Strategic planning aligns the organization with a common understanding of what they want to achieve and how they will get there with daily operations. It’s taking a company’s vision and breaking it into mid-term and long-term goals.
In contrast to strategic planning, business planning focuses on short-term goals. But a strategic plan sets priorities to ensure employees and stakeholders in the organization are grounded in this common goal, thereby significantly influencing organizational decision-making.
In short, strategic planning is the process of breaking up the company mission statement into achievable goals for the organization to work towards.
We will explain in more detail what strategic planning is and how to understand the process, define strategic objectives and goals, conduct a SWOT analysis, create an action plan, roadmap, and more. Let’s dive in.
What is strategic planning?
Strategic planning results in a strategic plan. Without smart strategic planning, there is no strategic goal to lead the company in the right direction for success.
A strategic plan is important because it serves as a guiding light and focuses on the future of the organization’s goals rather than day-to-day planning.
There are so many benefits of having a well-defined strategic plan, which we will cover later on.
Understanding the strategic planning process
Now, let’s dive deeper to understand the strategic planning process. Effective strategic planning dictates where an organization is going and the actions needed to achieve progress. Equally as important is a strategy formulation to measure how it will measure success.
Effective strategic development can include many different methodologies and planning tools. There are no hard and fast rules that articulate the right way to do this, but most frameworks follow a similar pattern with a few of the same attributes.
When we break down the strategic planning process step-by-step, it can look like this:
- Analyze. Assess any existing or current strategic plan — use a SWOT (strengths, weaknesses, opportunities, and threats) assessment. For example, a shipping company may analyze its finances and identify excessive costs for its last-mile delivery. As a response, they opt to implement a more efficient routing system based on real-time traffic data to improve their bottom line and customer satisfaction.
- Set priorities. Start with the most relevant and urgent goals on your list. You can only tackle so many initiatives at once — so set objectives and document goals by priority. For instance, a project manager at a tech company may be tasked with a software development project, including goals like launching a new software product, enhancing the user experience, and resolving critical bugs. To complete the project, the manager needs to set priorities and tackle the most urgent goals first based on company and customer needs.
- Develop. Collaborate with fellow stakeholders to formulate the necessary steps to achieve each strategic objective, such as a retail company wanting to expand its operations in new markets. Create a strategy map to help visualize the many short-term goals with tactical business planning showing how these fit into the overarching strategy.
- Execute. Communicate the future state of the company to everyone across the organization. This is the time to set responsibilities and establish measurements for progress. An example of this may be a company looking to modernize its operations with digital technologies, such as implementing cloud-based solutions, data analytics, and automation. Meetings, clear communication, and phased implementation are necessary for success.
- Evaluate. Ensure strategic management has an ongoing plan to monitor, analyze, and assess the strategy with regular reviews to ensure progress. This also helps keep the plan on track amidst changes in business environments. Then, refine as needed. For example, a company expanding globally will need to host regular meetings to review key performance indicators and keep track of local competition and changing consumer preferences to ensure continued success.
1. Define strategic objectives and goals
Whether your company is a startup, nonprofit, or firmly established organization, creating this roadmap is crucial to measure success. It’s important to involve key stakeholders in the process of developing the guidance for the direction the organization is working toward.
Mission and vision statements are a must when it comes to setting organizational goals. This will help set the trajectory for strategic objectives and long-term goals.
Vision statements set the tone for what you want the future of your company to look like. Perhaps your company envisions a more sustainable way to operate, reducing its carbon footprint and promoting environmentally friendly practices throughout its industry.
On the other hand, a mission statement outlines the current actions and strategies of your company toward achieving its goals. For example, your mission may be to implement energy-efficient technologies in the manufacturing processes and collaborate with suppliers who share a commitment to sustainability for an environmentally responsible future. These statements give a clear goal for team members to work toward and creates a sense of accountability to achieve them.
So what are strategic objectives? The strategic objectives are the pieces of the strategic plan that work together to create the whole plan. Using a strategy map shows how each strategic objective works together to pave the roadmap to achieve long-term goals.
Short-term goals and measurable metrics also contribute to successful planning by being the building blocks you develop to help you get to the future state of the company.
2. Conduct a SWOT analysis
For strategic planners, it’s critical to understand what a SWOT analysis is and its role in strategic planning. A SWOT analysis dives into the company’s strengths, weaknesses, opportunities, and threats.
It is a framework that identifies internal strengths and weaknesses. A SWOT analysis also assesses the current and future potential of a company by assessing external opportunities and threats.
A comprehensive SWOT analysis has a huge impact on decision-making. It can give you a realistic look at the strengths and weaknesses of the organization and greater industry by analyzing data and facts. Keeping the analysis focused on real-life situations and avoiding preconceived beliefs is important so you can create an impactful strategy.
3. Create an action plan and roadmap
Once you have conducted a SWOT analysis, strategic planners can create an action plan that translates strategic goals into actionable steps.
Let’s break down the process of developing and implementing a strategic roadmap by discussing strategy mapping.
Strategy maps are extremely useful for effective strategy execution. Most people are visual learners and will benefit from a structured picture of the strategy. This visual also shows employees how they directly contribute to the organization’s mission and goals through their efforts.
Developing a strategy map also makes senior leadership come to an agreement on their goals in simple terms that are an easily-digestible template everyone understands.
Balanced scorecards also play a key role here. A balanced scorecard focuses on four major parts of an organization’s goals: financial, customer, internal business processes, and learning and growth.
4. Define key performance indicators (KPIs) and metrics
As we all know, data is king. So here are some more important terms to get familiar with during your strategy development. KPIs, or key performance indicators, help when it comes to tracking progress with quantifiable business metrics.
Decision makers can define KPIs that are aligned with organizational goals and your overall strategic framework by using dashboards.
A KPI dashboard displays interactive charts and graphs to help in visualizing KPI data for quick review and organized analysis.
To determine the most suitable KPIs for your business, assess what’s most important to your success. In the case of a small company, your emphasis might lean towards monitoring monthly sales growth, while a larger corporation may prioritize analyzing the average time taken for conversions to enhance its sales closing procedures.
Benefits of strategic planning
There are huge advantages to having a successful strategic plan. For example, strategic planning leads to improved decision-making and a competitive advantage in the market. In addition, here are some more important benefits to strategic planning:
- It ensures the organization is looking at a realistic view of the company’s future state with its opportunities and challenges.
- It helps to anticipate risks and plan for potential resources that might be needed to take advantage of opportunities and overcome particular strategic issues.
- It helps limit time spent doing crisis management because the organization can anticipate and prepare for unexpected changes.
- It streamlines business goals with a plan to track progress.
- It gives individual employees a sense of direction and benchmarks to plan around a common goal.
- It creates an organizational standard and ensures accountability within certain time frames.
- It can enhance operational plans and project management efficiency.
Examples of successful strategic planning
It’s helpful to look at companies that have done successful strategic planning to see what goals they set to help their organization. Here are three household companies that used effective strategic planning to drive major success.
Best Buy
This is a great example of a company that reinvented itself by discovering the secrets to successful strategy execution. After plummeting in profits in 2012, Best Buy needed to do something drastic to save them as they tried to compete with Amazon.
They hired a new CEO to be a visionary leader and launched their digital transformation strategy, putting them back in the game. Their five-goal strategy included reinvigorating the customer experience by developing a price-match policy, attracting transformational leaders, energizing employees, hiring vendors to drive value and innovation, implementing recycling efforts, and more.
This values-based strategy is an excellent example of how shifting a business strategy can lead to fast growth.
Starbucks
After 2008’s financial downturn, Starbucks adopted a value-based strategy to strive for market domination. The company decided it needed to shift its focus back to the customers and “reignite an emotional attachment.” So they launched “My Starbucks Idea” with the goal of creating a space for customers to exchange ideas with each other.
After nearly 93,000 ideas were recorded and 1.3 million newly generated on social media, Starbucks used this customer-driven data to zero in on what their customers truly cared about. This led to many business model changes like free Wi-Fi, lounge chairs, and Starbucks’ rewards program — which all came directly from customer feedback and forums. This customer-focused approach turned the company into the world’s largest coffeehouse chain we know today.
IBM
After dominating the market in the 1980s, IBM needed to evolve further along with customers’ ever-changing needs. A new CEO led the company into a transformational shift with strategic planning that changed its products and services. Their strategy changed from being a multinational technology provider to a holistic, shared-services partner.
The most effective parts of their strategy included offering the best technology stack to clients (which sometimes included competitor products) instead of just pushing their hardware sales alone. They also tied employees’ pay to their company performance instead of department performance.
IBM also standardized processes for internal functions and consolidated marketing efforts under one agency instead of over 40. IBM’s strategy became one of the greatest comebacks of all time, proving successful with increased sales and stock market value.
Equip yourself for successful strategy planning and execution with IMD
Overall, we’ve learned how important strategic planning is to grow any successful organization. Plus, how strategic management is necessary to conduct the ongoing planning, reviewing, analysis, and assessment an organization needs to meet its goals.
Now that you know a little bit more about strategic planning, company goal setting, and operational plans to achieve those goals — are you intrigued by the basics and open to new opportunities to learn more about strategy execution?
Learn more about one of IMD’s learning courses to dive deeper into how to master both strategic planning and execution. With so many strategy programs to choose from, you will gain confidence in making strategic choices, discover fresh perspectives, and acquire strategy tools to drive immediate impact.
Get ready to put what you’ve learned into action with more programs and solutions to reach your business goals.
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