read….
Thanks for commenting, Reena! We’re glad you found the article interesting.
Thoroughly enjoyed this…
That’s great to hear, Melanie! You can also check out our other strategic planning articles, here:
Loved it all
That’s great to hear, Jean!
I really enjoyed this notice. Be blessed.
We’re glad you enjoyed it!
I’m very much interested in your support with the information. Thank you very much as it will help me develop my organization.
Thank you for reaching out, John! You can learn more about strategic planning with these articles from SBA: https://sba.thehartford.com/business-management/strategic-planning-process/ https://sba.thehartford.com/business-management/develop-a-strategic-plan/ https://sba.thehartford.com/business-management/why-is-strategic-planning-necessary/
Thanks for commenting!
Very good notes. Easy to understand.
That’s great to hear, Samuel! Check out our other strategic planning articles to learn more:
lnterested in learning more about this subject.
That’s great to hear, Linnet! You can learn more by checking out these other SBA articles on strategic planning:
https://sba.thehartford.com/business-management/strategic-planning-process/ https://sba.thehartford.com/business-management/why-is-strategic-planning-necessary/ https://sba.thehartford.com/business-management/develop-a-strategic-plan/
Good write up, very informative.
Thank you! We’re glad you enjoyed it.
Really liking this website!
That’s great to hear, Lise!
I really enjoyed reading the article about the strategy planning. There are many things I was not aware before.
We’re so glad you enjoyed it! Thank you for the nice comment!
Good stuff. Straight forward.
We’re glad you liked it!
Great article. keep it up.
Will do, thank you for the nice comment and for reading SBA!
Insightful.
Thank you, Stella!
Fantastic article!! Done with clarity. But my question has always been, at what point does the goals and objectives come in the strategic Planning process? Do we establish the goals and objectives after defining the Mission and Vision statements or do we develop goals and objectives after the analytic tool is utilized (SWOT, PEST,)? etc
Thanks for reaching out! This can depend on the business owner. While some business owners may have initial goals and objectives early on, it can also make sense to this after doing the analysis (SWOT, PEST). The information from these analyses can help create meaningful goals and objectives. The idea behind goals and objectives (both short- and long-term) is that they’re supposed to support/ladder up to the mission and vision statements.
Good article and very interesting.
Thanks for the comment! We’re happy to hear you found it interesting.
Thank you, this is a great article!
You’re welcome, Muhammad!
It was a great. Very helpful.
We’re glad you found it helpful! Thank you for the comment!
Great article. I really enjoyed reading it.
We’re glad you enjoyed reading it! Thanks for leaving a comment, Samana!
I need your coaching.
Thanks for reaching out! Check out this SBA article: https://sba.thehartford.com/business-management/small-biz-owner/build-stronger-mindset/
Under #8 in the article, you can sign up for a free 1-hour consultation!
Excellent piece of information on strategic planning!
We’re so glad you liked it! Thanks!
I appreciate this greatly. It’s helpful for small businesses especially for new initiatives and those at the mature business stage. Thank you!
We’re glad you liked it. Thank you for commenting, Adolf!
It is better to make some terms like vision, goal and mission clear.
Appreciated article.
We’re glad you liked it. Thanks for commenting!
Very informative! It helps me a lot as a student. Thank you 😊
You’re welcome, Joice! We’re always happy to help and glad to hear you find our articles informative.
I enjoyed reading the article. Thank you for providing the overview about the topic. Examples and links are very useful too.
That’s great to hear! Thank you!
Any discussion on Strategic Planning is good discussion – it is such a critical element of any organisation that aspires to be good and dares to be great.
Great point, Steve!
A very interesting article.
We’re glad you liked it! Thanks for commenting!
Informative article! You have made strategic planning so easy to understand. But how do i reference this article in an academic paper?
One way to cite this article in an academic paper is like this:
Vo, Eric. “What Is Strategic Planning.” Small Biz Ahead Blog , 2 Sept. 2020, sba.thehartford.com/business-management/what-is-strategic-planning/
I fully agree with you. The article is useful, but mostly for beginners and students. But it is informative and I liked it as well.
Thank you for sharing this very informative article. It will definitely guide me in conducting our own Strategic Planning at our office.
Thanks for the comment. We’re glad the article could help!
I definitely enjoyed every little bit of it. It is a great website and nice share. I want to thank you. Good job! You guys do a great blog and have some great content. Keep up the good work. SEO canada
That’s great to hear! Thanks for the comment!
This is helpful. Thank you.
Thanks for the comment, Patricia!
Really helpful… thanks alot.
Glad you enjoyed the article!
What is the difference between Policy development & Strategic planning?
Companies first come up with strategic plan to establish their long term goals and objectives along with general actions to be taken to support those goals and objectives. You then establish policies to ensure that your team is staying within those actions. For example, your strategic plan may say you want to increase revenues 20 percent next year in the aerospace market. Your actions will include marketing campaigns and outreach events. Your policies will then ensure that your team are not undertaking actions that are not included in these campaigns and events.
Thanks for your educative explanation on the preparation of strategic business plan.
Thank you for this article. It helped me to understand the strategic planning process, which is something I am studying and this was straightforward and to the point.
Thank you Emily!
This article is a good basic overview. Something that must be emphasized is translating the strategic plan into specific actions with measurable outcomes. If you go into work on Monday after completing your plan and do your work the way you did before the plan, then the plan has already failed. I see this frequently in the businesses with which I work. Another key is to clearly tie individual staff roles and performance expectations and goals to the strategic goals. When effectively done, you begin to harness the very real power of employees’ intimate knowledge of their work and how to do it better.
Thanks for sharing. This is very helpful to business owners and managers. As it is said, the strategic plan need to be flexible, same applies to getting knowledge of strategic plan as business environments keep changing.
Glad to hear this was helpful. Thanks for reading!
Thanks for so much for the this exciting read. I can’t wait to start doing the stuff with my team
Strategic planning is important to an organization because it provides a sense of direction and outlines measurable goals. Strategic planning is a tool that is useful for guiding day-to-day decisions and also for evaluating progress and changing approaches when moving forward. Found an another website Evolvetraining.ac.nz it has lots of valuable information for everyone
Thanks for sharing such an informative blog.
I really enjoyed reading the article.it motivates and gives direction in the business Thanks
I thank you for this platform because it is updating my knowledge on Strategic Planning
I really enjoyed reading the article. It was written in simple language and in a manner that helped me identify key points under each subtitle. I am going to use this as a guide to some strategic plans am working on, thanks.
This teaching is educative.
That’s good to hear. Glad you liked it!
This is a good and educative article. It’s very informative. Thanks.
I actually appreciate this piece. The writing is incredibly beneficial. my start up manufacturering business seems to be in better position with articles like this! My gratitude to the masterminds behind this program, Cheers.
Your article is helpful if you have employees, but how does this work if you have sub-contractors? Do you get them involved?
Now i have an insight of what strategic planning is. So what can be the sub-topics to include when writing an essay?
Great article. Thanks for the detailed information. Your blog is by far the best source I’ve found. Thanks!
Thank you, Victoria!
This is a comprehensive Strategic Planning manual.
Very interesting and valuable document. Enjoyed reading the participatory role of employees. Thanks a lot.
Thank you for the comment, Gemechu.
Love this article!! Thanks.
We are so glad you enjoyed this article! Thank you for the comment, Vanessa!
I send it to Beby.
Interesting read.
Thank you Bert!
Very practical article- thankyou very much
Thank you for reading!
Howdy! Great article on strategic planning for small businesses. I agree with the statistic you quote from Constant Contact. In my work, I find that most business owners can only think and plan about a year out. There are a couple of contributing factors to that ‘limited’ sight. For many business owners, this is the first time they have ever been where they are. They are suffering from ‘not knowing what they do not know.’ They are smart enough to recognize it, but they are cautious about the outlook because of it. The second is the rate of change in the economy, which only speeds up each year; it is just that very few businesses have the tools and expertise to keep pace with the change. Both factors lead to a general hesitation to look out too far or to dream too big.
I love the fact that you see that strategic planning needs to flexible and inclusive. It’s crucial to have a framework but to be flexible to incorporate learnings and shifts along the way. When you involve all the people who work in and on your business, there is more engagement, better ideas and a higher rate of success.
Great insights. Thank you, Leslie!
Thanks a lot for this wonderful article, Eric. You have resolved my problem of trying to know what strategic planning really is. I look forward to more up building articles. Thank you!
Thank you for the comment, Melvin!
Hi Christyne,
Your question about involving subcontractors is an interesting one. To me, a plan should involve as many of those that are strategic to your business and getting as much feedback as possible – as long at it’s relevant – should be the goal. So if you have a few good contractors (like my company does) that you think could contribute some value to the formation of your plan I say go for it.
Your article is helpful if you have employees, but how does this work if you have sub-contractors. Do you get them involved.
Hi Cristyne- please see the response below from Gene Marks.
Great job. This was very helpful.
Thank you for your feedback, John!
You have the BEST newsletter! This article was another great one. I shared it on all my social media platforms. I offer strategic planning services and this article is helpful in promoting my services. As well, most people think a strategic plan is ONLY for nonprofits. Thank you!
Hi Leslie, thanks so much for sharing!
Great summary “how-to” article for busy business owners. I often encourage our clients to start simple and achieve! This road map is an excellent way to jump in to real-life strategy setting!
Thank you, Patti!
This is an explicit, yet simple, post on strategic planning.
Thanks deeply for sharing this!
You’re welcome! We’re so glad you liked it and found it informative.
Great article, thanks for spelling this out in such easy-to-read terms.
Thanks for your feedback, Wende!
It’s a great eye opener into strategic planning process. Thank you for the great efforts.
Glad you liked the article! Thanks for the comment!
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Strategic planning
Growing a business means taking many decisions about the way you want to expand your operations. Creating a strategic plan is a key component of planning for growth. It will help you prepare a realistic vision for the future of your business and in doing so can maximise your business' potential for growth.
A strategic plan should not be confused with a business plan. A business plan is about setting short- or mid-term goals and defining the steps necessary to achieve them. A strategic plan is typically focused on a business' mid- to long-term goals and explains the basic strategies for achieving them.
This guide sets out the basics of the strategic planning process. It explains how to go about drawing up a strategic plan, it highlights some important issues to bear in mind and it shows how to turn from planning to implementation.
The purpose of strategic planning
The three key elements of strategic planning, getting started with strategic planning, build your plan on solid strategic analysis, what a written strategic plan should include, some important strategic planning issues to consider, implementing a strategic plan.
The purpose of strategic planning is to set your overall goals for your business and to develop a plan to achieve them. It involves stepping back from your day-to-day operations and asking where your business is headed and what its priorities should be.
Why strategic planning matters more to growing businesses
Taking the decision actively to grow a business means embracing the risks that come with growth. Spending time on identifying exactly where you want to take your business - and how you will get there - should help you reduce and manage those risks.
As your business becomes larger and more complex, so strategy formulation will need to become more sophisticated, both to sustain growth and to help you muster the leadership and resources you need to keep your business developing.
To do this, you will also need to start collecting and analysing a wider range of information about your business - both about how it operates internally and about how conditions are developing in your current and potential markets.
The difference between strategic planning and writing a business plan
The process of strategic planning is about determining the direction in which you want to take your business. It involves setting out your overall goals for your business. By contrast, the purpose of the business plan is to provide the detailed roadmap that will take you in your desired direction.
Your strategic planning and your business planning should be complementary, but effective strategy development requires you to shift your focus from the day-to-day concerns of your business and to consider your broader and longer-term options.
Developing a strategy for business growth requires you to deepen your understanding of the way your business works and its position relative to other businesses in your markets. As a starting point, you need to ask yourself the following three questions:
- Where is your business now? This involves understanding as much about your business as possible, 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 be 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 periodically.
- Where do you want to take it? Here you need to set out your top-level objectives. Work out 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 your source of competitive advantage over your rivals in the marketplace? This step should be the foundation for the final plan and motivate change.
- What do you need to do to get there? What changes will you need to make in order 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.
While the second question - Where do you want to take it? - is at the heart of the strategic planning process, it can only be considered usefully in the context of the other two.
You should balance your vision for the business against the practical realities of your current position and changes, such as increased investment in capital and other resources that would be required to implement your vision. A strategic plan needs to be realistically achievable.
As with any business activity, the strategic planning process itself needs to be carefully managed. Responsibilities and resources need to be assigned to the right people and you need to keep on top of the process.
Who to involve
Try to find people who show the kind of analytical skills that successful strategic planning depends upon. Try to find a mix of creative thinkers and those with a solid grasp of operational detail.
A good rule of thumb is that you shouldn't try to do it all yourself. Take on board the opinions of other staff - key employees, accountants, department heads, board members - and those of external stakeholders, including customers, clients, advisors and consultants.
How to structure the process
There is no right or wrong way to plan the process of strategic planning, but be clear in advance about how you intend to proceed. Everyone involved should know what is expected of them and when.
For example, you may decide to hold a series of weekly meetings with a strategy team before delegating the drafting of a strategy document to one of its members. Or you might decide to block off a day or two for strategy brainstorming sessions - part of which might involve seeking contributions from a broader range of employees and even key customers.
Getting the planning document right
The priority with strategic planning is to get the process right. But don't neglect the outcome - it's also important to make sure you capture the results in a strategic planning document that communicates clearly to everyone in your business what your top-level objectives are. Such a document should:
- reflect the consensus of those involved in drafting it
- be supported by key decision-makers, notably owners and investors
- be acceptable to other stakeholders, such as your employees
Strategic planning is about positioning your business as effectively as possible in the marketplace. So you need to make sure that you conduct as thorough as possible an analysis of both your business and your market.
There is a range of strategic models that you can use to help you structure your analysis here. These models provide a simplified and abstract picture of the business environment. SWOT (strengths, weaknesses, opportunities and threats) analysis is probably the best-known model and is used by both smaller and bigger businesses in the for-profit and not-for-profit sectors alike. STEEPLE (social, technological, economic, environmental, political, legal, ethical) and Five Forces analysis are two other widely used models.
A SWOT analysis involves identifying an objective of a business or project and then identifying the internal and external factors that are favourable and unfavourable to achieving that goal.
These factors are considered using four elements:
- s trengths - attributes of the business that can help in achieving the objective
- w eaknesses - attributes of the business that could be obstacles to achieving the objective
- o pportunities - external factors that could be helpful to achieving the objective
- t hreats - external factors that could be obstacles to achieving the objective
There are other models you can use to assess your strategic position. STEEPLE analysis, for example breaks the business environment down into the following components:
s ocial –e.g. demographic trends or changing lifestyle patterns
t echnological – e.g. the emergence of competing technologies, or productivity-improving equipment for your business
e conomic – e.g. interest rates, inflation and changes in consumer demand
e nvironmental – e.g. changing expectations of customers, regulators and employees on sustainable development
p olitical – e.g. changes to taxation, trading relationships or grant support for businesses
l egal – e.g. changes to employment law, or to the way your sector is regulated
e thical – e.g. ethical and moral standards governing policies and practices
STEEPLE analysis is often used alongside SWOT analysis to help identify opportunities and threats.
Five Forces
The Five Forces model aims to help businesses understand the drivers of competition in their markets. It identifies five key determinants of how operating in a given market is likely to be for a business:
- customers' bargaining power - the higher it is (perhaps because there is a small number of major buyers for your product or service) the more downward pressure on prices and thus revenue they will be able to exert
- suppliers' bargaining power - the ability of suppliers to push prices up (for instance if you rely on a single firm) can impact significantly on costs and profitability
- the threat of new competitors entering your market or industry - more businesses competing makes it more difficult to retain market share and maintain price levels
- the threat of customers switching to substitute products and services - an example would be the threat to fax machine manufacturers posed by the wide availability of email
- the level of competition between businesses in the market - this depends on a wide range of factors, including the number and relative strength of the businesses and the cost to customers of switching between them.
There is no set blueprint for how to structure a strategic plan, but it is good practice to include the following elements:
- Analysis of internal drivers - corresponding, for example, to the strengths and weaknesses of a SWOT (strengths, weaknesses, opportunities and threats) analysis.
- 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 elements of a SWOT analysis.
- Vision statement - a concise summary of where you see your business in five to ten years' time.
- Top-level objectives - these are the major goals that need to be achieved in order for your vision for the business to be realised. These might include attracting a new type of customer, developing new products and services, 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.
- Resourcing - a summary of the implications your proposed strategy will have for the resources your business needs. This will reflect financing requirements, as well as factors such as staffing levels, premises and equipment.
You may also want to consider adding an executive summary . This can be useful for prospective investors and other key external stakeholders.
Growing a business can pose some considerable personal challenges to the owner or manager, whose role can change dramatically as the business grows.
Effective strategic planning involves considering options that challenge the way that business has been done up to this point. It may be that decision-making in some areas will be handed to others, or that processes which have worked well in the past will no longer fit with future plans.
It can be tempting for owners or managers to overlook alternatives that are uncomfortable for them personally, but to disregard your options on these grounds can seriously compromise your strategic plan and ultimately the growth of your business.
Examples of the kind of issues that tend to get overlooked by growing businesses include:
- The future role of the owner - for example, it may be in the best interests of the business for the owner to focus on a smaller number of responsibilities, or to hand over all day-to-day control to someone with greater experience.
- The location of the business - most small businesses are located close to where the owner lives. But as a business grows it may make sense to relocate the business -for example, to be closer to greater numbers of customers or employees with certain skills.
- Ownership structure - growing businesses in particular should ensure that they get this right. The more a business grows, the more sophisticated it needs to be about meeting its financing needs. In many cases, the best option is for the owner to give up a share of the business in return for equity finance - but this can be emotionally difficult to do.
In the final analysis, it is the owner of the business who decides the strategic plan. Growing a business is not something done "at all costs". However, an honest assessment of the options allows for any decisions made to be as informed as possible.
The plan needs to be implemented and this implementation process requires planning.
The key to implementation of the objectives identified in the strategic plan is to assign goals and responsibilities with budgets and deadlines to responsible owners - key employees or department heads, for example.
Monitoring the progress of the implementation plan and reviewing the strategic plan against implementation 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.
Monitoring implementation is the key. Using key performance indicators (KPIs) and setting targets and deadlines is a good way of controlling the process of introducing strategic change.
Your business plan is another important tool in the implementation process. The business plan is typically a short-term and more concrete document than the strategic plan and it tends to focus more closely on operational considerations such as sales and cash flow trends. If you can ensure that your strategic plan informs your business plan, you'll go a long way to ensuring its implementation.
Remember that strategic planning can involve making both organisational and cultural changes to the way your business operates.
Original document, Strategic planning , © Crown copyright 2009 Source: Business Link UK (now GOV.UK/Business ) Adapted for Québec by Info entrepreneurs
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COMMENTS
Strategic planning is the art of creating specific business strategies, implementing them, and evaluating the results of executing the plan
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.
Strategic plans become the budget's descriptive front end, often projecting five years of financials in order to appear “strategic.” But management typically
The widely accepted theory of corporate strategic planning is simple: using a time horizon of several years, top management reassesses its current strategy
What to include in a strategic plan · The company's mission statement · The organizational goals of the plan · A vision statement · A roadmap with time frames for
A strategic plan is a document used to communicate with the organization the organizations goals, the actions needed to achieve those goals and
A strategic plan offers a business focus, direction and action to help the business grow from the point it presently resides to a greater market
Strategic planning is the ongoing organizational process of using available knowledge to document a business's intended direction. This process
What is a strategic plan? Strategic planning in management is the process of documenting and establishing the direction of your small business—
A strategic plan should not be confused with a business plan. A business plan is about setting short- or mid-term goals and defining the steps necessary to