Strategic issues are critical unknowns driving you to embark on a robust strategic planning process. These issues can be problems, opportunities, market shifts, or anything else that keeps you awake at night and begging for a solution or decision. The best strategic plans address your strategic issues head-on.
Conducting an environmental scan will help you understand your operating environment. An environmental scan is called a PEST analysis, an acronym for Political, Economic, Social, and Technological trends. Sometimes, it is helpful to include Ecological and Legal trends as well. All of these trends play a part in determining the overall business environment.
The reason to do a competitive analysis is to assess the opportunities and threats that may occur from those organizations competing for the same business you are. You need to understand what your competitors are or aren’t offering your potential customers. Here are a few other key ways a competitive analysis fits into strategic planning:
Learn more on how to conduct a competitive analysis here .
Opportunities are situations that exist but must be acted on if the business is to benefit from them.
What do you want to capitalize on?
Threats refer to external conditions or barriers preventing a company from reaching its objectives.
What do you need to mitigate? What external driving force do you need to anticipate?
Strengths refer to what your company does well.
What do you want to build on?
Weaknesses refer to any limitations a company faces in developing or implementing a strategy.
What do you need to shore up?
Customer segmentation defines the different groups of people or organizations a company aims to reach or serve.
A SWOT analysis is a quick way of examining your organization by looking at the internal strengths and weaknesses in relation to the external opportunities and threats. Creating a SWOT analysis lets you see all the important factors affecting your organization together in one place.
It’s easy to read, easy to communicate, and easy to create. Take the Strengths, Weaknesses, Opportunities, and Threats you developed earlier, review, prioritize, and combine like terms. The SWOT analysis helps you ask and answer the following questions: “How do you….”
Want More? Deep Dive Into the “Developing Your Strategy” How-To Guide.
Determine your primary business, business model and organizational purpose (mission) | Planning Team (All staff if doing a survey) | 2 weeks (gather data, review and hold a mini-retreat with Planning Team) | |
Identify your corporate values (values) | Planning Team (All staff if doing a survey) | 2 weeks (gather data, review and hold a mini-retreat with Planning Team) | |
Create an image of what success would look like in 3-5 years (vision) | Planning Team (All staff if doing a survey) | 2 weeks (gather data, review and hold a mini-retreat with Planning Team) | |
Solidify your competitive advantages based on your key strengths | Planning Team (All staff if doing a survey) | 2 weeks (gather data, review and hold a mini-retreat with Planning Team) | |
Formulate organization-wide strategies that explain your base for competing | Planning Team (All staff if doing a survey) | 2 weeks (gather data, review and hold a mini-retreat with Planning Team) | |
Agree on the strategic issues you need to address in the planning process | Planning Team | 2 weeks (gather data, review and hold a mini-retreat with Planning Team) |
The mission statement describes an organization’s purpose or reason for existing.
What is our purpose? Why do we exist? What do we do?
Step 2: discover your values.
Your values statement clarifies what your organization stands for, believes in and the behaviors you expect to see as a result. Check our the post on great what are core values and examples of core values .
How will we behave?
Step 3: casting your vision statement.
A Vision Statement defines your desired future state and directs where we are going as an organization.
Where are we going?
Step 4: identify your competitive advantages.
A competitive advantage is a characteristic of an organization that allows it to meet its customer’s need(s) better than its competition can. It’s important to consider your competitive advantages when creating your competitive strategy.
What are we best at?
Step 5: crafting your organization-wide strategies.
Your competitive strategy is the general methods you intend to use to reach your vision. Regardless of the level, a strategy answers the question “how.”
How will we succeed?
Want More? Deep Dive Into the “Build Your Plan” How-To Guide.
Action | Who is Involved | Tools & Techniques | Estimated Duration |
---|---|---|---|
Develop your strategic framework and define long-term strategic objectives/priorities | Executive Team Planning Team | Strategy Comparison Chart Strategy Map | Leadership Offsite: 1 – 2 days |
Set short-term SMART organizational goals and measures | Executive Team Planning Team | Strategy Comparison Chart Strategy Map | Leadership Offsite: 1 – 2 days |
Select which measures will be your key performance indicators | Executive Team and Strategic Director | Strategy Map | Follow Up Offsite Meeting: 2-4 hours |
If your team wants to take the next step in the SWOT analysis, apply the TOWS Strategic Alternatives Matrix to your strategy map to help you think about the options you could pursue. To do this, match external opportunities and threats with your internal strengths and weaknesses, as illustrated in the matrix below:
External Opportunities (O) | External Threats (T) | |
---|---|---|
Internal Strengths (S) | SO Strategies that use strengths to maximize opportunities. | ST Strategies that use strengths to minimize threats. |
Internal Weaknesses (W) | WO Strategies that minimize weaknesses by taking advantage of opportunities. | WT Strategies that minimize weaknesses and avoid threats. |
Evaluate the options you’ve generated, and identify the ones that give the greatest benefit, and that best achieve the mission and vision of your organization. Add these to the other strategic options that you’re considering.
Long-Term Strategic Objectives are long-term, broad, continuous statements that holistically address all areas of your organization. What must we focus on to achieve our vision? Check out examples of strategic objectives here. What are the “big rocks”?
Outcome: Framework for your plan – no more than 6. You can use the balanced scorecard framework, OKRs, or whatever methodology works best for you. Just don’t exceed 6 long-term objectives.
Once you have formulated your strategic objectives, you should translate them into goals and measures that can be communicated to your strategic planning team (team of business leaders and/or team members).
You want to set goals that convert the strategic objectives into specific performance targets. Effective strategic goals clearly state what, when, how, and who, and they are specifically measurable. They should address what you must do in the short term (think 1-3 years) to achieve your strategic objectives.
Organization-wide goals are annual statements that are SMART – specific, measurable, attainable, responsible, and time-bound. These are outcome statements expressing a result to achieve the desired outcomes expected in the organization.
Outcome: clear outcomes for the current year..
Key Performance Indicators (KPI) are the key measures that will have the most impact in moving your organization forward. We recommend you guide your organization with measures that matter. See examples of KPIs here.
Outcome: 5-7 measures that help you keep the pulse on your performance. When selecting your Key Performance Indicators (KPIs), ask, “What are the key performance measures we need to track to monitor if we are achieving our goals?” These KPIs include the key goals you want to measure that will have the most impact on moving your organization forward.
To move from big ideas to action, creating action items and to-dos for short-term goals is crucial. This involves translating strategy from the organizational level to individuals. Functional area managers and contributors play a role in developing short-term goals to support the organization.
Before taking action, decide whether to create plans directly derived from the strategic plan or sync existing operational, business, or account plans with organizational goals. Avoid the pitfall of managing multiple sets of goals and actions, as this shifts from strategic planning to annual planning.
Department/functional goals, actions, measures and targets for the next 12-24 months
Now in your Departments / Teams, you need to create goals to support the organization-wide goals. These goals should still be SMART and are generally (short-term) something to be done in the next 12-18 months. Finally, you should develop an action plan for each goal.
Keep the acronym SMART in mind again when setting action items, and make sure they include start and end dates and have someone assigned their responsibility. Since these action items support your previously established goals, it may be helpful to consider action items your immediate plans on the way to achieving your (short-term) goals. In other words, identify all the actions that need to occur in the next 90 days and continue this same process every 90 days until the goal is achieved.
1 Increase new customer base. |
1.1 Reach a 15% annual increase in new customers. (Due annually for 2 years) |
1.1.1 Implement marketing campaign to draw in new markets. (Marketing, due in 12 months) |
1.1.1.1 Research the opportunities in new markets that we could expand into. (Doug) (Marketing, due in 6 months) |
1.1.1.1.1 Complete a competitive analysis study of our current and prospective markets. (Doug) (Marketing, due in 60 days) |
1.1.1.2 Develop campaign material for new markets. (Mary) (Marketing, due in 10 months) |
1.1.1.2.1 Research marketing methods best for reaching the new markets. (Mary) (Marketing,due in 8 months) |
Want more? Dive Into the “Managing Performance” How-To Guide.
Action | Who is Involved | Tools & Techniques | Estimated Duration |
---|---|---|---|
Establish implementation schedule | Planning Team | 1-2 hours | |
Train your team to use OnStrategy to manage their part of the plan | HR Team, Department Managers & Teams | 1 hr per team member | |
Review progress and adapt the plan at Quarterly Strategy Reviews (QBR) | Department Teams + Executive Team | Department QBR: 2 hrs Organizational QBR: 4 hrs |
Implementation is the process that turns strategies and plans into actions in order to accomplish strategic objectives and goals.
Once your resources are in place, you can set your implementation schedule. Use the following steps as your base implementation plan:
Monthly strategy meetings don’t need to take a lot of time – 30 to 60 minutes should suffice. But it is important that key team members report on their progress toward the goals they are responsible for – including reporting on metrics in the scorecard they have been assigned.
By using the measurements already established, it’s easy to make course corrections if necessary. You should also commit to reviewing your Key Performance Indicators (KPIs) during these regular meetings. Need help comparing strategic planning software ? Check out our guide.
Never lose sight of the fact that strategic plans are guidelines, not rules. Every six months or so, you should evaluate your strategy execution and strategic plan implementation by asking these key questions:
Guidelines for your strategy review.
The most important part of this meeting is a 70/30 review. 30% is about reviewing performance, and 70% should be spent on making decisions to move the company’s strategy forward in the next quarter.
The best strategic planners spend about 60-90 minutes in the sessions. Holding meetings helps focus your goals on accomplishing top priorities and accelerating the organization’s growth. Although the meeting structure is relatively simple, it does require a high degree of discipline.
Strategic planning frequently asked questions, read our frequently asked questions about strategic planning to learn how to build a great strategic plan..
Strategic planning is when organizations define a bold vision and create a plan with objectives and goals to reach that future. A great strategic plan defines where your organization is going, how you’ll win, who must do what, and how you’ll review and adapt your strategy..
Your strategic plan needs to include an assessment of your current state, a SWOT analysis, mission, vision, values, competitive advantages, growth strategy, growth enablers, a 3-year roadmap, and annual plan with strategic goals, OKRs, and KPIs.
A strategic planning process should take no longer than 90 days to complete from start to finish! Any longer could fatigue your organization and team.
There are four overarching phases to the strategic planning process that include: determining position, developing your strategy, building your plan, and managing performance. Each phase plays a unique but distinctly crucial role in the strategic planning process.
Prior to starting your strategic plan, you must go through this pre-planning process to determine your organization’s readiness by following these steps:
Ask yourself these questions: Are the conditions and criteria for successful planning in place now? Can we foresee any pitfalls that we can avoid? Is there an appropriate time for our organization to initiate this process?
Develop your team and schedule. Who will oversee the implementation as Chief Strategy Officer or Director? Do we have at least 12-15 other key individuals on our team?
Research and Collect Current Data. Find the following resources that your organization may have used in the past to assist you with your new plan: last strategic plan, mission, vision, and values statement, business plan, financial records, marketing plan, SWOT, sales figures, or projections.
Finally, review the data with your strategy director and facilitator and ask these questions: What trends do we see? Any obvious strengths or weaknesses? Have we been following a plan or just going along with the market?
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In an ever-changing business world, it’s imperative to have strategic goals and a plan to guide organizational efforts. Yet, crafting strategic goals can be a daunting task. How do you decide which goals are vital to your company? Which ones are actionable and measurable? Which goals to prioritize?
To help you answer these questions, here’s a breakdown of what strategic planning is, what characterizes strategic goals, and how to select organizational goals to pursue.
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Strategic planning is the ongoing organizational process of using available knowledge to document a business's intended direction. This process is used to prioritize efforts, effectively allocate resources, align shareholders and employees, and ensure organizational goals are backed by data and sound reasoning.
Research in the Harvard Business Review cautions against getting locked into your strategic plan and forgetting that strategy involves inherent risk and discomfort. A good strategic plan evolves and shifts as opportunities and threats arise.
“Most people think of strategy as an event, but that’s not the way the world works,” says Harvard Business School Professor Clayton Christensen in the online course Disruptive Strategy . “When we run into unanticipated opportunities and threats, we have to respond. Sometimes we respond successfully; sometimes we don’t. But most strategies develop through this process. More often than not, the strategy that leads to success emerges through a process that’s at work 24/7 in almost every industry."
Related: 5 Tips for Formulating a Successful Strategy
To craft a strategic plan for your organization, you first need to determine the goals you’re trying to reach. Strategic goals are an organization’s measurable objectives that are indicative of its long-term vision.
Here are four characteristics of strategic goals to keep in mind when setting them for your organization.
The starting point for crafting strategic goals is asking yourself what your company’s purpose and values are . What are you striving for, and why is it important to set these objectives? Let the answers to these questions guide the development of your organization’s strategic goals.
“You don’t have to leave your values at the door when you come to work,” says HBS Professor Rebecca Henderson in the online course Sustainable Business Strategy .
Henderson, whose work focuses on reimagining capitalism for a just and sustainable world, also explains that leading with purpose can drive business performance.
“Adopting a purpose will not hurt your performance if you do it authentically and well,” Henderson says in a lecture streamed via Facebook Live . “If you’re able to link your purpose to the strategic vision of the company in a way that really gets people aligned and facing in the right direction, then you have the possibility of outperforming your competitors.”
Related: 5 Examples of Successful Sustainability Initiatives
While strategic goals are the long-term objectives of your organization, operational goals are the daily milestones that need to be reached to achieve them. When setting strategic goals, think of your company’s values and long-term vision, and ensure you’re not confusing strategic and operational goals.
For instance, your organization’s goal could be to create a new marketing strategy; however, this is an operational goal in service of a long-term vision. The strategic goal, in this case, could be breaking into a new market segment, to which the creation of a new marketing strategy would contribute.
Keep a forward-focused vision to ensure you’re setting challenging objectives that can have a lasting impact on your organization.
Strong strategic goals are not only long-term and forward-focused—they’re actionable. If there aren’t operational goals that your team can complete to reach the strategic goal, your organization is better off spending time and resources elsewhere.
When formulating strategic goals, think about the operational goals that fall under them. Do they make up an action plan your team can take to achieve your organization’s objective? If so, the goal could be a worthwhile endeavor for your business.
When crafting strategic goals, it’s important to define how progress and success will be measured.
According to the online course Strategy Execution , an effective tool you can use to create measurable goals is a balanced scorecard —a tool to help you track and measure non-financial variables.
“The balanced scorecard combines the traditional financial perspective with additional perspectives that focus on customers, internal business processes, and learning and development,” says HBS Professor Robert Simons in the online course Strategy Execution . “These additional perspectives help businesses measure all the activities essential to creating value.”
The four perspectives are:
The most important element of a balanced scorecard is its alignment with your business strategy.
“Ask yourself,” Simons says, “‘If I picked up a scorecard and examined the measures on it, could I infer what the business's strategy was? If you've designed measures well, the answer should be yes.”
Related: A Manager’s Guide to Successful Strategy Implementation
Whatever your business goals and objectives , they must have all four of the characteristics listed above.
For instance, the goal “become a household name” is valid but vague. Consider the intended timeframe to reach this goal and how you’ll operationally define “a household name.” The method of obtaining data must also be taken into account.
An appropriate revision to the original goal could be: “Increase brand recognition by 80 percent among surveyed Americans by 2030.” By setting a more specific goal, you can better equip your organization to reach it and ensure that employees and shareholders have a clear definition of success and how it will be measured.
If your organization is focused on becoming more sustainable and eco-conscious, you may need to assess your strategic goals. For example, you may have a goal of becoming a carbon neutral company, but without defining a realistic timeline and baseline for this initiative, the probability of failure is much higher.
A stronger goal might be: “Implement a comprehensive carbon neutrality strategy by 2030.” From there, you can determine the operational goals that will make this strategic goal possible.
No matter what goal you choose to pursue, it’s important to avoid those that lack clarity, detail, specific targets or timeframes, or clear parameters for success. Without these specific elements in place, you’ll have a difficult time making your goals actionable and measurable.
Once you’ve identified several strategic goals, determine which are worth pursuing. This can be a lengthy process, especially if other decision-makers have differing priorities and opinions.
To set the stage, ensure everyone is aware of the purpose behind each strategic goal. This calls back to Henderson’s point that employees’ alignment on purpose can set your organization up to outperform its competitors.
Next, calculate the estimated return on investment (ROI) of the operational goals tied to each strategic objective. For example, if the strategic goal is “reach carbon-neutral status by 2030,” you need to break that down into actionable sub-tasks—such as “determine how much CO2 our company produces each year” and “craft a marketing and public relations strategy”—and calculate the expected cost and return for each.
The ROI formula is typically written as:
ROI = (Net Profit / Cost of Investment) x 100
In project management, the formula uses slightly different terms:
ROI = [(Financial Value - Project Cost) / Project Cost] x 100
An estimate can be a valuable piece of information when deciding which goals to pursue. Although not all strategic goals need to yield a high return on investment, it’s in your best interest to calculate each objective's anticipated ROI so you can compare them.
Finally, when deciding which strategic goal to prioritize, the importance of the present moment can’t be overlooked. What’s happening in the world that could impact the timeliness of each goal?
For example, the coronavirus (COVID-19) pandemic and the ever-intensifying climate change crisis have impacted many organizations’ strategic goals in 2020. Often, the goals that are timely and pressing are those that earn priority.
As you set and prioritize strategic goals, remember that your strategy should always be evolving. As circumstances and challenges shift, so must your organizational strategy.
If you lead with purpose, a measurable and actionable vision, and an awareness of current events, you can set strategic goals worth striving for.
Do you want to learn more about strategic planning? Explore our online strategy courses and download our free flowchart to determine which is right for you and your goals.
This post was updated on November 16, 2023. It was originally published on October 29, 2020.
In conference rooms everywhere, corporate planners are in the midst of the annual strategic-planning process. For the better part of a year, they collect financial and operational data, make forecasts, and prepare lengthy presentations with the CEO and other senior managers about the future direction of the business. But at the end of this expensive and time-consuming process, many participants say they are frustrated by its lack of impact on either their own actions or the strategic direction of the company.
This sense of disappointment was captured in a recent McKinsey Quarterly survey of nearly 800 executives: just 45 percent of the respondents said they were satisfied with the strategic-planning process. 1 1. “ Improving strategic planning: A McKinsey Survey ,” The McKinsey Quarterly , Web exclusive, September 2006. The survey, conducted in late July and early August 2006, received 796 responses from a panel of executives from around the world. All panelists have mostly financial or strategic responsibilities and work in a wide range of industries for organizations with revenues of at least $500 million. Moreover, only 23 percent indicated that major strategic decisions were made within its confines. Given these results, managers might well be tempted to jettison the planning process altogether.
But for those working in the overwhelming majority of corporations, the annual planning process plays an essential role. In addition to formulating at least some elements of a company’s strategy, the process results in a budget, which establishes the resource allocation map for the coming 12 to 18 months; sets financial and operating targets, often used to determine compensation metrics and to provide guidance for financial markets; and aligns the management team on its strategic priorities. The operative question for chief executives is how to make the planning process more effective—not whether it is the sole mechanism used to design strategy. CEOs know that strategy is often formulated through ad hoc meetings or brand reviews, or as a result of decisions about mergers and acquisitions.
Our research shows that formal strategic-planning processes play an important role in improving overall satisfaction with strategy development. That role can be seen in the responses of the 79 percent of managers who claimed that the formal planning process played a significant role in developing strategies and were satisfied with the approach of their companies, compared with only 21 percent of the respondents who felt that the process did not play a significant role. Looked at another way, 51 percent of the respondents whose companies had no formal process were dissatisfied with their approach to the development of strategy, against only 20 percent of those at companies with a formal process.
So what can managers do to improve the process? There are many ways to conduct strategic planning, but determining the ideal method goes beyond the scope of this article. Instead we offer, from our research, five emergent ideas that executives can employ immediately to make existing processes run better. The changes we discuss here (such as a focus on important strategic issues or a connection to core-management processes) are the elements most linked with the satisfaction of employees and their perceptions of the significance of the process. These steps cannot guarantee that the right strategic decisions will be made or that strategy will be better executed, but by enhancing the planning process—and thus increasing satisfaction with the development of strategy—they will improve the odds for success.
Ask CEOs what they think strategic planning should involve and they will talk about anticipating big challenges and spotting important trends. At many companies, however, this noble purpose has taken a backseat to rigid, data-driven processes dominated by the production of budgets and financial forecasts. If the calendar-based process is to play a more valuable role in a company’s overall strategy efforts, it must complement budgeting with a focus on strategic issues. In our experience, the first liberating change managers can make to improve the quality of the planning process is to begin it by deliberately and thoughtfully identifying and discussing the strategic issues that will have the greatest impact on future business performance.
Granted, an approach based on issues will not necessarily yield better strategic results. The music business, for instance, has discussed the threat posed by digital-file sharing for years without finding an effective way of dealing with the problem. But as a first step, identifying the key issues will ensure that management does not waste time and energy on less important topics.
We found a variety of practical ways in which companies can impose a fresh strategic perspective. For instance, the CEO of one large health care company asks the leaders of each business unit to imagine how a set of specific economic, social, and business trends will affect their businesses, as well as ways to capture the opportunities—or counter the threats—that these trends pose. Only after such an analysis and discussion do the leaders settle into the more typical planning exercises of financial forecasting and identifying strategic initiatives.
One consumer goods organization takes a more directed approach. The CEO, supported by the corporate-strategy function, compiles a list of three to six priorities for the coming year. Distributed to the managers responsible for functions, geographies, and brands, the list then becomes the basis for an offsite strategy-alignment meeting, where managers debate the implications of the priorities for their particular organizations. The corporate-strategy function summarizes the results, adds appropriate corporate targets, and shares them with the organization in the form of a strategy memo, which serves as the basis for more detailed strategic planning at the division and business-unit levels.
A packaged-goods company offers an even more tailored example. Every December the corporate senior-management team produces a list of ten strategic questions tailored to each of the three business units. The leaders of these businesses have six months to explore and debate the questions internally and to come up with answers. In June each unit convenes with the senior-management team in a one-day meeting to discuss proposed actions and reach decisions.
Some companies prefer to use a bottom-up rather than top-down process. We recently worked with a sales company to design a strategic-planning process that begins with in-depth interviews (involving all of the senior managers and selected corporate and business executives) to generate a list of the most important strategic issues facing the company. The senior-management team prioritizes the list and assigns managers to explore each issue and report back in four to six weeks. Such an approach can be especially valuable in companies where internal consensus building is an imperative.
An issues-based approach won’t do much good unless the most relevant people are involved in the debate. We found that survey respondents who were satisfied with the strategic-planning process rated it highly on dimensions such as including the most knowledgeable and influential participants, stimulating and challenging the participants’ thinking, and having honest, open discussions about difficult issues. In contrast, 27 percent of the dissatisfied respondents reported that their company’s strategic planning had not a single one of these virtues. Such results suggest that too many companies focus on the data-gathering and packaging elements of strategic planning and neglect the crucial interactive components.
Strategic conversations will have little impact if they involve only strategic planners from both the business unit and the corporate levels. One of our core beliefs is that those who carry out strategy should also develop it. The key strategy conversation should take place among corporate decision makers, business unit leaders, and people with expertise essential to the discussion. In addition to leading the corporate review, the CEO, aided by members of the executive team, should as a rule lead the strategy review for business units as well. The head of a business unit, supported by four to six people, should direct the discussion from its side of the table (see sidebar, "Things to ask in any business unit review").
Are major trends and changes in your business unit’s environment affecting your strategic plan? Specifically, what potential developments in customer demand, technology, or the regulatory environment could have enough impact on the industry to change the entire plan?
How and why is this plan different from last year’s?
What were your forecasts for market growth, sales, and profitability last year, two years ago, and three years ago? How right or wrong were they? What did the business unit learn from those experiences?
What would it take to double your business unit’s growth rate and profits? Where will growth come from: expansion or gains in market share?
If your business unit plans to take market share from competitors, how will it do so, and how will they respond? Are you counting on a strategic advantage or superior execution?
What are your business unit’s distinctive competitive strengths, and how does the plan build on them?
How different is the strategy from those of competitors, and why? Is that a good or a bad thing?
Beyond the immediate planning cycle, what are the key issues, risks, and opportunities that we should discuss today?
What would a private-equity owner do with this business?
How will the business unit monitor the execution of this strategy?
One pharmaceutical company invites business unit leaders to take part in the strategy reviews of their peers in other units. This approach can help build a better understanding of the entire company and, especially, of the issues that span business units. The risk is that such interactions might constrain the honesty and vigor of the dialogue and put executives at the focus of the discussion on the defensive.
Corporate senior-management teams can dedicate only a few hours or at most a few days to a business unit under review. So team members should spend this time in challenging yet collaborative discussions with business unit leaders rather than trying to absorb many facts during the review itself. To provide some context for the discussion, best-practice companies disseminate important operational and financial information to the corporate review team well in advance of such sessions. This reading material should also tee up the most important issues facing the business and outline the proposed strategy, ensuring that the review team is prepared with well-thought-out questions. In our experience, the right 10 pages provide ample fuel to fire a vigorous discussion, but more than 25 pages will likely douse the level of energy or engagement in the room.
Managers are justifiably concerned about the resources and time required to implement an issues-based strategic-planning approach. One easy—yet rarely adopted—solution is to free business units from the need to conduct this rigorous process every single year. In all but the most volatile, high-velocity industries, it is hard to imagine that a major strategic redirection will be necessary every planning cycle. In fact, forcing businesses to undertake this exercise annually is distracting and may even be detrimental. Managers need to focus on executing the last plan’s major initiatives, many of which can take 18 to 36 months to implement fully.
Some companies alternate the business units that undergo the complete strategic-planning process (as opposed to abbreviated annual updates of the existing plan). One media company, for example, requires individual business units to undertake strategic planning only every two or three years. This cadence enables the corporate senior-management team and its strategy group to devote more energy to the business units that are “at bat.” More important, it frees the corporate-strategy group to work directly with the senior team on critical issues that affect the entire company—issues such as developing an integrated digitization strategy and addressing unforeseen changes in the fast-moving digital-media landscape.
Other companies use trigger mechanisms to decide which business units will undergo a full strategic-planning exercise in a given year. One industrial company assigns each business unit a color-coded grade—green, yellow, or red—based on the unit’s success in executing the existing strategic plan. “Code red,” for example, would slate a business unit for a strategy review. Although many of the metrics that determine the grade are financial, some may be operational to provide a more complete assessment of the unit’s performance.
Freeing business units from participating in the strategic-planning process every year raises a caveat, however. When important changes in the external environment occur, senior managers must be able to engage with business units that are not under review and make major strategic decisions on an ad hoc basis. For instance, a major merger in any industry would prompt competitors in it to revisit their strategies. Indeed, one advantage of a tailored planning cycle is that it builds slack into the strategic-review system, enabling management to address unforeseen but pressing strategic issues as they arise.
In the end, many companies fail to execute the chosen strategy. More than a quarter of our survey respondents said that their companies had plans but no execution path. Forty-five percent reported that planning processes failed to track the execution of strategic initiatives. All this suggests that putting in place a system to measure and monitor their progress can greatly enhance the impact of the planning process.
Most companies believe that their existing control systems and performance-management processes (including budgets and operating reviews) are the sole way to monitor progress on strategy. As a result, managers attempt to translate the decisions made during the planning process into budget targets or other financial goals. Although this practice is sensible and necessary, it is not enough. We estimate that a significant portion of the strategic decisions we recommend to companies can’t be tracked solely through financial targets. A company undertaking a major strategic initiative to enhance its innovation and product-development capabilities, for example, should measure a variety of input metrics, such as the quality of available talent and the number of ideas and projects at each stage in development, in addition to pure output metrics such as revenues from new-product sales. One information technology company, for instance, carefully tracks the number and skill levels of people posted to important strategic projects.
Strategic-performance-management systems, which should assign accountability for initiatives and make their progress more transparent, can take many forms. One industrial corporation tracks major strategic initiatives that will have the greatest impact, across a portfolio of a dozen businesses, on its financial and strategic goals. Transparency is achieved through regular reviews and the use of financial as well as nonfinancial metrics. The corporate-strategy team assumes responsibility for reviews (chaired by the CEO and involving the relevant business-unit leaders) that use an array of milestones and metrics to assess the top ten initiatives. One to expand operations in China and India, for example, would entail regular reviews of interim metrics such as the quality and number of local employees recruited and the pace at which alliances are formed with channel partners or suppliers. Each business unit, in turn, is accountable for adopting the same performance-management approach for its own, lower-tier top-ten list of initiatives.
When designed well, strategic-performance-management systems can give an early warning of problems with strategic initiatives, whereas financial targets alone at best provide lagging indicators. An effective system enables management to step in and correct, redirect, or even abandon an initiative that is failing to perform as expected. The strategy of a pharmaceutical company that embarked on a major expansion of its sales force to drive revenue growth, for example, presupposed that rapid growth in the number of sales representatives would lead to a corresponding increase in revenues. The company also recognized, however, that expansion was in turn contingent on several factors, including the ability to recruit and train the right people. It therefore put in place a regular review of the key strategic metrics against its actual performance to alert managers to any emerging problems.
Simply monitoring the execution of strategic initiatives is not sufficient: their successful implementation also depends on how managers are evaluated and compensated. Yet only 36 percent of the executives we surveyed said that their companies’ strategic-planning processes were integrated with HR processes. One way to create a more valuable strategic-planning process would be to tie the evaluation and compensation of managers to the progress of new initiatives.
Although the development of strategy is ostensibly a long-term endeavor, companies traditionally emphasize short-term, purely financial targets—such as annual revenue growth or improved margins—as the sole metrics to gauge the performance of managers and employees. This approach is gradually changing. Deferred-compensation models for boards, CEOs, and some senior managers are now widely used. What’s more, several companies have added longer-term performance targets to complement the short-term ones. A major pharmaceutical company, for example, recently revamped its managerial-compensation structure to include a basket of short-term financial and operating targets as well as longer-term, innovation-based growth targets.
Although these changes help persuade managers to adopt both short- and long-term approaches to the development of strategy, they don’t address the need to link evaluation and compensation to specific strategic initiatives. One way of doing so is to craft a mix of performance targets that more appropriately reflect a company’s strategy. For example, one North American services business that launched strategic initiatives to improve its customer retention and increase sales also adjusted the evaluation and compensation targets for its managers. Rather than measuring senior managers only by revenue and margin targets, as it had done before, it tied 20 percent of their compensation to achieving its retention and cross-selling goals. By introducing metrics for these specific initiatives and linking their success closely to bonus packages, the company motivated managers to make the strategy succeed.
An advantage of this approach is that it motivates managers to flag any problems early in the implementation of a strategic initiative (which determines the size of bonuses) so that the company can solve them. Otherwise, managers all too often sweep the debris of a failing strategy under the operating rug until the spring-cleaning ritual of next year’s annual planning process.
Some business leaders have found ways to give strategic planning a more valuable role in the formulation as well as the execution of strategy. Companies that emulate their methods might find satisfaction instead of frustration at the end of the annual process.
Renée Dye is a consultant in McKinsey’s Atlanta office, and Olivier Sibony is a director in the Paris office.
This article was first published in the Autumn 2007 issue of McKinsey on Finance . Visit McKinsey’s corporate finance site to view the full issue.
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Tired of strategic planning.
Using goal-based planning, making time, promoting communication, following up.
Every successful business has a plan and knows where it is heading in the future. Setting a plan with goals, target dates, and a purpose should be finalized before embarking on a business. Taking the time on an ongoing basis to review the company's past performance, and predict its future performance, gives it a road map to follow.
Without strategic planning , which is knowing the current state of your business and where you want it to go, most businesses will fail. A strategic plan allows you to see what is important, how to get there, the pitfalls to avoid, and the noise to ignore. Below we discuss some of the reasons why strategic planning is important and how to implement it.
The very first strategic planning most businesses do is a business plan . When you first start your business, you will likely have prepared a mission statement , a budget, and a marketing and promotion plan. The business plan is a good first step, but it needs to be reviewed and updated as the business continues and grows. If you shove it in a drawer and let dust gather on it, it won't serve as the foundation of your business, as it was meant to.
A business plan serves as the blueprint for a company's success, providing a comprehensive roadmap that outlines its objectives, strategies, and tactics for achieving growth and profitability. In some cases, a business plan is also necessary for attracting external funding and support from an outside investor or bank.
How you go about conducting strategic planning will depend on many variables, including the size of your business, the time frame included, and your personal preferences. The most common style of plan is goals-based. In this type of plan, you set goals for the business (financial and non-financial) and map out the steps needed to meet those goals.
For example, if your goal is to have $100,000 in revenues next year, the steps to get there might include bringing in five new clients a month and attending three trade shows. Whatever the goals you set for your business, they should be concrete and measurable so that you know when you reach them. Another method of strategic planning is mission-based.
When you first started your business, you likely developed a mission or values statement, outlining the purpose of your company and its overall reason for being. A mission-based strategic plan ties each part of the plan into the mission, to ensure that the company is always operating in the service of that mission.
For example, if your mission statement is to be recognized as a leader in the financial services sector and to help families become financially independent, your strategic plans should address how you will meet those goals.
It can be difficult to find the time to plan your business. Other, more pressing priorities, like trying to bring in revenue , may grab your attention; however, carving out time regularly will help you keep on top of your business.
Blocking off a few hours a day or week to focus on your plan should be part of your business operations. During that time, you can examine the prior week's financial performance and update any marketing initiatives to make sure that your business is on track with your initial plan. If it's not, then you'll need to make adjustments to get back on track.
Regardless of how often you plan, make sure that you set it in stone in your day planner. Block off the time and don't let anything else get in the way. Turn off your cell phone and, if at all possible, go somewhere away from your office to plan in order to minimize distractions.
As a business owner, you will most likely have employees. It is critical to inform them of your strategic plan so that they are on the same page and working towards the same goal as you.
Including your staff in your strategic plan will instill a feeling of responsibility in their jobs that will help ensure productivity.
For example, if you have a sales team and your strategic plan involves bringing in five new clients a month, your sales team needs to be aware of this so that they know the goal to achieve. If they don't, perhaps they would be under the assumption that bringing in two new clients a month is excellent, when in actuality, it is only 40% of your goal. Without clear communication to your employees, your business will be a boat set adrift without any course to follow.
A critical part of the planning process is reviewing your previous plan and comparing it to your actual results. Were you able to bring in five new clients last month? If not, why not? Tweak the plan going forward to account for changes in your business or the general economic climate. The more experience you get with the planning process and with the operational side of your business, the more accurately you will be able to plan.
Once you have had your business running for a while and block out time to follow up on your strategic plan, you will be able to determine where the strengths and weaknesses in your business lie. This would allow you to correct course, perhaps changing your business plan and goals slightly to focus on your strengths, while allowing you to eliminate your weakness, making your business stronger and increasing the likelihood of achieving your goals.
Strategic planning is crucial for businesses because it provides a roadmap for achieving long-term objectives, identifying opportunities, and mitigating risks. It helps align organizational resources, activities, and goals, ensuring that everyone is working towards a common vision.
The key benefits of strategic planning include improved decision-making, enhanced resource allocation, increased organizational alignment, better risk management, and the ability to seize opportunities for growth and innovation.
Without a strategic plan, organizations may struggle to maintain focus, allocate resources efficiently, or adapt to changing circumstances. They may miss opportunities for growth or become vulnerable to competitive threats. Companies with a strategy may be more likely to face challenges in sustaining long-term success.
Best practices for effective strategic planning include involving key stakeholders in the process and conducting thorough environmental scans to fully understand all aspects of a company that will be impacted. This can be done through a SWOT analysis. Once your strategy is in place, set clear and measurable objectives, regularly monitor progress, and don't be afraid to realign the strategy with new information as it comes available.
Planning out the future of your business is the best way to ensure success. Creating an initial plan and communicating that plan to your employees will ensure that everyone is working towards the same goal.
Taking out time to review your business's results and comparing them to your plan will help ensure that the right policies and procedures continue whereas those that are not benefiting the company will be removed. It may seem awkward and difficult at first to create a strategic plan, but with practice, you will be able to move your business in the right direction.
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What is business strategic planning, the strategic planning process in 3 steps, what is a business strategic plan, key components of a business strategic plan, business strategic plan example, strategic plan vs. business plan.
Strategic planning is key for success in business. By planning strategically for the future, a business can achieve its goals. It’s easier said than done, but the more you know about strategic planning, the better chance you have at succeeding.
Business strategic planning is the process of creating a business strategy and an accompanying business strategic plan to implement a company’s vision and achieve its goals over time. The main goal of strategic planning is to take a company from its current state to its desired state through a series of business actions.
The business strategic planning process usually consists of defining business goals, doing a SWOT analysis to assess the company’s business environment and developing a business strategy. The leadership team is in charge of business strategic planning, as it has a very important impact on the overall direction of a company.
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Strategic Planning is one of the three levels of organizational planning, which is the process that allows organizations to define its objectives for the future and make action plans to guide the efforts of each of its departments, employees and management levels .
The other two levels of organizational planning are tactical and operational planning. Let’s see how these three types of organizational planning differ from each other.
While a strategic plan is created by the top management team and defines the high-level strategic goals of an entire organization, a tactical plan has a narrower scope. A tactical plan is created by the middle management level of a business and describes the specific goals, initiatives, challenges and resources for each department and how its efforts contribute to the completion of the larger strategic plan of the business.
An operational plan allows you to establish guidelines, procedures and best practices for the daily operations of your business. The main objective of operational planning is to ensure that your business operations contribute to the accomplishment of the strategic objectives defined in the strategic plan.
Strategic planning is very important, but it doesn’t need to be overly complex. Let’s simplify this process by breaking it down into three simple steps.
A business goal is simply an accomplishment that a company wants to achieve in the short, medium or long term. Business goals can take many forms such as increasing sales, revenue, customer satisfaction levels and brand positioning, among many other things.
The goal of a business strategy is to leverage the strengths of a business and minimize the impact of its weaknesses. Those two things are internal factors. The strengths of a company can become competitive advantages that can lead to business growth. There are many types of business strengths and weaknesses such as scale, speed, or R&D, just to name a few.
Threats and opportunities refer to external factors such as competitors or an untapped market. A successful business strategy considers all of these factors to define how a product or service will be created, marketed and sold, and a SWOT analysis is a great starting point.
Once you’ve completed your SWOT analysis, you can create a business strategy that’s designed to help position your company in the market. Your business strategy guides how you produce, market and sell your product or service based on internal and external analysis. In addition to this, it’s advisable to use a scenario planning matrix to estimate how successful your business strategy would be in different scenarios.
Then, you’ll need a strategic plan to explain how you plan to execute that business strategy. To oversee the execution of a business strategic plan, managers need to manage time, costs and tasks. ProjectManager is a project planning tool that allows managers to plan, schedule and manage their team’s work. Plan your work with professional tools such as Gantt charts, kanban boards, task lists and calendars. Then track your progress in real time to stick to your strategic plan. Get started for free.
A business strategic plan is an implementation plan that’s meant to turn a business strategy into action items that can be executed over time. Business strategic plans are usually executed over the course of 3-5 years.
To develop a strategic plan, you should ask yourself the following three questions.
Once you’ve answered the above questions and have a way to achieve the long-term goals laid out in the strategic plan, the next step is making sure you have the right person to manage all of its moving parts. They must be analytical, a creative thinker and able to grasp operational detail.
That doesn’t mean the strategic plan is led by one person. It’s best to not do it alone; seek other opinions. The people in your organization, from bottom to top, are all great resources to offer perspectives from their standpoints. Don’t forget to take in the advice of stakeholders, including customers, clients, advisors and consultants.
To create a strong strategic plan, one must first have a strong understanding of the business that is to expand. How does the business work? Where does the business stand in relation to competitors in the marketplace? A strategic plan is built on the bones of the following foundational elements:
Never forget to check your strategic plan against reality. In addition to being achievable, it must be practical for your business environment, resources and marketplace.
Now let’s look at a simple business strategic plan example. This is a strategic plan for a small construction company.
Our free strategic plan template helps leadership teams gather important information about their business strategy, which makes it the perfect tool to start shaping a strategic plan for your business or project.
Here are some free strategic planning templates for Word and Excel that will help you with key aspects of the strategic planning process. Use them individually or add them to your strategic plan template for Word so you don’t miss any detail about your organizational strategy.
This strategic roadmap template allows you to map the activities, strategic projects and initiatives that each business department will execute to accomplish the objectives defined in the strategic plan of an organization.
This strategic map template it’s a strategic planning tool that allows you to visualize all the strategic objectives of your organization and understand how they’re interrelated.
A balanced scorecard is a chart that allows you to set strategic objectives that will benefit your business in one of four key areas, its finances, internal processes, customer satisfaction and organizational learning.
The vision statement is one of the most important aspects of the organizational strategy of a business. It’s a short but powerful statement that describes the overall direction of a company and what it intends to achieve in the future. This free vision statement template will help you focus on what matters most and define the vision of your business.
A strategic plan is a type of business plan, but there are distinctions between the two. Whereas a strategic plan is for implementing and managing the strategic direction of a business, a business plan is more often the document that starts a business.
A business plan is used primarily to get funding for the venture or direct the operation, and the two plans target different timeframes in business history. A strategic plan is used to investigate a future period, usually between three-to-five years. A business plan is more routinely a year out.
A strategic plan offers a business focus, direction and action to help the business grow from the point it presently resides to a greater market share in the future. A business plan, on the other hand, is more focused on offering a structure to capture and implement ideas that initially define a business.
With a strategic plan, existing resources are prioritized to increase revenue and return on investment. The business plan is different in that it’s seeking funding for a venture that doesn’t yet exist. Where a strategic plan is building a sustainable competitive advantage in the future, a business plan is designed to take advantage of a current business opportunity.
So, a strategic plan is communicating direction to teams and stakeholders in order to achieve future goals. A business plan isn’t talking to staff, which is likely nonexistent or minimal at this point. It’s speaking to banks and other financial supporters.
Strategic planning, like any planning, requires keeping a lot of balls in the air. That means having the right tool to plan, monitor and report on all the various tasks and resources. ProjectManager is online project management software that gives you control over every aspect of creating and implementing a strategic plan. Try it today with this free 30-day trial.
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Like everything else in life, the nature of business needs a plan in place to follow and measure. Crafting a strategic roadmap isn't just a suggestion—it's a necessity.
This is one of the key elements of a startup or even a business division within an organization that is expanding or diversifying. It has every resource element and needs to be mapped out for the business, including projected milestones for the future.
However, every business strategist needs to know that there are some subtle differences between what constitutes a business plan, and the several differences it has with a strategic plan. Let’s walk through the different elements that comprise each and understand the outcome each aims to achieve.
A business plan is exactly what the name suggests— a plan to start and run a business or a new entity of an existing business; usually either an expansion in a newer region or a diversification into a new market. Business plans are mainly created for internal reference purposes or external funding purposes, with the latter being the common usage. They form the basis of all business strategies and decisions made at the ownership level in an organization. The most essential components of a business plan include:
Organizational Plan - This is the core of a business plan, and it includes the mission and vision statement, along with the market in which the company plans to operate. This plan also encompasses thorough market research to gauge the potential of the business, crucial for securing funding or sponsorship. It articulates the rationale behind the business's growth trajectory, outlining clear timelines for achieving milestones along the way.
Financial Plan - A robust financial plan is the bedrock of any successful business venture, where cash flow reigns supreme, and a meticulously crafted balance sheet serves as the ultimate scorecard. A financial plan includes some of the most important elements of the entire business plan and includes elements like projected cash flow statements, capital requirements, a summary of projected overheads, a projected balance sheet including assets and liabilities, and income and expense statements.
Remember to regard this as the central nervous system, for it permeates and influences almost every aspiration the enterprise hopes to attain.
Sales and Marketing Plan - We mentioned “almost” everything above for this very reason. Sales and marketing form the other significant component of the business plan. These include sales forecasts and overheads, marketing and brand management summaries, and market share projections that the business hopes to achieve within a time frame.
Business plans are indeed comprehensive and all-encompassing. They form the basis of the business's existence or the rationale for investments in it. But what about translating these plans into action? How do we ensure that the sky-high goals set forth are actually achievable?
Strategic plans constitute the basis of operations and responsibilities within the business. These plans lay the paths out for each member of the organization to follow and define the functional outline and the key outcomes for every project and process within the business. A strategic plan goes on to define the operations and their outcomes within the organization, its departments, and its employees. The single thread connecting strategic planning with the business plan is the vision of the organization, and for obvious reasons— vision serves as the guiding light for strategy formation, which, in turn, directs the day-to-day operations of the business.
In a word— synchronization. A robust and well-laid-out strategic plan establishes the much-needed sync between teams and their objectives. Not only that, it also provides a guide for daily operations alongside the focus and direction that teams often need to get the job done, on time and within budget. When all these components are integrated into a cohesive network, the true value of a strategic plan emerges—a seamless and grand orchestration of departments, teams, and individuals using the resources allocated to them to achieve the key performance indicator that they are responsible for.
When tasked with creating a strategic plan for your business, you will need to incorporate certain components that will ensure that the stakeholders are aligned completely with the organization’s goals and objectives. These include:
Vision and Values - The vision statement is the most important component of the strategic plan and the most overarching. It propels the organization towards established goals and the values that every employee and stakeholder must incorporate.
Goals - These are short, medium, or long-term, depending on the scope of the strategic plan. They provide the much-needed context for the organization to undertake initiatives that meet the vision while maintaining the values.
Guiding Principles - Often, organizations face crossroads where they must decide which steps to take next, to reach their vision. Principles are included in strategic plans to align teams towards the vision when faced with a dilemma and form a critical part of strategic planning.
Action Plans - A sum of key initiatives, processes, and projects that are required to be performed on a pre-determined periodic basis for the goal to be accomplished. These also include the time frames for each stakeholder responsible for each option. They usually follow the DACI format for each action (Driver, Approver, Contributor, Informed)
SWOT Analysis - The quintessential component, the Strength, Weaknesses, Opportunities, and Threats analysis of the strategic plan lends context to all business actions vis-a-vis the external environment. This includes competitors, market forces and conditions, identification of internal and external threats, and several other factors.
Read This - SWOT Analysis: How to Strengthen Your Business Plan
Here’s a table highlighting the main differences between a Business Plan and a Strategic Plan with a focus on the key components of each—
In all businesses, a strategic plan serves as the foundational blueprint, akin to a meticulously drawn map for a general. It provides the essential guidance and direction needed for the entire organization to navigate toward success. It is crucial, therefore, to acquire the necessary skills and certifications for employment as a business strategist who would be entrusted with creating it. Know more about how to become a successful and sought-after business strategist today!
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Strategic planning is a process in which an organization's leaders define their vision for the future and identify their organization's goals and objectives. The process includes establishing the sequence in which those goals should be realized so the organization can reach its stated vision.
Strategic planning is forward looking. It differs from traditional business planning, which typically focuses on short-term, tactical goals, such as how a budget is divided up. The time covered by a business plan can range from several months to several years.
The product of strategic planning is a strategic plan. It is often reflected in a plan document or other media. These plans can be easily shared, understood and followed by various people including employees, customers, business partners and investors.
Organizations conduct strategic planning periodically to consider the effect of changing business, industry, and legal and regulatory conditions . A strategic plan may be updated and revised at that time to reflect any strategic changes.
Businesses need direction and organizational goals to work toward. Strategic planning offers that type of guidance. Essentially, a strategic plan is a roadmap to get to business goals . Without such guidance, there is no way to tell whether a business is on track to reach its goals.
The following four aspects of strategy development are worth attention:
While strategic planning has been a cornerstone of organizational management for decades, the landscape of strategic planning has undergone significant shifts in recent years.
Innovations in technology and socioeconomic upheavals, most notably the COVID-19 pandemic, have fundamentally altered the calculus of strategic planning. These modern considerations underscore the evolving nature of strategic planning in today's world.
The advent of the COVID-19 pandemic has starkly highlighted the importance of flexibility and resilience in strategic planning. Organizations worldwide have faced the stark reality that the ability to pivot quickly in response to rapidly changing external conditions is not just advantageous but essential for survival.
This period has reinforced the concept that strategic plans must be living documents -- adaptable, dynamic and responsive to unforeseen challenges and opportunities. The traditional view of strategic planning as a set of fixed guidelines has given way to an understanding of strategic plans as fluid frameworks that guide organizational response to a volatile environment.
The swift pace of technological evolution has made the incorporation of digital transformation strategies a critical component of strategic planning.
Digital capabilities are now at the heart of operational success and competitive differentiation. Organizations can integrate data analytics and AI into strategic planning processes to help them innovate, boost efficiency, enhance customer experiences and maintain a competitive edge .
Modern strategic planning is characterized by an emphasis on agility and the capacity for rapid adaptation. In an era marked by constant change, organizations must be prepared to navigate through a sea of change, adjusting their course in response to market dynamics and environmental shifts.
This necessitates a continuous reassessment of the strategic plan and a willingness to recalibrate goals and tactics in alignment with the evolving external landscape. The agility to adapt strategic priorities swiftly is now a critical competency for organizational resilience and long-term success.
Sustainability and social responsibility have emerged as central considerations in strategic planning. As societal expectations evolve, there is an increasing demand for organizations to align their strategies with environmental, social and governance ( ESG ) criteria.
This alignment reflects a broader commitment to sustainable development and responsible corporate citizenship . Incorporating sustainability and social responsibility into strategic planning not only meets regulatory and societal expectations but also opens new avenues for innovation and connects organizations with eco-conscious consumers and stakeholders .
A strategic plan that resonates with an organization's culture and actively engages employees is more likely to succeed. Cultivating a supportive culture that aligns with the strategic vision is crucial for fostering organizational alignment and buy-in.
Engaging employees in the strategic planning process instills a sense of ownership and commitment to the organization's goals , thereby driving collective effort toward their realization. Modern strategic planning recognizes the value of employee engagement and organizational culture as foundational elements that underpin the successful implementation of strategic objectives.
There are myriad different ways to approach strategic planning depending on the type of business and the granularity required. Most strategic planning cycles can be summarized in these five steps:
Identify. A strategic planning cycle starts with the determination of a business's current strategic position. This is where stakeholders use the existing strategic plan -- including the mission statement and long-term strategic goals -- to perform assessments of the business and its environment. These assessments can include a needs assessment or a SWOT analysis (strengths, weaknesses, opportunities and threats analysis) to understand the state of the business and the path ahead.
Prioritize. Next, strategic planners set objectives and initiatives that line up with the company mission and goals and will move the business toward achieving its goals. There may be many potential goals, so planning prioritizes the most important, relevant and urgent ones. Goals may include a consideration of resource requirements -- such as budgets and equipment -- and they often involve a timeline and business metrics or KPIs for measuring progress.
Develop. This is the main thrust of strategic planning in which stakeholders collaborate to formulate the steps or tactics necessary to attain a stated strategic objective. This may involve creating numerous short-term tactical business plans that fit into the overarching strategy. Stakeholders involved in plan development use various tools such as a strategy map to help visualize and tweak the plan. Developing the plan may involve cost and opportunity tradeoffs that reflect business priorities. Developers may reject some initiatives if they don't support the long-term strategy.
Implement. Once the strategic plan is developed, it's time to put it in motion. This requires clear communication across the organization to set responsibilities, make investments, adjust policies and processes , and establish measurement and reporting. Implementation typically includes strategic management with regular strategic reviews to ensure that plans stay on track.
Update. A strategic plan is periodically reviewed and revised to adjust priorities and reevaluate goals as business conditions change and new opportunities emerge. Quick reviews of metrics can happen quarterly, and adjustments to the strategic plan can occur annually. Stakeholders may use balanced scorecards and other tools to assess performance against goals.
A committee typically leads the strategic planning process. Planning experts recommend the committee include representatives from all areas within the enterprise and work in an open and transparent way where information is documented from start to finish.
The committee researches and gathers the information needed to understand the organization's status and factors that will affect it in the future. The committee should solicit input and feedback to validate or challenge its assessment of the information.
The committee can opt to use one of many methodologies or strategic frameworks that have been developed to guide leaders through this process. These methodologies take the committee through a series of steps that include an analysis or assessment, strategy formulation, and the articulation and communication of the actions needed to move the organization toward its strategic vision.
The committee creates benchmarks that will enable the organization to determine how well it is performing against its goals as it implements the strategic plan. The planning process should also identify which executives are accountable for ensuring that benchmarking activities take place at planned times and that specific objectives are met.
There are no uniform requirements to dictate the frequency of a strategic planning cycle. However, there are common approaches.
Timetables are always subject to change. Timing should be flexible and tailored to the needs of a company. For example, a startup in a dynamic industry might revisit its strategic plan monthly. A mature business in a well-established industry might opt to revisit the plan less frequently.
Strategic planning activities typically focus on three areas: business, corporate or functional. They break out as follows:
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.
Organizations that are best at aligning their actions with their strategic plans engage in strategic management. A strategic management process establishes ongoing practices to ensure that an organization's processes and resources support the strategic plan's mission and vision statement .
In simple terms, strategic management is the implementation of the strategy . As such, strategic management is sometimes referred to as strategy execution. Strategy execution involves identifying benchmarks, allocating financial and human resources and providing leadership to realize established goals.
Strategic management may involve a prescriptive or descriptive approach . A prescriptive approach focuses on how strategies should be created. It often uses an analytical approach -- such as SWOT or balanced scorecards -- to account for risks and opportunities. A descriptive approach focuses on how strategies should be implemented and typically relies on general guidelines or principles.
Given the similarities between strategic planning and strategic management, the two terms are sometimes used interchangeably.
A strategy map is a planning tool or template used to help stakeholders visualize the complete strategy of a business as one interrelated graphic. These visualizations offer a powerful way for understanding and reviewing the cause-and-effect relationships among the elements of a business strategy.
While a map can be drawn in a number of ways, all strategy maps focus on four major business areas or categories: financial, customer, internal business processes, and learning and growth. Goals sort into those four areas, and relationships or dependencies among those goals can be established.
For example, a strategy map might include a financial goal of reducing costs and a business process goal to improve operational efficiency . These two goals are related and can help stakeholders understand that tasks such as improving operational workflows can reduce company costs and meet two elements of the strategic plan.
A strategy map can help translate overarching goals into an action plan and goals that can be aligned and implemented.
Strategy mapping can also help to identify strategic challenges that might not be obvious. For example, one learning and growth goal may be to increase employee expertise but that may expose unexpected challenges in employee retention and compensation, which affects cost reduction goals.
Effective strategic planning has many benefits. It forces organizations to be aware of the future state of opportunities and challenges. It also forces them to anticipate risks and understand what resources will be needed to seize opportunities and overcome strategic issues.
Strategic planning also gives individuals a sense of direction and marshals them around a common mission. It creates standards and accountability. Strategic planning can enhance operational plans and efficiency. It also helps organizations limit time spent on crisis management , where they're reacting to unexpected changes that they failed to anticipate and prepare for.
Information technology is a key part of developing an effective strategic plan. Look at these eight free IT strategic planning templates that can help make IT a driving force in a business. Learn how to assess an organization's needs and implement a technology strategy and see how to set business goals in these step-by-step guides.
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Small decisions about where to focus and what to do throughout your day may feel inconsequential, but their impacts accumulate.
Business leaders are expected to be strategic, and while organizational obstacles can prevent you from translating intent into strategic actions, so can your personal limitations and practices. It doesn’t have to be this way. Even when it feels like the odds are stacked against you, you have more choices than you may realize. Small decisions about where to focus and what to do throughout your day may feel inconsequential, but their impacts accumulate. Master those small decisions and before you know it, you’ll overcome the obstacles as you pursue your strategy with greater clarity, determination, and ultimately success. The author presents six ways to incorporate strategy into your daily practices.
Being strategic — that is, making a coherent set of choices to help you pursue an ambition or goal — is a nonnegotiable skill for business leaders. But it can be hard to practice, and strategies are notoriously hard to design and deliver. Sometimes we blame organizational obstacles. For example, micromanagement dampens enthusiasm for trying something new. Incentives encourage us to stick to the status quo. Poor communication makes it hard to know where to focus.
Expansion planning: strategies for scaling across new markets.
Brandon Dawson is CEO of Cardone Ventures , Leader & Scaling Expert. His mission is to help 1 million business owners 10X their success.
The allure of new markets is a common dream for many entrepreneurs. The promise of untapped opportunities and exponential growth is enticing.
Yet the journey is often fraught with challenges and uncertainties. Without the right knowledge and strategies, business owners can quickly become overwhelmed by the complexities of navigating unfamiliar markets.
Over the years, I’ve helped clients implement essential strategies to ensure smooth and successful scaling. Here are some of the most valuable approaches I've found to help you confidently expand your business into new markets:
Through my decades of helping scale businesses, I have seen the enormous value in starting with the end in mind. Ask yourself these critical questions: What markets are you aiming to enter? What are the specific growth targets you want to achieve in these new markets?
Then, craft a detailed outline of the steps you need to take to achieve these goals. This plan should include timelines, resource allocation and key performance indicators (KPIs) to measure progress. Break down your objectives into manageable tasks, assigning responsibilities to team members and setting realistic deadlines.
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Your expansion strategy should also take into account potential risks and challenges. Conduct a thorough SWOT analysis (strengths, weaknesses, opportunities, threats) to understand the internal and external factors that could impact your expansion. By anticipating obstacles, you can develop contingency plans to mitigate risks.
Through years of perfecting methods of analyzing and building companies, one thing remains essential to the success of any growth strategy: Understanding and committing to your end goal.
To truly grasp the dynamics of the market you're planning to enter, you need to dive deep into its nuances. This involves more than just skimming the surface; it requires a comprehensive analysis of the various factors that can influence your business's performance in that market.
First and foremost, examine the competitive landscape. Who are the major players in the market? What are their strengths and weaknesses?
Next, delve into customer needs and preferences. Conduct surveys, interviews or focus groups to gather insights directly from your target audience. What are their pain points? What features or benefits are they looking for in a product or service?
Additionally, pay attention to regulatory requirements and legal considerations. Different markets may have unique regulations governing business operations, product safety or marketing practices. I've witnessed how failing to comply with these regulations can result in costly fines or even legal consequences.
When venturing into unfamiliar territory, tapping into the expertise and network of local partners can significantly enhance your chances of success. Look for partners who not only have a deep understanding of the local market but also share your vision and values.
Moreover, partnering with established entities in the market can enhance your credibility and reputation, especially among local customers. I've found that people are more likely to trust brands that have the endorsement of reputable local partners.
Ultimately, establishing strong partnerships is not just about expanding your network; it's about leveraging the collective strength and expertise of your partners to drive mutual success.
Related to finding local partners, successful expansion also demands a deep understanding of and responsiveness to local conditions. Each market presents distinct characteristics, cultural nuances and consumer behaviors that must be carefully considered.
To thrive, customize your products or services to align with local preferences and requirements. For instance, modify product features, packaging and pricing to meet local tastes and purchasing power. Additionally, create marketing campaigns that reflect local cultural values and traditions, using language and imagery that resonate with the target audience. Develop distribution strategies that leverage local channels and practices; this includes using region-specific online platforms.
This level of flexibility and willingness to adapt can help position your business as a relevant and competitive player in the new market.
Expanding into a new market necessitates assembling a talented and dedicated team. Because of this, make sure to invest in recruiting and developing individuals who possess the specific skills, knowledge and experience essential for success in the new market.
Prioritize hiring professionals who are well-versed in the local culture, fluent in the local language and knowledgeable about regional business practices. You want candidates with a proven track record in the target market and who understand local consumer behavior and regulatory environments. Local experts and consultants can help provide insights and facilitate smoother integration.
As the leader of a global team, I've seen firsthand how essential it is to include diverse perspectives and to respect these employees' unique contributions. On this note, I encourage you to make the same commitment to the personal, professional and financial goals of your employees as you do to your businesses. In this way, your team understands that the business’ success is also your success.
As one last piece of advice, a strong, authentic and visible mission can help keep everyone focused regardless of the particulars within each market. Overall, I believe a strong, locally-savvy team can be your greatest asset in navigating challenges, establishing valuable relationships and driving sustainable growth in the new market.
Expansion is a complex process that requires continuous monitoring and evaluation. After you establish key performance indicators (KPIs) to track your progress and measure the success of your expansion efforts, regularly review and analyze your results, identifying areas for improvement and making necessary adjustments along the way.
This iterative approach will allow you to optimize your strategies and maximize your chances of long-term success in the new market.
In closing, expansion planning is the linchpin for successfully scaling your business into new markets. By crafting a robust strategy that, among other considerations, uses market research, forges strategic partnerships and tailors your approach to local nuances, you can navigate the intricate landscape of new markets and set the stage for enduring growth.
I encourage you to embrace these steps with confidence knowing that each one brings you closer to unlocking the full potential of your business.
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In today's rapidly changing business landscape, strategic planning, Key Performance Indicators (KPIs), and quarterly goals have become more crucial than ever. In this interactive session, we will guide you through the process of developing a robust strategic plan that aligns with your business objectives, enabling you to navigate uncertainties and seize opportunities effectively.
Learn how to identify the right KPIs for your business and leverage them to monitor performance, make informed decisions, and drive growth. Whether you're a seasoned entrepreneur or just starting out, this webinar will equip you with the knowledge and tools to optimize your business' performance and achieve tangible results.
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PRESENTER: Masoom Ahmed
Masoom Ahmed holds an Engineering Degree from IIT Chicago and an Executive Management Degree from the University of Chicago Booth School of Management. He worked with a fortune 100 Chicago based company for many years, in US and ex US regions. He served in critical roles in Operations Management, Asset Management after an M&A, Global Product Launch, and New Business Development through M&A and/or internal pipeline. He left the corporate entity, post-planned spin-off to form two independent companies from the parent company.
Masoom Ahmed formed an LLC to work with small business organizations (both profit and nonprofit) in the Chicagoland area. In 2013 Masoom joined the SCORE organization in the role of a business consultant, workshop/webinar presenter, and mentor. He works with both SCORE Chicago and SCORE North Cook & Lake Counties.
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Funded, in part, through a Cooperative Agreement with the U.S. Small Business Administration. All opinions, and/or recommendations expressed herein are those of the author(s) and do not necessarily reflect the views of the SBA.
Whether your industry faces challenges from geopolitical strife, fallout from a global pandemic or rising aggression in the cybersecurity space, the threat vector for modern enterprises is undeniably powerful. Disaster recovery strategies provide the framework for team members to get a business back up and running after an unplanned event.
Worldwide, the popularity of disaster recovery strategies is understandably increasing. Last year, companies spent USD 219 billion on cybersecurity and solutions alone, a 12% increase from 2022, according to a recent report by the International Data Corporation (IDC) (link resides outside ibm.com).
A disaster recovery strategy lays out how your businesses will respond to a number of unplanned incidents. Strong disaster recovery strategies consist of disaster recovery plans (DR plans), business continuity plans (BCPs) and incident response plans (IRPs). Together, these documents help ensure businesses are prepared to face a variety of threats including power outages, ransomware and malware attacks, natural disasters and many more.
Disaster recovery plans (DRPs) are detailed documents describing how companies will respond to different types of disasters. Typically, companies either build DRPs themselves or outsource their disaster recovery process to a third-party DRP vendor. Along with business continuity plans (BCPs) and incident response plans (IRPs), DRPs play a critical role in the effectiveness of disaster recovery strategy.
Like DRPs, BCPs and IRPs are both parts of a larger disaster recovery strategy that a business can rely on to help restore normal operations in the event of a disaster. BCPs typically take a broader look at threats and resolution options than DRPs, focusing on what a company needs to restore connectivity. IRPs are a type of DRP that focuses exclusively on cyberattacks and threats to IT systems. IRPs clearly outline an organization’s real-time emergency response from the moment a threat is detected through its mitigation and resolution.
Disasters can impact businesses in different ways, causing all kinds of complex problems. From an earthquake that affects physical infrastructure and worker safety to a cloud services outage that closes off access to sensitive data storage and customer services, having a sound disaster recovery strategy helps ensure businesses will recover quickly. Here are some of the greatest benefits of building a strong disaster recovery strategy:
The strongest disaster recovery strategies prepare businesses to face a wide variety of threats. A strong template for restoring normal operations can help build investor and customer confidence and increase the likelihood you will recover from whatever threats your business faces. Before we get into the actual components of disaster recovery strategies, let’s look at a few key terms.
Disaster recovery planning starts with a deep analysis of your most critical business processes—known as business impact analysis (BIA) and risk assessment (RA). While every business is different and will have unique requirements, there are several steps you can take regardless of your size or industry that will help ensure effective disaster recovery planning.
Business impact analysis (BIA) is a careful assessment of every threat your company faces, along with the possible outcomes. Strong BIA looks at how threats might impact daily operations, communication channels, worker safety and other critical parts of your business. Examples of a few factors to consider when conducting BIA include loss of revenue, length and cost of downtime, cost of reputational repair (public relations), loss of customer or investor confidence (short and long term), and any penalties you might face because of compliance violations caused by an interruption.
Threats vary greatly depending on your industry and the type of business you run. Conducting sound risk analysis (RA) is a critical step in crafting your strategy. You can assess each potential threat separately by considering two things——the likelihood it will occur and its potential impact on business operations. There are two widely used methods for this: qualitative and quantitative risk analysis. Qualitative risk analysis is based on perceived risk and quantitative analysis is performed using verifiable data.
Disaster recovery relies on having a complete picture of every asset your enterprise owns. This includes hardware, software, IT infrastructure, data and anything else that’s critical to your business operations. Here are three widely used labels for categorizing your assets:
Clearly assigning roles and responsibilities is arguably the most important part of a disaster recovery strategy. Without it, no one will know what to do in the event of a disaster. While actual roles and responsibilities vary greatly according to company size, industry and type of business, there are a few roles and responsibilities that every recovery strategy should contain:
To ensure your disaster recovery strategy is sound, you’ll need to practice it constantly and regularly update it according to any meaningful changes. For example, if your company acquires new assets after the formation of your DRP strategy, they will need to be folded into your plan to ensure they are protected going forward. Testing and refinement of your disaster recovery strategy can be broken down into three simple steps:
Modern enterprises rely more than ever on technology to serve their customers. Even minor outages can cause critical downtime and impact customer and investor confidence. The IBM FlashSystem Cyber Recovery Guarantee is designed for anyone who purchases a new FlashSystem Array with IBM Storage expert care and IBM Storage Insights Pro.
Harnessing xaas to reduce costs, risks and complexity.
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4 min read - A new sandbox that use IBM Cloud Virtual Servers for VPC invites customers into a nonproduction environment to test the performance of 2nd Gen and 4th Gen Intel® Xeon® processors across various applications. Addressing performance concerns in a test environment Performance testing is crucial to understanding the efficiency of complex applications inside your cloud hosting environment. Yes, even in managed enterprise environments like IBM Cloud®. Although we can deliver the latest hardware and software across global data centers designed for…
6 min read - Distributed computing is a process that uses numerous computing resources in different operating locations to mimic the processes of a single computer. Distributed computing assembles different computers, servers and computer networks to accomplish computing tasks of widely varying sizes and purposes. Distributed computing even works in the cloud. And while it’s true that distributed cloud computing and cloud computing are essentially the same in theory, in practice, they differ in their global reach, with distributed cloud computing able to extend…
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Step 1: Assess your current business strategy and business environment. Before you can define where you're going, you first need to define where you are. Understanding the external environment, including market trends and competitive landscape, is crucial in the initial assessment phase of strategic planning.
Related: 4 Business Strategy Skills Every Business Leader Needs. 6 Steps to Develop a Value-Based Business Strategy 1. Define Your Purpose. When approaching business strategy, defining your organization's purpose can be a useful starting point. This is vital in creating customer and employee value, especially if your organization's purpose ...
The steps below will guide you through the process of creating a business plan and what key components you need to include. 1. Create an executive summary. Start with a brief overview of your entire plan. The executive summary should cover your business plan's main points and key takeaways.
Strategic planning is also different from a business plan that focuses on a specific product, service, or program and short-term goals. Rather, strategic planning means looking at the big picture. While they are related, it is important not to confuse strategic planning with strategic thinking, which is more about imagining and innovating in a ...
The Benefits Of Strategic Planning (& Challenges You Should Be Aware Of) Done right, strategy planning can benefit your business tremendously, but a certain degree of stick-to-itiveness is required to get the job done. (As we noted at the beginning of this guide, organizations that actually meet their strategic objectives are in the minority ...
Determine your priorities and objectives. Define responsibilities. Measure and evaluate results. Each step requires close collaboration as you build a shared vision, strategy for implementation, and system for understanding performance. Related: Learn how to hold an effective strategic planning meeting.
1. Basic model. The basic strategic planning model is ideal for establishing your company's vision, mission, business objectives, and values. This model helps you outline the specific steps you need to take to reach your goals, monitor progress to keep everyone on target, and address issues as they arise.
Strategic planning is the ongoing organizational process of using available knowledge to document a business's intended direction. This process is used to prioritize efforts, effectively allocate resources, align shareholders and employees on the organization's goals, and ensure those goals are backed by data and sound reasoning. It's ...
Strategy and strategic plans: How they are different and why it matters. Strategy creates a common understanding of what an organization wants to achieve and what it needs to do to meet its goals. Strategic plans bridge the gap from overall direction to specific projects and day-to-day actions that ultimately execute the strategy. Job No. 1 is ...
Strategic planning charts your business's course toward success. Using your organization's vision, mission statement, and values — with internal and external information — each step of the strategic planning process helps you craft long-term objectives and attain your goals with strategic management.. The key elements of strategic planning includes a SWOT analysis, goal setting ...
The concept of strategic planning originally became popular in the 1950s and 1960s, and enjoyed favor in the corporate world up until the 1980s, when it somewhat fell out of favor. However, enthusiasm for strategic business planning was revived in the 1990s and strategic planning remains relevant in modern business.
Strategic planning is the process of defining your business's direction and outlining a path toward a preferred future. The goal of a strategic plan is to capture an organization's mission and core principles — to envision the fulfillment of these ideals. Strategic planning is both conceptual and practical, as it presents both high-level ...
A strategic plan defines who you are as a business and lists concrete actions to achieve your goals. When the unexpected occurs, a strategic plan helps your business survive and find new opportunities while staying true to your values and mission. On top of that, building a strategic plan is a team-building exercise that can bring together ...
Estimated Duration. Determine organizational readiness. Owner/CEO, Strategy Director. Readiness assessment. Establish your planning team and schedule. Owner/CEO, Strategy Leader. Kick-Off Meeting: 1 hr. Collect and review information to help make the upcoming strategic decisions. Planning Team and Executive Team.
Over the years I've facilitated many strategic planning workshops for business, government, and not-for-profit organizations. We reflect on recent changes and future trends and consider how to ...
Strategic planning is the ongoing organizational process of using available knowledge to document a business's intended direction. This process is used to prioritize efforts, effectively allocate resources, align shareholders and employees, and ensure organizational goals are backed by data and sound reasoning.
In conference rooms everywhere, corporate planners are in the midst of the annual strategic-planning process. For the better part of a year, they collect financial and operational data, make forecasts, and prepare lengthy presentations with the CEO and other senior managers about the future direction of the business.
The strategic plan and business plan also offer different uses and benefits as well. Benefits of using a strategic plan One of the primary benefits of a strategic plan is that it helps a company to increase its profitability, allowing for greater flexibility in how it can allocate funds for components like buying newer technologies and hiring ...
Strategic planning is crucial for a business as it creates a map for a business to follow and course correct when need be. The first part of a strategic plan is the business plan, which outlines ...
The business strategic planning process usually consists of defining business goals, doing a SWOT analysis to assess the company's business environment and developing a business strategy. The leadership team is in charge of business strategic planning, as it has a very important impact on the overall direction of a company. ...
Strategic planning has several benefits for an organization, including: 1. It encourages proactivity in your business. A strategic plan enables businesses to anticipate and plan for the future. Businesses can predict some unfavorable circumstances and take appropriate steps to prevent them through strategic planning.
The single thread connecting strategic planning with the business plan is the vision of the organization, and for obvious reasons— vision serves as the guiding light for strategy formation, which, in turn, directs the day-to-day operations of the business. Why A Strategic Plan is Crucial to The Organization. In a word— synchronization.
Strategic planning is a process in which organizational leaders determine their vision for the future as well as identify their goals and objectives for the organization. The process also includes establishing the sequence in which those goals should fall so that the organization is enabled to reach its stated vision .
HBR Learning's online leadership training helps you hone your skills with courses like Strategy Planning and Execution. Earn badges to share on LinkedIn and your resume. Access more than 40 ...
This iterative approach will allow you to optimize your strategies and maximize your chances of long-term success in the new market. In closing, expansion planning is the linchpin for successfully ...
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In today's rapidly changing business landscape, strategic planning, Key Performance Indicators (KPIs), and quarterly goals have become more crucial than ever. In this interactive session, we will guide you through the process of developing a robust strategic plan that aligns with your business objectives, enabling you to navigate uncertainties ...
Dive into the world of strategic planning with easy-to-use visual tools designed to bring clarity to your business goals. Whether you're a startup or an established business, learn how to define your purpose, understand your customers' needs, and craft effective plans for growth. This virtual workshop introduces powerful tools like the Value Proposition Canvas and Business Model Canvas ...
They ensure that data initiatives align with business objectives, compliance standards and best practices. Chief artificial intelligence officer is an executive role that guides the organization through the complexities of AI adoption. They provide strategic leadership and oversee the development, strategy and implementation of AI technologies.
Disaster recovery planning starts with a deep analysis of your most critical business processes—known as business impact analysis (BIA) and risk assessment (RA). While every business is different and will have unique requirements, there are several steps you can take regardless of your size or industry that will help ensure effective disaster ...