So, what's the plan? Or should I say, what's the strategic plan?
Without a proper strategy, your business or organization can suffer. But, with strategic planning, businesses can increase productivity, profitability, and increase their longevity by creating a clear plan for the future.
Does strategic planning sound too good to be true?
Luckily, you can join the 44% of leaders and teams that had productive strategic planning sessions. If you take the right approach, strategic planning can have a positive impact on your business and its bottom line, and it will certainly be worth your time.
Strategic planning is a business activity that's used by the leadership of an organization. They set long-term goals and priorities for the business, agree on ways to reach these goals, and how to measure progress. This provides a clear action plan for the company. Common frameworks used in strategic planning include the Balanced Scorecard (BSC), Objectives and Key Results (OKR), and the Theory of Change (TOC).
The purpose of strategic planning is for an organization to determine the direction its heading in the next three to five years. The objectives set during strategic planning can be modified if strategies were based off incorrect assumptions, or if the organization needs to adjust in response to changes in the business environment (e.g., internal or external). And strategic plans are often adjusted each year.
"It is a disciplined effort that produces fundamental decisions and actions that shape and guide what an organization is, who it serves, what it does, and why it does it, with a focus on the future. Effective strategic planning articulates not only where an organization is going and the actions needed to make progress, but also how it will know if it is successful."
Strategic vs. Operational Planning
Strategic planning is used by the organization to outline its long-term visions and goals for the next three to five years. These are the overarching priorities for the entire company. Operational planning supports the strategic plan. Different departments and divisions of the organization focus on short-term goals that can be accomplished within a year and impact the priorities set in the strategic plan.
While strategic planning and operational planning sound similar, they are different business activities. Strategic planning focuses on long-term goals -- these goals are often set by the executive leadership team. They'll outline their mission and vision for the business and
Operational planning breaks down the long-term goals of the strategic plan into short-term goals and activities. Oftentimes, this sort of planning is performed by individual departments or teams, and the planning is done by department leaders. They focus their efforts on creating strategies and tactics they can pursue throughout the year that will support the broader goals laid out in the strategic plan.
Wondering how strategic and operational planning impact sales teams? The strategic plan is determined by senior leadership or executives to develop a long-term vision for the company. It's up to individual departments to create plans and strategies for their teams to align with and work towards the objectives set in the strategic plan.
Sales leaders create a sales plan (operational plan) that outlines the short-term strategies and tactics that will be used to achieve long-term goals. This aligns sales teams and salespeople so they know exactly what they're working towards, and how progress and success will be measured.
Strategic Planning Process
The strategic planning process is how an organization defines its vision and long-term goals. Company leaders hold planning sessions to define the vision of the company and the high-level objectives. They outline the goals they'd like to achieve and which tactics and resources will be used to reach the goals. This information is written down in a document known as a strategic plan.
What is a strategic plan?
A strategic plan is a document that outlines the results of the strategic planning session. The length of the strategic plan varies depending on the complexity of the company and its size. The document is the source of truth and keeps the organization on track to hit its goals.
So, what exactly does the strategic planning process look like? Here are the steps.
Strategic Planning Process Steps
Prepare for strategic planning.
Assess the business.
Outline your mission, vision, and key stakeholders.
Choose a strategic planning framework.
Create a strategic plan.
1. Prepare for strategic planning.
Who do you want to include in the strategic planning process? Ideally, you should assemble a cross-functional group that includes executives and leadership from your critical business functions (e.g., finance, operations, product, sales, marketing, human resources, etc.).
After your strategic planning group is assembled, set a timeline for completion. Depending on the size or complexity of your company, planning can take anywhere from a few weeks to a few months. Pick a timeline that works best for your organization.
2. Assess the business.
Look at the internal and external factors that impact your business. For example:
Is there a particular business area that's growing quickly? How can the business further support its growth?
Will a new technological advancement help improve your business processes?
Are any pieces of legislation being passed that the company needs to respond to?
These are just a few things to consider when evaluating the environment your business is operating in. Tools like SWOT Analysis, Porter's Five Forces, and PESTLE Analysis can help you assess the strongest and weakest parts of the organization. Plus, you can determine opportunities for growth and see where potential challenges might arise.
3. Outline your mission, vision, and key stakeholders.
What's the business' mission or vision? Identify the core values and priorities of the business by outlining your mission and vision statements. Determine who your key stakeholders are (e.g., customers, employees, owners, board members, suppliers) to understand exactly who your strategy will impact.
And take the opportunity to identify your target customer as well. Since customers are your primary stakeholders, you'll need to create an accurate customer persona or profile so you know how their needs should be met.
When working through the strategic planning process, you'll start by outlining your aspirational goals first, so you can eventually develop specific strategies and tactics that will be used to achieve the aspirational goals.
This strategy pyramid is an ideal reference tool to make sure your priorities are on the right track.
4. Choose a strategic planning framework.
Once you've identified key opportunities, it's time to choose a framework that will help you develop your strategic plan. Here are a few of the most common frameworks businesses use for strategic planning.
The Balanced Scorecard (BSC) framework helps you outline your business' mission, vision, and strategy and creates a visual strategy map that your business can follow. It includes strategic objectives, targets, measures and KPIs, and the strategic initiatives that will help you reach your goals.
With this strategic method, organizations make a list of three to five, high-level objectives. Below each objective, they'll list three to five, quantifiable key results which are measured with a score between 0 to 1 or 0-100%. Check out these OKR examples to get started.
The Theory of Change (TOC) is a framework where you identify your long-term goals, then work backward to determine which conditions must be in place for each goal to be reached. Here is an in-depth description of how and when to use the Theory of Change method.
By using these frameworks, you'll be able to develop your strategies, the tactics you'll use to accomplish them, and the key performance indicators (KPIs) you'll use to track performance.
These are the strategic planning methodologies that are used most often. If they don't seem like they'll work for you, check out this list of strategic planning models and find the best one for your business.
5. Create a strategic plan.
Now that you've consulted with your team and came up with your long-term plans, it's time to record the agreements and strategies in a strategic plan. The strategic plan is a physical document that can be shared across departments in the company.
But, many companies have gone digital with strategic planning software, so their strategic plan can be accessed by anyone in the company from their electronic devices. Many of these software options are collaborative for people at all levels of the company, which increases the transparency of the business' primary goals.
Cascade Strategy helps you create a plan and execute it with its strategy planning platform. It allows you to create a strategy map, outline your goals, and include specific details like goal timeframes and the metrics used to evaluate goal achievement.
Additional features include a KPI builder, smart frameworks, goal and project management tools, and dashboards to report on progress.
This strategic planning tool has Balanced Scorecard Software that enables you to build your strategic plan. The platform provides you with the ability to build interactive Balanced Scorecards, and create dashboards and strategy maps to track your goals.
You can assign elements of the strategic plan to different owners so they can tackle specific parts of the strategy.
WorkBoard offers a strategic planning solution that's specifically for CEOs and General Managers. And with tools like the active OKR solution, teams can identify plan using the Objectives and Key Results (OKR) technique.
The tool provides a way to align organizations and help them identify risks with OKR heatmaps.
Khorus is a strategy execution software that creates transparency for CEOs, management, and individual contributors. CEOs set objectives in Khorus, and then teams and individuals can add their own goals that contribute to the overarching objectives.
This strategic planning software improves the ability of businesses to execute their strategies, and it increases alignment and transparency.
With this project portfolio management system, you can manage ideas and projects to help you and your team develop a strategy. An interesting feature is the star rating system that allows employees to rate each project. The system takes this information, analyzes it, and rates the project's overall potential.
The tool creates transparency between leaders and employees, and management is able to engage with the feedback to improve upon their strategic goals and projects.