Strategic planning can help you to improve the performance of your enterprise for the next several years.
Systematic strategic thinking helps you to find, and decide what to do about, the handful of really big issues facing your business or any other organization. It is the size and impact of these strategic issues that gives rise to the importance of the strategic plan.
Strategic planning is one of the most valuable management practices in the manager’s tool kit.
Few formal management practices have been proven by hard won experience, and confirmed by research, to enable organisations to improve their performance, and a logical formal strategic planning process is one of them.
Organizational performance is about creating value for the primary beneficiaries of the organization. Strategic thinking and planning can help you to keep the focus of your team on this value creation, and not on management tools or practices for their own sake.
We have found from long and sometimes painful experience that to effectively plan strategically requires only a handful of essential procedures.
Improve long-term performance of your organization, at dramatically reduced risk, with these five simple planning process elements or procedures.
Make sure that any system of planning that you use, or corporate planning process that you follow, has formal, well documented, clearly communicated, and simple procedures for these five essentials.
Effective strategic planning requires only a handful of procedures.
1. Engage commitment
2. Set long term strategic objectives for improved performance
3. Generate strategic options
4. Evaluate and decide on strategies
5. Monitor plan implementation against the long term objectives.
Let's look at each of these more closely-
1. Engage commitment from those people who will be affected by the plan
This is how you Start and ensure Support for planning, and the implementation of the plan. The people you need to include are primarily the Chief Executive Officer and their immediate reporting managers, and the layer of staff or management at one remove from the Chief Executive Officer (CEO).
In turn the CEO must engage with the governing body, who in turn engage the beneficiary groups they are there to represent. Other stakeholder groups may possibly be affected by the implementation of the strategic corporate plan in the operation of the enterprise. Their interests must be respected. It must be remembered that the processes for engaging people operate in various ways in all the other stages of the planning process.
2. Set long term strategic objectives for improved performance of the organization
These objectives should clearly further the enduring Purpose of the organisation. This means knowing and spelling out for whom the organization exists, and what benefit the organization seeks to provide this group. Every organization, whether private company or nonprofit organization (NPO), should set out to benefit one clearly defined group of beneficiaries, and a single, long term, verifiable, target figure should be set to reflect what it is trying to do for them. If it cannot set such a target, the organization should be reformed until this becomes possible.
The intended beneficiaries must be defined as one homogeneous group; in the case of the business enterprise it is the owners or shareholders.
The benefit offered must also be homogeneous and capable of definition in just a few words. In the business context, the proposed benefit is something like ‘increased wealth’. The benefit must be capable of being targeted and of empirical verification- essentially then, it must be quantifiable.
It must be of perceived significance to the beneficiaries, e.g. the benefit resulting from the point of view of the shareholders is ‘improved prospects for an acceptable mix of capital gains and dividends within a risk profile that is tolerable’.
3. Generate strategic options
Formal strategic planning calls for the Analysis of key strategic factors, shortlisting the really major strategic issues and the generation of Alternative strategies.
First, an attempt should be made to provide comprehensive strategies; that is, the plan should consider all the truly important factors - the strategic elephants.
Secondly the strategies should not exhaust all available resources. Something should be held in reserve. This recognizes uncertainty and adds flexibility to the plan.
Alternative strategies can improve the Adaptability of the organization in two ways.
First, by explicitly examining Alternatives, it is likely that the organization will find Alternatives that are superior to the current approach.
Second, the organization will encounter environmental changes; if Alternative, contingency, plans have been considered for these changes, the organization can respond more effectively.
Processes of finding all the relevant significant strategic factors will be covered on other pages about SWOT analysis, and methods for generating the Alternative strategies will be under Business Strategy, for companies, or nonprofit strategy making for other kinds of organization.
4. Evaluate and Decide on strategies
It is all too easy to go with the bright ideas that emerge from brainstorming strategic alternatives. Effective formal planning uses systematic methods for evaluating the various alternatives. Evaluate to ensure that they do not violate any constraints. Rate the strategic options against the objectives. Ensure that all major strategic issues are addressed.
Then you are in a position to Design a set of strategies, based on a few key Decisions.
With this done you can proceed with some confidence to get approval from the governing body, and convert the strategic intentions into specific work assignments for individual managers, prepare budgets and project plans, and generally prepare to implement the strategic plans.
5. Monitor Execution of the strategies against the long term objectives.
Having planned the work of implementing or Executing the strategic plan, you need a system in place for working the plans as they get implemented. The plan should provide for formal reporting at agreed intervals. To allow for corrective action, the monitoring system should address the same objectives and factors determined as significant through the planning process. Too often there is a disconnect between the plan and how it is managed into reality.
Notice the bold letters beginning some words in the text above?
All of the above essential procedures for strategic planning can be summarized as follows -
Practical Corporate Planning is as useful as a S P A D E
Organizing to plan, engaging affected parties
Sizing up the strategic challenge, setting targets
Strengths, Weaknesses, Opportunities, Threats, and generate options
Devising Strategies from the options looked at
Evaluating and Actioning strategies
Put simply - find and decide what to do about the handful of really big issues facing your business or any other organization. We call these biggest issues ‘strategic elephants'.
The strategic planning process and tools, such as SWOT analysis, offered here will help you - directors, owners, managers - to find the elephants in your organization!
At simply-strategic-planning.com we provide advice on how to prepare and implement practical plans to address the elephant sized strategic issues over the next few years.
These approaches, with their value-based management focus, will ensure that your business or non profit organization (NPO) will have long run superior performance, and your organization will also be at less risk of failure.
Wherever you are in the world, if you are keen to plan, develop, and manage a growing, thriving organization, you’ve come to the right place to learn about strategic planning, and the strategic planning process.