In an overly competitive business world, it’s highly crucial for organizations to consistently ace up their game to stay relevant. A part of it comes from effective strategic planning that involves crafting long-term strategic goals, and formulating a strategic plan that outlines the organization’s process to achieve these goals. Strategic Planning not only builds a competitive advantage for an organization, but also removes uncertainty and confusion. Let’s dive deep into the topic and build a deeper understanding of it.
What Is Strategic Planning?
How is Strategic Planning Different from Business Planning?
Purpose of Strategic Planning and Importance
The Strategic Planning Process
Objectives And Goals Of Strategic Planning
Effective Strategic Goals
What Is Strategic Planning?
Strategic planning is the systematic process of defining an organization’s long-term goals and proposing strategies to achieve them. This is essential to elucidating the organization’s long-term vision and its process of making that vision a reality. The strategic planning process is used to effectively allocate resources, prioritize work, and ensure that organizational goals are backed by statistical data and sound reasoning.
In a nutshell, the process of strategic planning includes answering questions like:
- Where are we now?
- Where are we going?
- What is going to get in our way?
- What do we need to do to get to where we want to go?
How is Strategic Planning Different from Business Planning?
Strategic planning differs greatly from business planning. Strategic planning requires you to withhold your general day-to-day activities and enunciate where your organization is heading. It also requires crafting strategic goals and objectives for the future and setting up milestones and steps required to achieve those goals. A business plan, on the other hand, is more concerned with creating and working on short- or mid-term goals. It focuses on goals that are not more than a year long and serves a specific purpose, such as directing operations, launching a product and acquiring funding.
Purpose of Strategic Planning and Importance
The main purpose of strategic planning is to set clearly defined goals for the growth and success of your organization and achieve them with the help of an effective strategic plan. It establishes a connection between your organization’s mission, its long-term vision and the established plan.
It’s important because of a variety of factors:
- It’s crucial to determine the direction and focus of an organization.
- It ensures organizational alignment, allowing everyone to work towards shared goals.
- It helps an organization understand its weaknesses and analyze potential risks.
- It boosts productivity and builds a positive work environment.
The Strategic Planning Process
Following are the steps involved in the development and execution of a strategic plan:
- Understanding your organization’s mission and defining its ultimate purpose.
- Describing your organization’s vision.
- Crafting long-term goals and objectives that are clearly aligned with the organization’s vision.
- Formulating a strategic plan that outlines how the organization will achieve its goals in the next 3–5 years.
Big Picture thinking is a critical aspect of the strategic planning process. Furthermore, the strategic planning process might look a bit simple at first, but the challenges start creeping in over time. It’s important for your organization to persistently stick to its plan, and leverage short term implementation to reach its goals.
Objectives And Goals Of Strategic Planning
Objectives of strategic planning are detailed statements of direction that indicate what all is necessary and important in an organizational strategy. Specifically, these are clear goals that the organization strives to achieve in the near future. Ideally, these are statements for the next 3-5 years that address the core competency and functional areas of an organization. These objectives help you draft strategies that include effective measures and initiatives.
Effective Strategic Goals
The following are some characteristics of effective strategic goals:
Purpose-driven
Aligning your strategic goals with your organization’s purpose and value is one of the prime factors that you should focus on. It’s also important to ask certain questions about your organization to better understand its purpose—what is the organization striving for, and why are these objectives and goals crucial?
Actionable
Strategic goals should not only be purpose-driven but also actionable. If these goals aren’t operational, then chances are your organization would be better off spending time and resources somewhere else. There should always be a few actionable steps that your team can take to reach organizational objectives.
Measurable
Creating strategic goals and consistently mapping their progress and success is vital. This will help you enhance your team’s actions and strategies to meet the goals more effectively.
Focused on the long term
Always keep your organization’s long-term vision in mind while crafting strategic goals. Strategic goals should never be confused with operational goals. The latter includes day-to-day activities and are indicative of the milestones that need to be achieved.
Some of the key aspects that you should focus on while drafting the right goals and objectives of strategic planning for your organization, include understanding your industry, and what your organization is seeking to achieve.
Objectives of Strategic Planning differ greatly based on the industry your organization is operating in. For instance, if you’re in IT, construction or technical services, which are fast-paced industries, you should focus on creating objectives that work for your organization’s growth goals. Launching a new range of products or investing in marketing and customer acquisition can be a few appropriate strategies. Organizations operating in slow-growing industries, such as coal power production and steel manufacturing, should bank on objectives that focus on stability, by managing expenses and protecting assets.
For creating goals of strategic planning, always begin with a label. The label must clearly define your organization’s long-term goals. For example, if customer retention is what your organization is eyeing, the objectives should focus on offering more value-for-money products and better customer services. But if your organization is seeking to improve employee retention rate, crafting objectives such as enhancing the recruitment process, streamlining the onboarding process and creating a better culture would help.
It’s essential to understand that while some organizations may require a comprehensive strategic plan for the future, others might just want to update their existing strategic plan, or specifically revise some elements of the plan. A lot of organizations focus on crafting a plan that tackles a particular strategic issue such as an unexpected competitive initiative, the latest technological trends or a possible M&A transaction.
Let’s look at a few examples of strategic goals to understand them better.
Financial Objectives
- Increase revenue
- Maintain profitability
- Grow shareholder value
- Ensure favorable bond ratings
- Ensure financial stability
Internal Objectives
- Grow sales percentage for new products.
- Decrease employee turnover rate.
- Improve customer service and relationships.
- Invest in total quality management.
- Reduce a certain amount of cost annually.
- Streamline core business processes.
Customer Objectives
- Offer the best value for money.
- Cross-sell more products.
- Provide the best service.
- Increase market share.
- Expand product offerings.
Learning And Growth Objectives
- Enhance technical and analytical knowledge.
- Improve staff productivity.
- Build a performance-focused culture.
- Invest in productivity tools.
- Maintain alignment across the organization.
Strategic planning is important, and one can readily assume that with a good plan, any business will prosper. Harappa’s Making Decisions course that includes effective strategies, frameworks and mental models that will help you avoid uncertainty and make smarter strategic goals. Check it out now!
