What Is Strategic Planning?
Strategic planning is the managerial process of deciding on a clear goal (or set of goals) and the means by which to achieve it — in other words: deciding on a strategy. A good strategic plan allows companies to set their priorities, effectively use any available resources, and eventually achieve their desired goals with good success.
There are many different ways to actually carry out strategic planning, including various different tools and techniques such as PEST(LE), Five Force or SWOT analyses, all of which will be discussed further below.
Strategic planning is often confused with SWOT analyses (and occasionally the others) because of their inherently similar nature. To sum up the differences (which were covered in a whole article over here), strategic planning is the broad framework through which managers build a ‘plan of attack’, while a SWOT analysis is simply a tool used to provide information about the present or future situation of a company or venture.
Another common misconception is that a business plan is the same thing as a strategic plan. The main purpose of a business plan is to decide how a business will operate and generate revenue on a much smaller scale, while a strategic plan is designed to help a company get from where they are now to where they want to be within. If you’d like to know more about business plans, as opposed to strategic planning, we have an entire article dedicated to them.
How do I carry out Strategic Planning?
As mentioned before, strategic planning is simply deciding how a company or other organization should achieve its goals over a given timespan — taking it from where it is now to where it wants to be.
A good strategic plan should analyze what the means are to achieving an end, and also, take into account any factors which will make achieving that end any harder or easier.
This short step-by-step guide will help is one approach to designing your strategic plan:
- Make a reasonable decision as to where you want to be in x number of years
- Decide (quite primitively) how it is that you intend to get there
- Employ various analyses to help anticipate any threats which might slow you down, opportunities you could leverage, or factors which make your goals hard to achieve
- Repeat steps number 1 and 2 with this new knowledge in case you need to redirect your path to something more realistic/effective, or find new approaches to getting there
As you can see, step number 3 is undoubtedly the most important. The goals you set or the means to achieving them are very much dependent on the circumstances that an organization finds itself in (or will find itself in), but it’s still good to set out with some idea of what you intend to achieve and how you might do it.
Another way you might build a strategic plan is to answer these questions:
- Where are you?
- What is the purpose of your organization?
- What do you do well, and what do you do poorly?
- Do you have any current opportunities or threats?
- Where do you want to be?
- Will the purpose of your organization have changed?
- What will you have improved on?
- Will there still be any opportunities or threats?
- How will you get there?
- What will you do to get from here to there?
- What milestones or goals will you use to track your progress?
- How will you iron out weaknesses and negate threats?
- How will you make the most of your strengths and leverage opportunities?
With this plan, steps 1 and 2 both include an analysis of the circumstances (or future circumstances) to help you pick the most realistic goals and find a clear path from A to B — you can’t go anywhere if you don’t know where you’re going!
How you actually form your strategy is entirely up to you. If you fully appreciate how you need to get from one exact point to another, it should be quite clear how to get there.
What Analyses Can Be Used in Strategic Planning?
A lot of the different business analyses covered on this website can be used in strategic planning. To name the three most popular:
SWOT Analysis: A SWOT analysis (Strengths, Weaknesses, Opportunities, Threats) provides a framework for analysing the internal and external factors a company faces or could face. SWOT analyses are particularly useful in strategic planning because they help you to understand what challenges you might face, and which aspects of your organization might be the most helpful. Making a ‘before’ and ‘after’ SWOT analysis (i.e. one for where you are, and one for where you want to be) is particularly useful, as it allows you to clearly see what it is that needs to be changed.
PEST (PESTLE, STEP, STEEP, STEEPLE) Analysis: A PEST analysis looks at the Political, Economic, Social, and Technological (and sometimes Ethical, Environmental or Legal) aspects of a plan or venture. Similar to a SWOT analysis, a PEST analysis is another way to look at the status, or potential status, of a company or venture. Once again, this clearly exposes any boundaries, focus areas, alternative paths.
Five Forces Analysis: A Porter’s Five Forces Analysis is especially useful in competitive commerce industries, where it looks at the threat of substitutes or new entrants in a market, competitive rivalry, and the bargaining power of suppliers and buyers. A well executed Five Forces analysis can help you pick better goals, or minimize risk in dynamic stages of your organization’s growth.
So, You’re in Charge of Strategic Planning?
Once you have decided on a strategy for getting to where you want to, it’s essential to manage all of the different facets of your organization. This is called strategic management, and it’s about perfecting areas from marketing to sales, and everything inbetween! If you’d like to know more about actually executing a strategy, and doing it well, from an administrative point of view, check out this article on strategic management.
That’s all there is to strategic planning. Like most kinds of planning, the process itself can be slow and unrewarding, but thankfully the benefits from occasionally redirecting your organization can be huge. With this information, you should be able to set clear, achievable goals, and hopefully, find an effective strategy to realizing them.