Strategic planning has become a concept that is commonly suggested as the "solution" to many business problems. Some days it appears that the chief product of many businesses is their strategic plan. Don't misunderstand me, strategic plans are wonderful when used appropriately, but they do need to be a tool of a business, not a goal unto themselves. And, most definitely, they should not be a major consumer of valuable employer/employee time.
Many entrepreneurial ventures mistakenly belief that strategic planning is only for large businesses that can afford the time and personnel to develop a sound plan. However, if you are to compete in the marketplace against the "big guys", you need to learn some of their gameplans - and strategic planning is a major part of any successful, large business. That does not mean that your startup needs all the bells and whistles of the more complex plans. You can in a matter of hours sketch out a good working draft that will help keep you on course to becoming a solid competitor. Let's take a look at the basics that will get your business strategically positioned to develop in the direction you want it to go.
What is strategic planning and how does it differ from other types of planning? Strategic planning involves setting up a strategy that your business is going to follow over a defined time period. It can be for a specific part of the business, like planning a marketing strategy, or for the business as a whole. Usually a board of directors sets the overall strategy for the business and each area of the company plans their strategy in alignment with the overall strategy. Differing businesses use various time periods for their strategic planning. The time period is usually dependent on how fast the industry is moving. In a fast-changing environment like the internet, 5-year plans don't make sense. In industries that change more slowly, longer range planning is possible and desirable.
Writing a business plan is different from strategic planning. One writes a business plan when one is starting something new - a business or a product/service line within a business. Strategy looks to growth while business planning looks to beginnings. Part of the strategy of a business may be to introduce a new product line. That product line would then have its own business plan for its development and introduction.
Without a strategy your business has no direction. Strategy tells where you want to go. It is like cooking without a recipe. It can be done, but the results may not be what you desire. Perhaps more apropos, it is like playing a sport, albeit running a race or playing football. Without a strategy, your chance of achieving your goals is significantly diminished.
And while strategic planning shouldn't be all you do in your business, it should be an integral part of it. Every action taken should fit with the direction you want the business to go - so every action should be in alignment with your strategy. That means every employee knows the strategy and understands their part in making it happen - and in helping change it, if that is needed. No strategy should be set in stone. It needs to be revisited and revised at regular intervals, again related to how quickly your industry is changing. Set a good process and follow it.
There is no set format for a strategic plan. There are a large variety of models. The important criterion is find a model that is workable for your particular business.
In its most basic form, the critical components are:
1. Business Purpose
2. Organizational Goals
3. Strategies for Reaching Each Goal
4. Action Plans to Implement Strategy
5. Monitoring Plan Implementation
The business purpose is often also called the mission of the business. It is a brief statement about why the business exists - what you want to achieve. This does not need to be complicated, but it must sum up the essence of what you are trying to do as a business. A good example is Nike's Mission Statement, "To be the world's leading sports and fitness company."
Goals are the ends to which your efforts are aimed - how you plan on accomplishing your purpose or mission. A sample goal might be to provide the highest quality widget in the world. This goal commits all your strategies to choosing quality as an endpoint. Brainstorm a wide variety of goals you might want to pursue.Don't worry about conflicts between goals on the first pass. Just get them out on the table for discussion and winnowing at a later time. There are thousands of goals one could set for each mission. Don't go for that many, but give yourself latitude for making choices.
Making choices is what this step is all about. You can't do everything, yet you want to have looked at the broader spectrum in choosing your business goals. A decision will need to be made about which of the possible goals you, as a business, are going to pursue. This doesn't mean you might not pursue some other goals later, just that these are what are planned within the time frame of this plan.
One of my favorite tools for making choices once you have a list of possible goals is the "Goals Grid" developed by Frederick Nickols. It is a very simple way to choose which of your goals to pursue.
The Goals Grid simply asks you to ask two questions of each possible goal:
|Do We Have It?||
The answer to each question places the goal in one of the cells in the goals grid. If you answer yes to both questions, then you want to preserve the goal. If you answer yes to the first question, but no to the second, you want to eliminate the goal. If you answer no to the first question, but yes to the second, this is a goal you want to achieve. If you answer no to both questions, then this is a goal you want to avoid. Part of what this grid is supposed to help you with is discovering what you are already doing right, whether you are doing everything you should be doing, whether you are overlooking anything, and how open you are to change.
Another tool you may have heard about which is often pursued at this stage is SWOT analysis. SWOT stands for strengths, weaknesses, opportunities and threats. To conduct this type of analysis, one assesses each of these factors for not only your business, but also for your competitors and the industry as a whole. While it can be a time consuming project, the information gained is very useful. If this is your first strategic planning venture, perhaps a good goal would be to conduct a SWOT over the course of the next year or whatever timeframe is workable for you. Once you have it developed, it is available for future planning efforts with minor updates.
Strategies for Reaching Each Goal
A strategy is another way of saying what approach are you going to take in reaching this goal. For instance, in the quality goal example above, you may pursue it by buying the best possible components or you may have stringent quality checks throughout the process or any of a wide variety of other approaches. Interestingly, this is the part of your plan that may change most frequently. You may discover that one strategy is not working and look for other ways to get the result you want. The important thing in this step is to build in checkpoints to ascertain that the strategy is working and to be flexible about changing if need be.
Action Plans to Implement Strategy
Action plans are the specific activities that you will be using to implement the strategy. Often these are stated as objectives. For instance, on our quality goal, an objective might be to have only one percent reject rate at a certain rating point in the process. It is good to have this step stated as precisely as possible so that you can measure progress towards its achievement. If multiple departments are involved, it may be helpful to have each of them set their own objectives since that provides buy in which is critical to the actions actually being implemented.
Monitoring Plan Implementation
Here is where many, many strategic plans fail. If you don't follow through on whether the plan is being implemented and how it is doing, you might as well have not spent the time doing it in the first place. Put checkpoints on your calendar and make it a point to not let them pass unnoticed. Include benchmarks in your financial reporting system. This is your chance to not only verify that you are on track towards your goal, but it gives you an opportunity to make modifications if they seem needed.
Now that wasn't so bad, was it? You can do this. Give it a try. This may be the step that puts you in the league with the "big guys".