A few key strategic planning principles will improve the development and implementation of corporate strategic plans. Below I will outline a few of the planning principles I have found most useful.
The first of the principles of strategic planning is that strategic planning is a managerial accountability inherent to top management roles.
Strategic planning is central to top management stewardship of the organization entrusted to them. Responsibility and accountability for strategic planning is not an optional extra; it is a responsibility that top managers may seek support and assistance with. However, it is not a responsibility to delegate away to ‘planning departments’, even if they are headed up by someone called a Chief Strategy Officer (CSO), who reports directly to the Chief Executive Officer (CEO)
Nor should the CEO pass the responsibility away to a ‘strategy consultant’. No matter how prestigious or how high their fees the strategy consultant is not accountable to the governing body for the strategic plan of the organization. This does not rule out using external assistance for aspects of the strategic planning process. In many situations, it is very helpful to have an independent person facilitating the process. However, the ownership of the plan content, which means the decisions and commitments to action, belongs to the CEO and other managers.
The second of the planning principles relates to the scope and level of the organization for strategic planning. When I refer to strategic planning in this context, it means corporate strategic planning. This planning principle asserts that corporate strategic planning is concerned primarily with the performance of the organization as a corporate whole, and not with planning for functions or parts of the organization.
It follows from the first of the principles of strategic planning that, if it is an accountability of the corporate managers, then it is essentially ‘corporate planning’. ‘Corporate planning’ is an alternative, less frequently used name for strategic planning.
However, I believe it is the planning for improving the long run performance of the organization as a whole that is the essence of this second of the strategic planning principles, and not the naming of the process that is our concern.
For a fuller explanation of what we mean by corporate strategic planning go to - What is strategic planning?
Because strategic planning is planning for the long run risk adjusted performance of the organization as a whole, strategic planning requires performance metrics that track the progress of the organization as a corporate whole.
Another of our key planning principles, which follows on from this, is the secret to unlocking appropriate overall organizational performance metric. This principle is to define the purpose of the organization in terms of delivering a clearly defined benefit to a level satisfactory to the intended beneficiaries of the organization. This is the way to define the fundamental purpose of the organization.
This is the third of our strategic planning principles. This is part of the larger and crucially important subject of corporate objectives.
In light of the two previous planning principles regarding corporate performance measurement and clarifying organizational purpose, we can say that corporate strategic planning involves deciding on strategies that have a high probability of achieving satisfactory performance at a very low risk of organizational failure.
Therefore, we see risk management as inherent in the strategy making process.
Corporate strategic planning almost always requires that top managers make hard choices from among many apparently desirable options. The desirable opportunities available to many organizations appear almost without limit, and they seem to present themselves very frequently. Therefore, it is vital that the strategic planning results in decisions that are so robust, and solidly committed to by the organization’s leadership, that they are confident to make a range of other choices. These other choices may be the making of hard decisions about what not to do as well as what to do. We regard this as another of our planning principles. Strategic decisions should make it clear what the organization is rejecting, as well as to what it is committing.
This is not to rule out all opportunities that arise outside the scope of its current strategic plan.
“…chance favors only the prepared mind.” –Louis Pasteur.
Planning is partly about being ready to take advantage of real opportunities. Opportunity, by its nature is something that may be better than our current intentions. However, without sound plans, resulting from a thorough planning process, we would find it hard to recognize, evaluate, and judge whether to take the opportunity seriously. This is why a systematic evidence-based SWOT analysis is so important in the strategic planning process.
This suggests another piece of advice to include among our strategic planning principles.
The strategic planning process should be formal enough to enable the tracing of the decisions to their information and evidence base.
This information also provides a reference point against which to monitor the execution of the plan over time.
I would like to say the following is among the principles of strategic planning. Keep it simple. However, I think it would be preferable to say, although less easy to use a strategic planning principle like ‘keep it requisite’. While urging the use of solid evidence to clarify strategic issues, we need also to avoid analysis paralysis. In addition, we need to avoid reducing the analysis to a simple sharing of current fashions in strategy.
A useful rule of thumb, rather than a full member of our set of strategic planning principles, is to limit the strengths, weaknesses, opportunities, and threats in the strategic analysis to no more than six in each, or a maximum of twenty-four. Limiting the number of elephant sized strategic issues to half a dozen each cell of the SWOT analysis chart will reduce the possibility of the corporate strategic planning exercise will becoming an operational planning exercise, in which the team will attempt to attend to every tiny detail and thus miss the whole purpose of the strategic planning process.
The final of this set of strategic planning principles has to do with participation in the process; open up the process to at least the first three layers of management in the organization, and be open to viewpoints and information from wherever it may be useful. Although the first of our strategic planning principles indicated that responsibility for strategic planning lay with the top managers of the organization, this does not mean that only they do the planning. For example, the more people involved in these SWOT appraisals the better. The knowledge and experience of the participants contributes a richer picture of the required strategic requirements, and their biases tend to cancel each other out.
For a contrasting, and yet comlimentary look at principles for strategic planning, see this sumamry of the Disney way of planning.
Go to Strategic Planning Process for more information on conducting the strategic planning process.
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