What determines the importance of strategic planning is the small number and the long term, organisation-wide impact of the decisions in the strategic plan. The corporate strategic planning sits above and informs all other plans in the organization.
The strategic plan is the master of other plans.
“Failing to plan is planning to fail”. This often-heard quote from Alan Lakein, the popular author on time management, is a reminder that many of the day-to-day operational struggles we face in organizational life had their seeds sown in the past, when we failed to think ahea . . .d.
True, you cannot predict the future. No manager has a crystal ball in his or her brief case. Every day has its own “we couldn’t see it coming”. Nevertheless, many severe day-to-day operating problems have, as their origin, a failure from months or years earlier- a failure in strategic planning. Simply, absence of strategic planning, or poor strategic plans, usually lead to tactical “days you’d rather forget” of operating nightmares, some of which can last months.
The importance of strategic planning in reducing these "days you would rather forget" cannot be overemphasized. My definition of strategic planning is “A systematic, formally documented process for deciding the handful of key decisions that an organisation, viewed as a corporate whole, must get right in order to thrive over the next few years.“
Note that in this definition it speaks of the strategic plan being for the organization ‘viewed as a corporate whole’. The kind of strategic planning we are talking about used to be called ‘corporate planning’. In a sense this makes the importance of strategic planning blindingly obvious. Get it right and the whole organization is impacted, and strengthened towards better long term performance, get it wrong and ... !
Strategic planning can provide an overall strategic direction to the management of the organization and gives a specific direction to areas like financial strategy, marketing strategy, organizational development strategy and human resources strategy, to achieve success. These other kinds of planning, some of which are confused with strategic planning are intended for parts of the organization, or specific functions or processes within the organization. All of these other types of planning should be guided and informed by the strategic plan.
To repeat strategic planning involves planning for an organization as a whole - as a corporate whole. So corporate strategic planning is not product planning, production planning, cash flow planning, workforce planning or any of the many of other sorts of planning conducted in today's organizations. All these are designed to plan parts or sections or departments of organizations. Most companies, even quite small ones, already employ product development managers, marketing directors, production planners and finance controllers to look after the planning of these various parts, and when you do strategic planning you certainly do not want to do all these again under a fancy new name.
As soon as a strategic plan starts to spell out detailed production plans, workforce plans, finance plans, and so on, it is going to overreach and become a initiative-sapping set of edicts from Head Office. The importance of strategic planning comes not from the degree of control or supervision, and the level of detailed instruction it includes, but for the scale, time horizon, and importance of the decisions it embodies.
Strategic planning is corporate. You can only have a strategic plan for an autonomous or quasi-autonomous organization; you should not have one for any section, part or fragment of an organization unless it is quasi-autonomous, like a profit centre, or a wholly owned subsidiary.
However, an indirect tribute to the importance of strategic planning is made by the common appropriation of the term ‘strategic’ to describe all manner of other partial plans.
Some planners seem to think that strategic planning means planning the whole organization and so they produce vast schedules showing what is going to happen to every tiny corner of the organization for years ahead in meticulous detail. It is possible to plan ahead in great detail for short periods of time; it is also possible to plan ahead for very long periods, although only in outline. To try to plan in meticulous detail over long periods, however, is quite misguided.
Some people may become suspicious that the ‘strategic planners’ who do this are only trying to cultivate a greater mystique around the practice of strategic planning. They seem to be saying that you need to be very brilliant to do strategic planning. This is to confuse the importance of strategic planning with the self importance of those who se themselves as 'strategic planners'. Top executives in companies with strategic planning departments get frustrated by 'planners' in their ivory towers, striving for an unattainable perfection in the messy reality of an uncertain world.
The importance of strategic planning is that it is planning for the corporate whole, not for its parts. It is not business planning, although it should inform and shape the business plan, it is not production planning, although it should guide what is produced, it is not workforce or technology planning or any other type of partial planning, and it definitely is not marketing, even though it guides who to market to and where to market. It is not coordinating, forecasting or budgeting. It is a process designed to yield a corporate strategic plan - a statement of strategies designed to affect the long term performance of the organization as a corporate whole.
The purpose of the corporate planning process described elsewhere on this site is to reach an enthusiastic consensus among the top executives in an organization as to the handful of decisions they have to take in order to place their organization in a strong position to face the long-term future.
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