Strategy planning

Strategy planning gives organisations a sense of direction and marshals it around a common mission. It creates standards and accountability. Strategy planning can enhance operational plans and efficiency. It also helps organisations limit time spent on crisis management, where they're reacting to unexpected changes that they failed to anticipate and prepare for.

What is strategy planning?

Strategy planning is a process in which an organisation's leaders define their vision for the future and identify their organisation's goals and objectives. The process includes establishing the sequence in which those goals should be realised so that the organisation can reach its stated vision.

Strategy planning typically represents mid- to long-term goals with a life span of three to five years, though it can go longer. This is different than business planning, which typically focuses on short-term, tactical goals, such as how a budget is divided up. The time covered by a business plan can range from several months to several years.

The product of strategy planning is a strategic plan. It is often reflected in a plan document or other media. These plans can be easily shared, understood and followed by various people including employees, customers, business partners and investors.
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Organisations conduct strategy planning periodically to consider the effect of changing business, industry, legal and regulatory conditions. A strategic plan may be updated and revised at that time to reflect any strategic changes. 

Is strategy planning important?

Businesses need direction and organisational goals to work toward. Strategy planning offers that type of guidance. Essentially, a strategic plan is a roadmap to get to business goals. Without such guidance, there is no way to tell whether a business is on track to reach its goals.

The following four key levers of strategy development are worth attention:

1. The mission. Strategy planning starts with a mission that offers a company a sense of purpose and direction. The organisation's mission statement describes who it is, what it does and where it wants to go. Missions are typically broad but actionable. For example, a business in the education industry might seek to be a leader in online virtual educational tools and services.
2. The goals. Strategy planning involves selecting goals. Most planning uses SMART goals: specific, measurable, achievable, realistic and time-bound or other objectively measurable goals. Measurable goals are important because they enable business leaders to determine how well the business is performing against goals and the overall mission. Goal setting for the educational business example might include releasing the first version of a virtual classroom platform within two years or increasing sales of an existing tool by 30% in the next year.
3. Alignment with short-term goals. Strategy planning relates directly to short-term, tactical business planning and can help business leaders with everyday decision-making that better aligns with business strategy. For the educational business example, leaders might choose to make strategic investments in communication and collaboration technologies, such as virtual classroom software and services but decline opportunities to establish physical classroom facilities.
4. Evaluation and revision. Strategy planning helps business leaders periodically evaluate progress against the plan and make changes or adjustments in response to changing conditions. For example, a business may seek a global presence, but legal and regulatory restrictions could emerge that affect its ability to operate in certain geographic regions. As result, business leaders might have to revise the strategic plan to redefine objectives or change progress metrics.

What is a strategy planning process?

There are myriad different ways to approach strategy planning depending on the type of business and the granularity required. Most strategy planning cycles can be summarised in these five steps:

Identify. A strategic planning cycle starts with the determination of a business's current strategic position. This is where stakeholders use the existing strategic plan including the mission statement and long-term strategic goals to perform assessments of the business and its environment. These assessments can include a needs assessment or a SWOT (strengths, weaknesses, opportunities and threats) analysis to understand the state of the business and the path ahead.

Prioritise. Next, strategy planners set objectives and initiatives that line up with the company mission and goals and will move the business toward achieving its goals. There may be many potential goals, so planning prioritises the most important, relevant and urgent ones. Goals may include a consideration of resource requirements such as budgets and equipment and they often involve a timeline and business metrics or KPI's for measuring progress.

Develop. This is the main thrust of strategy planning in which stakeholders collaborate to formulate the steps or tactics necessary to attain a stated strategy objective. This may involve creating numerous short-term tactical business plans that fit into the overarching strategy. Stakeholders involved in plan development use various tools such as a strategy map to help visualise and tweak the plan. Developing the plan may involve cost and opportunity trade-offs that reflect business priorities. Developers may reject some initiatives if they don't support the long-term strategy.

Implement. Once the strategic plan is developed, it's time to put it in motion. This requires clear communication across the organisation to set responsibilities, make investments, adjust policies and processes, and establish measurement and reporting. Implementation typically includes strategy management with regular strategy reviews to ensure that plans stay on track.
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Update. A strategic plan is periodically reviewed and revised to adjust priorities and reevaluate goals as business conditions change and new opportunities emerge. Quick reviews of metrics can happen quarterly, and adjustments to the strategic plan can occur annually. Stakeholders may use balanced scorecards and other tools to assess performance against goals.

Who is a stakeholder in strategy planning?

An executive committee typically leads the strategy planning process. Gestaldt Strategy Consultants recommends that the executive committee include representatives from all areas within the enterprise and work in an open and transparent way where information is documented from start to finish.

Gestaldt Strategy Consultants researches and gathers the information needed to understand the organisation's current status and factors that will affect it in the future. They solicit input and feedback to validate or challenge the assessment of the information with the executive committee.

Gestaldt Strategy Consultants can opt to use one of many methodologies or strategy frameworks that have been developed to guide leaders through this process. These methodologies take the executive committee through a series of steps that include an analysis or assessment, strategy formulation, and the articulation and communication of the actions needed to move the organisation toward its strategic vision.

Gestaldt Strategy Consultants, in collaboration with the executive committee, creates benchmarks that will enable the organisation to determine how well it is performing against its goals as it implements the strategic plan. The planning process should also identify which executives are accountable for ensuring that benchmarking activities take place at planned times and that specific objectives are met.

How often should strategy planning be done?

There are no uniform requirements to dictate the frequency of a strategy planning cycle. However, there are common approaches:

• Quarterly reviews. Once a quarter is usually a convenient time frame to revisit assumptions made in the planning process and gauge progress by checking metrics against the plan.
• Annual reviews. A yearly review lets business leaders assess metrics for the previous four quarters and make informed adjustments to the plan.

Timetables are always subject to change. Timing should be flexible and tailored to the needs of a company. For example, a startup in a dynamic industry might revisit its strategic plan monthly. A mature business in a well-established industry might opt to revisit the plan less frequently.

Types of strategy plans

Strategy planning activities typically focus on three areas: business, corporate or functional. They break out as follows:

• Business. A business-centric strategic plan focuses on the competitive aspects of the organisation - creating competitive advantages and opportunities for growth. These plans adopt a mission evaluating the external business environment, setting goals, and allocating financial, human and technological resources to meet those goals. This is the typical strategic plan and the main focus of this article.
• Corporate. A corporate-centric plan defines how the company works. It focuses on organising and aligning the structure of the business, its policies and processes and its senior leadership to meet desired goals. For example, the management of a research and development might be structured to function dynamically and on an ad hoc basis. It would look different from the management team in finance or HR.
• Functional. Function-centric strategic plans fit within corporate-level strategies and provide a granular examination of specific departments or segments such as marketing, HR, finance and development. Functional plans focus on policy and process such as security and compliance while setting budgets and resource allocations.

In most cases, a strategic plan will involve elements of all three focus areas. But the plan may lean toward one focus area depending on the needs and type of business. 

Effective strategic planning has many benefits. It forces organisations to be aware of the future state of opportunities and challenges. It also forces them to anticipate risks and understand what resources will be needed to seize opportunities and overcome strategic issues. 

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