by Allan Ung
"The essence of strategy is choosing what not to do.”
Strategic planning has become more critical than ever before in today's rapidly changing business landscape. It is the process of defining an organization's vision, mission, and goals, and developing a roadmap to achieve them. This involves analyzing the current state of the organization, identifying strengths and weaknesses, and developing strategies to leverage opportunities and mitigate threats. The ultimate goal of strategic planning is to align the organization's resources and capabilities with its vision and mission, drive growth and profitability, and achieve sustainable competitive advantage. Despite being a basic business practice, many organizations struggle to make it work, resulting in disappointing outcomes. Our research and experience show that most strategic planning processes are poorly executed and rarely impact day-to-day decisions. In this blog, we will dive into the eight steps of strategic planning and explore best practices to help you create a comprehensive and effective strategic plan for your organization. We will also provide insights on how a strategic planning process can provide a framework against which all decisions can be evaluated, making it a key driver of success.
What is Strategic Planning?
Strategic planning is a process of defining an organization's direction, setting priorities, allocating resources, and creating action plans to achieve its goals. It involves a systematic and comprehensive analysis of an organization's internal and external environment to identify its strengths, weaknesses, opportunities, and threats. The purpose of strategic planning is to align an organization's resources and capabilities with its vision and mission, so it can achieve sustainable growth and competitive advantage.
Importance of Strategic Planning
Strategic planning is essential for organizations to survive and thrive in today's rapidly changing business environment. It enables organizations to anticipate and respond to market trends, customer needs, and competitive pressures. By defining its strategic direction, an organization can set clear priorities, allocate resources effectively, and make informed decisions that drive growth and profitability. It also helps to align the efforts of employees and stakeholders, so they work towards a common goal.
Benefits of Strategic Planning
The benefits of strategic planning are numerous. By engaging in the process, organizations can:
1. Anticipate and respond to market trends and changes.
2. Identify and address emerging threats and opportunities.
3. Align resources and capabilities with strategic goals.
4. Improve decision-making and resource allocation.
5. Build consensus and engage stakeholders.
6. Enhance communication and collaboration among team members.
7. Increase accountability and ownership of outcomes.
8. Drive growth and profitability.
The Eight Steps of Strategic Planning
Strategic Planning: Eight Steps to Implementation.
Step 1: Plan the Planning Process
The first step in strategic planning is to plan the planning process. This involves determining the organization's readiness for strategic planning, obtaining the CEO's commitment, and identifying members of the planning team. It also includes educating the planning team and organization, defining the roles and responsibilities of key stakeholders, establishing timelines, and identifying the resources needed to complete the process.
Step 2: Define Shared Values and Mission
The second step in strategic planning is to define the organization's shared values and mission. This involves conducting a values scan, shaping the organizational culture and formulating the organization's mission statement. It also includes engaging stakeholders in the process and ensuring that everyone is aligned with the organization's purpose.
Step 3: Analyze the Current Organizational Profile
The third step in strategic planning is to analyze the organization's current profile. This involves conducting a thorough analysis of the organization's internal and external environment, including its strengths, weaknesses, opportunities, and threats. It also includes assessing the organization's resources, capabilities, and performance.
Step 4: Create an Inspiring Vision
The fourth step in strategic planning is to create an inspiring vision for the organization. This involves defining the organization's long-term aspirations and setting a clear direction for the future. It also includes innovating the strategic business model and communicating the vision to stakeholders and engaging them in the process.
Step 5: Compare Current to Envisioned Organization
The fifth step in strategic planning is to compare the current organization to the envisioned organization. This involves identifying the gaps between the current state and the desired future state. It also includes assessing the organization's readiness and capacity to achieve the envisioned organization.
Step 6: Develop Strategies, Objectives and Plans
The sixth step in strategic planning is to develop strategies, objectives, and plans to bridge the gap between the current and envisioned organization. This involves identifying the key strategic initiatives needed to achieve the vision, setting specific and measurable objectives, and developing action plans to implement the initiatives and achieve the objectives. It also includes cascading goals throughout the organization, integrating action plans and developing contingency plans.
Step 7: Execute Action Plans
The seventh step in strategic planning is to execute the action plans. This involves allocating resources, assigning accountabilities, and implementing the action plans. It also includes monitoring progress, identifying and addressing issues, and adjusting the plans as needed.
Step 8: Monitor Results and Make Improvements
The final step in strategic planning is to monitor results and make improvements. This involves tracking performance against the objectives, identifying areas for improvement, and making adjustments to the plans as needed. It also includes conducting regular reviews (e.g. monthly self-reviews and annual review) and assessments to ensure that the strategic plan remains relevant and effective.
What is Unique About the Eight-step Strategic Planning Model?
What sets this model apart is that it includes a pre-planning step for assessing the organization's readiness and making the necessary preparations for a successful planning process.
Additionally, the model incorporates steps for values scanning and shaping the organizational culture, which can greatly impact both the process of planning and the resultant strategic plan.
The framework also facilitates the envisioning of the future state and creating the strategic business model before conducting the performance assessment, enabling the planning team to be creative and innovative before becoming analytical and critical.
Best Practices for Strategic Planning
To achieve the best outcomes from strategic planning, organizations should follow these best practices:
1. Involve all stakeholders: Strategic planning should involve all key stakeholders, including senior management, employees, customers, suppliers, and partners. This ensures that everyone has a voice in the process and is invested in the outcomes.
2. Use data-driven analysis: Strategic planning should be based on a thorough analysis of internal and external data. This includes market research, customer feedback, financial analysis, and performance metrics.
3. Keep it simple: Strategic plans should be clear, concise, and easy to understand. This ensures that everyone can understand and support the plan.
4. Set realistic goals: Strategic goals should be achievable, measurable, and aligned with the organization's resources and capabilities.
5. Develop an execution plan: Strategic planning should include a detailed action plan that outlines the steps, resources, and timelines needed to achieve the goals.
6. Monitor progress: Strategic plans should be monitored regularly to ensure that the organization is on track to achieve its goals. This includes regular performance reviews, reporting, and analysis.
Strategic planning is a critical process for organizations to achieve sustainable growth and competitive advantage. By following the eight steps of strategic planning and best practices, organizations can align their resources and capabilities with their vision and mission, anticipate and respond to market trends and changes, and drive growth and profitability. Strategic planning also helps to build consensus, enhance communication and collaboration, and increase accountability and ownership of outcomes.
Article by Allan Ung, Principal Consultant at Operational Excellence Consulting, a Singapore-based management consultancy firm that assists organizations in maximizing customer value and minimizing wastes through adoption of Design Thinking and Lean Thinking practices. For more information, please visit www.oeconsulting.com.sg
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