Strategic Planning Basics

A strategic plan is ultimately a set of decisions about what to do, why to do it, and how to do it with a focus on the future. It implies that some organizational decisions and actions are more important than others (we cannot be all things to all people at all times), and much of the strategy lies in making tough decisions about what is most crucial to achieving organizational success. Strategic planning may be as simple as planning to achieve a long-range goal, or as complex as changing strategic direction for a program.

Process
Most strategic planning methodologies are based on the STP process:

• Situation - Where are we right now? How did we get here?
• Target - Where do we want to be?
• Path - How can we get there?

General Approaches
In general terms, there are two approaches to strategic planning:

• The Industrial Organization Approach - deals with issues like competition, resource allocation, and economies of scale
• The Sociological Approach - deals primarily with human interactions

Methodologies
There are two basic ways of doing strategic planning:

• Strategy as logical incremental steps - includes environmental scanning, internal resource assessment, industry or market research, competitor analysis, and customer marketing research. This leads to a vision, mission, objectives and a strategic plan that includes resource implementation, resource allocation, monitoring, adjustment, and control.
• Strategy as revolution - identify the unquestioned beliefs in your organization/ industry and challenge them, look for opportunities to re-write the rules, look for major discontinuities in technology, habits, and geopolitics, and embrace the change wholeheartedly.

Elements
While there are many variations, most strategic planning processes include:

• Environmental scanning - "Environmental scanning is the acquisition and use of information about events, trends, and relationships in an organization's external environment, the knowledge of which would assist management in planning the organization's future course of action" - Chun Wei Choo
• SWOT (Strengths, Weaknesses, Opportunities, Threats)
• GTSM (Goals, Targets, Strategies, Measures)

A good strategy should be:


• A good fit between the business environment and an organization's resources and core competency - It must be feasible and appropriate
• Capable of providing the organization with a unique and sustainable advantage
• Dynamic, flexible, and able to adapt to changing situations

Reasons Strategic Plans Fail
There are many reasons why strategic plans fail, especially:

• Failure to understand the customer and why they come to you
• Not determining whether or not there is a real need for the product or service
• Inadequate or incorrect marketing research
• Inability to predict environmental reaction - what will competitors do, will government intervene?
• Over-estimation of resource competence
• Failure to develop new employee and management skills
• Failure to coordinate
• Inadequate reporting and control relationships
• Organizational structure not flexible enough
• Failure to obtain senior management commitment
• Failure to get management involved right from the start
• Failure to obtain sufficient company resources to accomplish task
• Failure to obtain employee commitment - new strategy not well explained to employees, no incentives given to workers to embrace the new strategy
• Under-estimation of time requirements
• No critical path analysis done
• Failure to follow the plan - no follow through after initial planning, no tracking of progress against plan
• No consequences for above

Adapted from "Figures in Strategic Planning" - Michael Porter and J Barney