What is Strategic Planning?

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

The 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. 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.

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.

Frequently Asked Questions (FAQs)