What is Strategic Planning and why does it matter?

Learn what strategic planning is, its key components, and how to execute it effectively. Discover tools and processes for success.

Strategic planning is a systematic process whereby an organisation defines its strategy and its plans to pursue this strategy.

Although many people argue that strategy and planning are two separate concepts, in practice either is useless without the other. And so the two are often collectively described as strategic planning.

Strategic planning systems typically also encompass execution and results. This allows for the fact that few strategic plans ever unfold exactly as imagined and environmental change and internal performance factors come into play.

The four components of strategic planning

Strategic PlanningThe four components of strategic planning are:

  1. Strategy: Deciding what the organisation should do, where it should do it, and why it should do it.
  2. Planning: Deciding who should do it, how they should do it, and when they should do it.
  3. Execution: Actually doing it.
  4. Results: Comparing the actual results (outcomes) to what was anticipated.

In practice, the boundaries of these activities blur as they are performed on an iterative basis in response to changes in the external environment and the organisation's actual performance against plans.

Strategy

Deciding what the organisation should do, where it should do it, and why it should do it typically entails activities like:

  1. Market research and analysis of customers' needs and preferences, market trends, competitors and organisational performance.
  2. Analysis using tools like SWOT, McKinsey 7-S, PESTEL, Porter's 5 Forces, Business Model Canvas and/or Value Chain Analysis, BCG Matrices, Pareto analysis and scenario analysis.
  3. Decision-making and setting strategic direction with vision and mission statements, goals, objectives and KPIs.

Planning

Deciding who should do it, how they should do it, and when they should do it typically entails:

  1. Planning strategic initiatives, estimating how long they will take, what resources they will require, and how much they will cost.
  2. Allocating resources (including people) and budget.
  3. Identifying and mitigating risks.
  4. Tools like 3 Horizons, Gantt Charts, Budgets.

Execution

Actually doing it, typically involves a significant amount of coordination of activities and typically requires governance structures to be in place with detailed status and progress reporting and communications.

Execution typically involves constant adjustment and refinement of the plan as real-world problems are encountered and overcome.

Results

Comparing the actual results (outcomes) to what was anticipated typically involves tracking KPIs (which should have been identified up front when the strategy was determined).

It is important to track that, not only did the organisation do what it said it would do, but also that this achieved the outcomes it anticipated it would.

If the strategy has not achieved the anticipated outcomes then the organisation should adjust its strategy and try again. In this way, strategic planning becomes a fluid, iterative and adaptive process.

Tools like the Strategy Scorecard are used to track results.

Why is Strategic Planning important?

Strategic planning is crucial because it provides organisations with a clear sense of direction and purpose. By aligning goals, resources, and actions, it ensures that everyone in the organisation is working towards the same objectives. This process enables businesses to:

  • Set Priorities: Strategic planning helps organisations identify and focus on their most important goals, ensuring resources are used efficiently.
  • Adapt to Change: It prepares businesses to anticipate and respond to external changes, such as market shifts, technological advancements, or competitive pressures.
  • Improve Decision-Making: By providing a structured framework, it allows leaders to make informed decisions based on long-term objectives rather than short-term pressures.
  • Measure Progress: Strategic plans include key performance indicators (KPIs), enabling organisations to track progress and make adjustments when necessary.
  • Enhance Collaboration: A well-defined strategy aligns teams across the organisation, improving communication and fostering a shared vision.

Ultimately, strategic planning turns ambition into action, helping organisations stay competitive, resilient, and forward-looking in an ever-changing environment.

How to do Strategic Planning

Historically, strategic planning has been quite unstructured, relying on general-purpose tools like Microsoft PowerPoint to produce documents which, whilst they might look attractive, are often disjointed and inconsistent, and almost always out of date the minute they're written.

StratNavApp.com provides a structured platform for strategic planning to ensure that plans remain consistent and up-to-date.

Common challenges and pitfalls in Strategic Planning

While strategic planning is essential for success, organisations often encounter challenges that can derail the process. Here are some common pitfalls and how to overcome them:

  • Lack of Stakeholder Engagement: If key leaders and teams are not involved, the plan may lack buy-in and fail during implementation. Solution: Foster collaboration and include stakeholders early in the process.
  • Unrealistic Goals: Setting overly ambitious or vague objectives can lead to frustration and wasted resources. Solution: Ensure goals are SMART – Specific, Measurable, Achievable, Relevant, and Time-bound.
  • Failure to Adapt: Sticking rigidly to a plan despite changing circumstances can make the strategy obsolete. Solution: Regularly review and adjust the plan based on new information or changes in the environment.
  • Poor Communication: If the strategy is not clearly communicated, teams may struggle to align their actions. Solution: Develop a clear communication plan to ensure everyone understands the strategy and their role in achieving it.
  • Neglecting Execution: A well-crafted strategy means little without effective implementation. Solution: Assign responsibilities, set timelines, and monitor progress with key performance indicators (KPIs).

By recognising these challenges and addressing them proactively, organisations can ensure their strategic planning process delivers real value and drives long-term success.

StratNavApp.com will help you to overcome all of these challenges and pitfalls.

Frequently Asked Questions (FAQs)

What is strategic planning?

Strategic planning is a systematic process where an organisation defines its strategy and plans to pursue this strategy. It combines strategy, planning, execution, and results to facilitate execution and drive outcomes.

What are the four components of strategic planning?

The four components of strategic planning are: Strategy (deciding what, where, and why), Planning (deciding who, how, and when), Execution (doing it), and Results (comparing actual results to anticipated outcomes).

Why is strategic planning important?

Strategic planning provides clarity, direction, and focus for an organisation. It aligns resources with objectives and helps teams prioritise actions to achieve long-term goals.

How do you perform strategic planning?

Performing strategic planning involves market research, using strategic tools (like SWOT, PESTEL, etc.), setting strategic direction, planning initiatives, allocating resources, executing the plan, and tracking outcomes with KPIs and tools like the Strategy Scorecard.

What tools are used in strategic planning?

Tools used in strategic planning include SWOT analysis, McKinsey 7-S, PESTEL, Porter's 5 Forces, Business Model Canvas, Value Chain Analysis, BCG Matrices, Pareto analysis, scenario analysis, 3 Horizons, Gantt Charts, budgets, and the Balanced Scorecard.

How does StratNavApp.com help with strategic planning?

StratNavApp.com provides a structured platform for strategic planning, ensuring that plans remain consistent, up-to-date, and effectively executed.


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Published: 2024-07-30  |  Updated: 2024-12-17

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