What is strategic planning?
Strategic planning is a process used by organizations to identify their goals, the strategies necessary to accomplish those goals and the internal performance management system that will be used to monitor and evaluate progress. Most organizations use a SWOT or gap analysis to identify the underlying factors driving their current performance. This, in turn, informs the selection of the most high-leverage strategies to create change. The strategic planning process culminates in the development of a strategic plan document that serves as the organization’s collective roadmap. While each organization is unique, the essential elements of any strategic plan include:
- Clear mission and vision statements to frame the context of the document
- Clear timelines for strategy implementation and progress monitoring
- Quarterly benchmarks or objectives that will inform progress towards annual goals
- Identification of the data sources used to track progress
- Indication of the individuals and/or offices responsible for each strategy
Right from the start: strategic planning for your business
Creating a strategic plan when you first start a business is a helpful strategy to set your business up for success. Doing so can create a structure to guide the initial brainstorming that businesses are already engaged in when first starting up. In this case, the strategic plan would be one component of the larger business plan that also includes a financial plan, marketing plan and operational or management plan. Strategic planning is especially helpful for new businesses to stay focused on a few key priorities.
Related: 10 Steps to Starting a Business
Where and when to use strategic planning
In addition to the initial start-up phase, strategic planning can be a helpful process throughout the life of a business. In general, the decision about exactly when or how often to engage in strategic planning is specific to each organization. Some organizations engage in strategic planning annually or biennially, adjusting goals and strategies throughout as needed. In education, for example, schools develop strategic plans annually. They are usually generated in the late spring and are informed by the previous school year’s student performance. The financial sector, however, often aligns strategic planning to quarterly financial reporting cycles.
Strategic planning can also be beneficial for organizations during any of the following circumstances:
- Changing industry trends or economic market
- Prior to the launch of a new product or branch of the business
- Following a merger with another organization
- Following a change in senior leadership
Next steps for strategic planning
Here are three helpful steps to take following the initial strategic planning:
- Allocate resources in alignment with the strategic plan. If the strategic plan is to be the central driving document for an organization, that organization’s financial and personnel resources should be allocated accordingly. This may require involving finance and operational staff who might not have been part of the initial strategy development.
- Develop cascading goals. Cascading goals are a structure that organizations use to align goals from the highest level of the organization all the way to individual employees. Beginning with the highest level goals from the strategic plan, organizations then backward plan for the smaller sub-goals that offices and individual employees must accomplish to achieve the broader outcomes. Doing this can help employees see the connection between their performance and the success of the larger organization, which can increase motivation and engagement.
- Build a performance management infrastructure. Building a robust infrastructure for performance management can help your organization stay on track with its strategic planning process. This requires identification of the necessary data points, individuals responsible for analyzing and reporting data and meeting rhythms for review that include all relevant stakeholders. The structured checkpoints present an opportunity to refine the plan as needed in response to performance.
Strategic planning FAQs
Here are some frequently asked questions about strategic planning:
Why conduct strategic planning?
Strategic planning is a helpful organizational process that, if executed effectively, can increase the likelihood that a company will successfully meet its goals. Additional benefits of strategic planning include:
- Building consensus and engagement of all stakeholders
- Establishing systems of accountability
- Clarifying priorities
- Analyzing the organization’s strengths, weaknesses, opportunities and threats
- Creating mechanisms for evaluating progress
What is the first step in the strategic planning process?
Although this may vary across organizations, the first step in the strategic planning process is typically to create mission and vision statements. It is helpful to begin the process this way so that your values and long term objectives guide the goal setting and action planning components of the process. For companies with a solidly established mission or vision statement, this step may reflect refining more than creating, or customizing the vision to reflect a new or changing project.
Who should be involved in a company’s strategic planning?
Typically senior leaders who engage in the initial strategic planning process are involved. Following the initial plan development, leaders commonly engage their teams, sometimes for feedback and other times just to inform them.
Once established, it is the responsibility of all employees to execute the strategic plan strategies and monitor progress. Although individual offices may monitor their sub-goals, it is again senior leadership who typically engages in the formal, ongoing performance management. A company’s data analyst also supports the performance management process by running reports and preparing data for leadership to review.