Applied strategic planning

Applied strategic planning is making strategy in a way that improves the chances of sound execution.

Strategic planning out of the ivory tower

Often there can be a loss of momentum towards the end of the strategic planning process. The plans are in effect ‘thrown over the wall’ to the middle management teams to implement. Because these managers have often not been engaged in the planning process, they find it hard to commit to the plans dropped out of the ivory tower, from on high.

This lack of engagement of those responsible for plan implementation violates the first of the five essentials of any applied form of strategic planning.

Essential procedures in strategic planning

Any system of planning should use formal, clearly documented and communicated, simple steps for these five essential components of strategic planning.

  • Engage commitment from those who can provide useful information and insight, and also those who will be held accountable for the implementation of the plan
  • Set long term strategic objectives for improved performance of the organisation
  • Generate strategic options
  • Evaluate options and decide strategies most likely to achieve the objectives
  • Monitor carrying out of the strategies against the long term objectives.

Engagement in practical strategic planning

Pick the right people at the beginning. Engage other appropriate people though other stages of the process. This improves the quality of information and insight brought into the planning process.

In practical strategic planning, this engagement of the affected people through stages of the process also builds the necessary understanding, and commitment required, to execute the strategic decisions.
Include those you need to rely on to manage the carrying out of the strategic decisions.

Applied strategic planning and the visiting expert

An organization can find itself with a strategy that is good in theory, and of little value in practice, through over reliance on external consultants.
Strategic planning is a process that uses available and relevant information on the organization, and its environment. The executives of the entity doing the planning need to own the process. . However, they are more often useful as facilitators of a process owned by the organization’s own managers.

Expert advice on strategic planning

External consultants can help in understanding what is happening across a number of enterprises.

In surveys conducted by Bain and Company over a few years, strategic planning comes out at or near the top of all management tools studied. The performance of organizations does seem to benefit by the use of a formal set of procedures for deciding the top few decisions about the future of the organization. See Importance of Strategic Planning for more on this.

Despite its usefulness, McKinsey & Co. studies in 2006 suggested that less than half of the top executives polled were happy with the strategic planning processes of their own organizations.

Another disturbing finding was that, although three-quarters of these executives indicated that their organizations engaged in strategic planning, less than a quarter of these executives reported that their organizations used the results of the planning process in making important organizational decisions. It appears that in some enterprises planning is more theoretical than practical.

When asked about how things might be improved, the executives argued for improved alignment of the enterprise with its corporate strategy, and the development of better methods for monitoring the results from executing the strategic plan.

Applied strategic planning requires grounding planning discussions in reality

The same McKinsey studies show that only about half of the top managers surveyed believed their strategic plans were evidence-based. In other words, they acknowledged that their strategic plans did not focus on the most important strategic issues facing the organization. Moreover, the plans lacked an agreed understanding of the forces at work in the external environment faced by the organization.

Too many plans are dreaming. Others follow some fashionable trends in strategy. Vague aspiration is no substitute for systematic practical strategic planning.

Communication is vital for formulating practical strategic plans

Finally, these executives raised concerns about how their organizations communicated their strategies to those who had to carry out the plans.

Pie in the sky visions rather than applied strategic planning induces cynicism

The above findings suggest many organizations do not practice applied strategic planning. For many, strategic planning is a low value pursuit.

An applied strategic planning model

One approach, which addresses these concerns, is actually Applied Strategic Planning!

This model of strategic planning by Goodstein, Nolan, and Pfeiffer (GNP Applied Strategic Planning), combines the process of managing strategy execution with strategy making.

The GNP model of Applied Strategic Planning requires that the enterprise formulates a strategic plan, and at the same time engineers a strategic management process, one that ensures that efficient and effective execution.

Here is an outline of steps in the GNP Applied Strategic Planning model.

  • Plan to plan - CEO decision to plan, identifying key internal players, and identifying stakeholders, deciding support arrangements, including whether or not to use external consultants, and setting goals for the process.
  • Review culture - this review covers organizational values, philosophy, and culture; this unearths those things that can help or hinder strategy implementation as well as highlighting constraints and priorities for the content of the strategic plan itself.
  • Define or redefine the mission statement of the organization.
  • Model the enterprise from a strategic standpoint. This includes identification of business lines or major programs, critical success factors, strategic thrusts, as well as relevant supportive cultural factors. This can throw up ideas for new futures and new venture opportunities.
  • Review past performance and audit threats, opportunities, strengths, and weaknesses.
  • Identify critical gaps between where the organization is and where it wants to be in the future.
  • Select strategies to expand or retrench as a means to close performance gaps.
  • Implement the strategies to acquire or divest.
  • Monitor actions, updating conditions, and restarting the cycle.

Return from here to Definition of Strategic Planning.

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