What is strategic planning?
Defining an organization's future vision and determining its goals and objectives are both done through the process of strategic planning. In order for the organization to achieve its stated vision, the process also includes determining the order in which those goals should be accomplished.
Though it can run longer, strategic planning typically entails objectives with a three to five-year life span. This differs from business planning, which usually concentrates on tactical, short-term goals, including how a budget is allocated. A business plan may cover a period of time that is many months or even several years long.
Why is strategic planning important?
Organizational goals and direction are essential for businesses. That kind of advice is provided by strategic planning. A strategic strategy is essentially a road map for achieving corporate objectives. Without such direction, it is impossible to determine if a company is on course to meet its objectives.
The following four elements of developing a plan merit consideration:
- A mission provides a corporation with a feeling of purpose and direction and serves as the foundation for strategic planning. The mission statement of the organization outlines who it is, what it does, and where it intends to go. Usually, missions are wide but doable. For instance, a company in the education sector can want to be a pioneer in virtual instructional tools and services offered online.
- The goals Setting goals is a part of strategic planning. The majority of planning employs SMART goals, or other objectively measurable targets, which are "specific, measurable, achievable, realistic, and time-bound." Measurable goals are crucial because they allow company leaders to assess how successfully their organization is carrying out both its general mission and its goals. The fictional educational company might establish goals like boosting sales of an existing tool by 30% over the following year or producing the first edition of a virtual classroom platform in two years.
- Alignment with short-term goals. compliance with short-term objectives. Corporate executives can make daily decisions that are more closely aligned with business strategy with the aid of strategic planning, which is directly related to short-term, tactical business planning. Leaders in the hypothetical educational company might decide to forego opportunities to construct physical classroom facilities in favour of strategic investments in communication and collaboration technology, such as virtual classroom software and services.
- Evaluation and revision. Revision and assessment Business executives can make changes or adjustments in response to shifting situations by frequently evaluating their success against the plan thanks to strategic planning. For instance, a company may aim for a global presence, yet legal and regulatory limitations may appear that limit its capacity to operate in particular geographical areas. As a result, business management may need to update the strategic plan to shift goals or clarify.
What are the steps in the strategic planning process?
Depending on the sort of business and the level of granularity necessary, there are a plethora of different approaches to strategic planning. These five steps can be used to outline most strategic planning cycles:
- Identify. Determining a company's current strategic position is the first step in a strategic planning cycle. Here, stakeholders evaluate the company and its surroundings using the current strategic plan, which includes the mission statement and long-term strategic goals. To understand the state of the firm and the future course, these evaluations may comprise a requirements analysis or a SWOT (strengths, weaknesses, opportunities, and threats) study.
- Prioritize. The next step is for strategic planners to define goals and initiatives that are consistent with the organization's mission and goals and will help the company progress in that direction. Planning establishes priorities for the most significant, pertinent, and urgent goals out of many possible ones. Goals frequently include a timeline, business measurements, or KPIs, for tracking success, and they may take into account the resources needed, such as money and equipment.
- Develop. This is the core goal of strategic planning, in which several parties work together to develop the actions or strategies required to realize a certain strategic aim. This could entail developing multiple tactical business plans for the short term that are aligned with the overall strategy. The plan is visualized and modified by stakeholders who are involved in its development using a variety of tools, including a strategy map. Cost and opportunity tradeoffs that represent corporate priorities may be necessary while creating the plan. If a project doesn't support the long-term plan, developers could reject it.
- Implement. It's time to put the strategic plan into action once it has been created. For this, there needs to be open communication within the business in order to develop roles, make investments, modify procedures and rules, and set up measurement and reporting. Strategic management and ongoing strategic assessments are often part of implementation to make sure that plans are carried out as intended.
- Update. Every so often, a strategic plan is reviewed and updated to reflect shifting business conditions and new opportunities, reevaluating goals and priorities. Quarterly quick assessments of metrics and annual revisions to the strategic plan are both possible. Stakeholders can evaluate performance in relation to goals using balanced scorecards and other techniques.
Types of strategic plans
Activities for strategic planning often concentrate on one of three areas: business, corporate, or functional. They split into the following:
- Business. An organization's competitive elements are the main emphasis of a business-centric strategic plan, which also creates chances for growth. These plans use a goal-making process that includes assessing the external business environment, formulating objectives, and allocating resources—financial, human, and technological—to achieve those objectives. This article's core objective and typical strategic plan.
- Corporate. A corporate-centric plan outlines the organization's operations. It focuses on structuring and coordinating senior leadership, corporate policies, and procedures in order to achieve desired goals. For instance, the management of research and development skunkworks may be set up to operate flexibly and as needed. Compared to the management teams in HR or finance, it would seem different.
- Functional. Integrated into corporate-level strategies, function-centric strategic plans offer a detailed analysis of particular divisions or segments, such as marketing, HR, finance, and development. While establishing budgets and resource allocations, functional plans have a strong emphasis on policy and process, including security and compliance.
In most cases, a strategic plan will involve elements of all three focus areas. But the plan may lean toward one focus area depending on the needs and type of business
Benefits of strategic planning
Effective strategic planning offers several advantages. Organizations are compelled to understand the opportunities and challenges that lie ahead. Additionally, it forces them to foresee risks and comprehend the resources that will be required to take advantage of opportunities and resolve strategic problems.
Strategic planning also provides people with a sense of purpose and unites them around a common goal. It establishes responsibility and norms. Planning strategically can improve the effectiveness of operational plans. Additionally, it assists businesses in reducing the amount of time spent on crisis management, where they are responding to unforeseen changes that they were unable to foresee and prepare for.