Strategic planning best practices are those professional procedures, methods, or techniques that have consistently achieved results superior to other means.
The concept of strategic planning best practices, as with best practice in any field, also usually implies that these professional procedures or methods are generally accepted, or even prescribed, as being correct or most effective by the body of professionals using them.
For example the American College of Physicians (ACP), has developed three different types of clinical recommendations:
ACP's goal is to -
With regard to best practices in strategic planning there is less than widespread agreement.
However some pioneering efforts are beginning to bear fruit.
The USA based Association for Strategic Planning (ASP) has documented a Body of Knowledge (BOK), and as part of its certification program has established guidelines for best practice in strategic planning.
Likewise the UK based Strategic Planning Society (SPS), and the more recently established Strategic Management Forum, both also seek to promote best practices. For example the SPS makes awards and other supports for planning best practices such as its Strategic Value in Corporate reporting Awards.
Before looking in more detail at what some of these corporate planning best practices are, let me point out that elsewhere on this site I have argued that there are five fundamental procedures that are the irreducible minimum for an effective strategic planning process. These procedures include -
They can be set out in this simple diagram.
However, a number of other strategic planning practices are needed to fully support this approach to strategic planning. It is this enlarged set of procedures or methods that make up the set of planning best practices that we are looking for.
From the work of the professional bodies mentioned above like ASP and SPS, together with my own experience in using strategic planning in a variety of settings, let me outline some of the best practices I believe to be of most value.
The first of the strategic planning best practices is to use a systematic or formal approach to strategic plan development and execution.
Such an approach, or system, starts with a clear understanding of end in mind. What is the point of doing strategic planning at all and why now? See strategic planning questions for more ideas on what strategic planning is for, and what questions should guide the process.
A systematic approach includes -
For examples of some of the clarity needed see definition of strategic planning.
In the broadest sense, this overall system of planning best practices needs to encourage -
To enhance valued behaviours, clear, inclusive and transparent communication with all relevant parties is essential.
Although the process diagram above is a simple arrow, in practice feedback loops will be integral to promote continuous improvement and learning.
Strategic planning best practices, in common with other management practices like quality systems, will incorporate a continuing process of review to rejuvenate the system of strategy development and execution.
Such a formal discipline of strategic planning can set the example for the sort of strategic planning best practices required throughout the enterprise.
A basic principle of any best practice approach to strategic planning is the building of a solid consensus among the top and preferably middle management teams. This is required not only to ensure that a wide range of ideas and information informs the strategic decision-making. It is also to encourage strong commitment among these senior people to the translation of the strategies into action plans, and to provide requisite support to all members of the organization in the execution of those strategies.
So essential is this participative approach to achieving best practices in strategic planning for most contemporary organizations, that it virtually rules out the preparation of plans by anyone other than the top executives themselves.
The team must include the chief executive without whom the most important strategic issues may not be identified, and will certainly not be addressed. Since addressing these elephant sized issues is the primary object of the corporate strategic planning activity, leaving out the chief executive could kill the project. If the chief executive is not willing or able to lead the team it is a waste of everyone’s time even to start.
Another of the strategic planning best practices is to build in change management and leadership training, education, and development to effectively focus the organization on achieving improved long-term performance at lower levels of risk. A well conducted strategic planning process is in itself a worthwhile management development activity.
In terms of engaging people, strategic planning best practices should also emphasize separation from, and integration with, ongoing management accountabilities. This involves making special provision for setting aside time for deliberation on strategic issues, and formulating strategies to address them. Studies have shown that many organizations do not so this, and find themselves frequently fighting organizational fires as a result.
Best practice organizations avoid the conventional conceptual muddle associated with setting corporate objectives in the form of missions, visions and values statements.
The overall governing corporate objective, that I prefer to call the corporate purpose, states for whom the organization is supposed to be working, what benefit it is intended to provide for them, and how much of that benefit is satisfactory to them. It is especially challenging to get this definition right in the case of non-profit-making organizations.
Failure to identify who and what these beneficiaries are renders the organization vulnerable. The organization can be high-jacked to suit the agendas of all kinds of other interests than those of the intended beneficiaries. The corporate strategic planning process will fail to address the key issues, if the corporate objectives have not been correctly identified.
Strategic planning best practices include the requirement that the corporate objectives must be strategy-neutral.
See also strategic planning cycle for the importance of separating corporate objectives from strategic decisions.
The objectives should be something that the beneficiaries, and the managers, find appealing and of which society does not disapprove.
Strategic planning best practices also include the requirement that this corporate purpose must have corresponding beneficiary performance indicators (BPI), or at least corporate performance indicators (CPI), to enable corporate performance targets to be set and monitored.
For more information on what these indicators could be see Corporate Objectives.
In terms of strategic planning best practices, I would say that using more than one or two CPIs is a strong indication that the appropriate corporate, or governing, objective has not been chosen, or clearly enough identified. The CPI must reflect the organization’s success or failure as a corporate whole, not the efficiencies of its various parts.
I would also recommend as a strategic planning best practice, the setting of corporate targets at two levels, rather than a single point. A range of targets should be set.
The first target should be set at a minimum level below which the organization would be seen to be failing.
A more satisfactory level above this minimum level should also be set.
The monitoring of corporate results within this envelope of targets gives the management, and governing body, a useful indication of how the organization is tracking. Of the two, the minimum target or Tmin, not Tsat, is the most significant, especially for non-profit-making organizations.
Strategic planning best practices should also cover the process of forecasting performance. Planners should lay the forecasts of projected current performance trends into the future over the same time horizon as the targets set for corporate performance, to highight and measure possible performance gaps in the future.
Just as the targets should be set as bracket, forecasts should also be set as a range, rather than some spurious attempt at a single line ‘crystal ball’ forecast.
Both a pessimistic and an optimistic forecast should be estimated. Failure to do so permits the forecasters to hide any potential bad news in their ‘best guess’ forecasts. The vulnerabilities of the organization to risk may be glossed over, and the plan will be devoid of sufficient attention to risk management.
The errors in long-range forecasts are often the most important part of the forecast. Without acknowledgments of the possible errors, in the form of this range between pessimistic and optimistic, the forecasts are hardly worth doing, because they can be so misleading.
Strategic planning best practices when it comes to strengths, weaknesses, opportunities, and threats analysis (SWOT), should observe the principle of ‘keep it simple’.
Limit the number of major strategic issues to half a dozen each - strengths and weaknesses, threats and opportunities. Otherwise the corporate strategic planning process will become a busybody process of delving into operational planning. The team will attempt to attend to every tiny detail, and thus miss the whole purpose of corporate strategic planning.
Strategic planning best practice requires that the more people involved in these appraisals the better. The knowledge and experience of the participants can combine for better results, while tending to reduce or neutralize the effects of their biases.
Brilliant new ideas may be welcome in many cases, but ideas, however innovative and industry changing, that are irrelevant to the specific organization’s strategic situation are of no value. The planning team should not expect corporate strategies that are exciting and entrepreneurial after every strategic planning cycle. The team should assure the organization of highly satisfactory progress at reduced risk.
One of the frequently neglected strategic planning best practices is evaluating the strategies. The corporate strategic planning team should always check that the proposed strategies stand a very good chance of achieving the satisfactory target performance level. It is however, vital that the strategies are sufficiently robust to withstand errors in forecasting. If the forecasts are wrong, the strategies should prevent the organization’s performance falling to levels that would risk organizational failure.
Strategic planning best practices encourage the establishment of strategic initiatives or developmental projects that focus attention on the most important performance improvements required. Prioritized initiatives, whether projects or programs, are developed consistently as part of strategy implementation; these should be activities, where timing and resource deployment are tracked and reported; risks are identified and managed; and scope creep is minimized.
It is tempting to put most an organization’s eggs into a single grand project basket. This is a temptation that should generally be avoided.
Monitoring strategy execution is not just ‘checking results’. It is asking, more or less continually, whether the top management team still has confidence in the strategies. Will the strategies they have selected actually take the organization to satisfactory improvements in performance, and not drop below the target level of performance designated as failure?
For their confidence to be maintained not only do the organization’s results, and action plans, have to be on target, but there must not be any major unforeseen changes in the strengths and weaknesses, or threats and opportunities, that cause them to lose confidence in the plans.
Of course, it is still essential that the top team be provided with actionable performance information, to better inform decision making as they review implementation.
Planning best practices include settling the information requirements as part of the strategic planning process, and not leaving this till after execution of strategies has commenced. Relevant strategic and operational performance measures and targets, logically derived, are used to monitor progress against targets.
Appropriate outcome, output, process efficiency, project schedule and resource adherence, and input resource measures are the basis for transforming performance data into performance useful information, and performance information into ‘business intelligence’. Performance information is provided in a timely manner throughout the organization to better inform decision-making at all levels, not just at the corporate management team level.
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