What Is Strategic Planning?
The word “strategy” is originally from the Greek word strategia which refers to an act, device, or plan employed by a general or leader to achieve a specific goal. Aristotle said, “…as there are many actions, arts and sciences, there ends are also many; the end of the medical art is health, that of shipbuilding a vessel, that of strategy victory, that of economics wealth.”
Thus, strategy early on was thought of in military or diplomatic terms but today strategy is also used in business to produce a competitive advantage or achieve a stated goal. To be successful the strategy needs to be written and this is called a strategic plan. To produce a strategic plan requires the ability to think strategically (strategic thinking).
Today most business owners and managers do not think strategically thus the reason for so many business failures. So how do we go about learning to “think strategically” so we can produce strategic plans.
Most strategic plans are created to solve problems first, and take advantage of opportunities second. Strategic plans are built to implement the vision of the organization.
Strategic plans need to be fact based, rigidly structured and hypothesis driven. But most important, no matter how good the strategic plan is, no matter how well researched, how thoroughly analyzed, how flawlessly structured; it is worth nothing if the people that have to implement the plan have not bought into the plan the plan will fail.
So what is the strategic planning process that produces a successful strategic plan followed by implementation? Without implementation (execution) the plan, again, is worthless. What follows is the basic methodology used by the best strategic planners.
- Framing the Problem/Opportunity:
S.W.O.T. (Strengths, Weaknesses, Opportunities, Threats) Analysis may be used to assess those aspects of the organization that are important to achieving the objective of the strategic plan. Strategy-development is a creative step that answers these four questions: How can we use the Strengths, stop the Weaknesses, exploit the Opportunities and defend against the Threats in pursuit of the organizations selected objective.
A truth in problem solving is that defining the problem is not the hardest thing to do. The real expertise comes in plotting or crafting the solution and then producing the implementation. Too often in many organizations the “problems” the organization believes are the problems that need to be solved, aren’t the real problems after all (take “new coke” which we will deal with in a minute).
The problems/opportunities defined have to be put into the context of the whole and then prioritized. Strategic planning is about taking a holistic approach to problem solving. - Designing the Analysis: Plan your work – work your plan. Find the key drivers so that it does not take so long to produce the plan and update the plan. Strategic plans need to be updated and published annually to be considered a valuable tool.
Look at the big picture. Remember, once you think you have the answer – you still have to prove it. - Gathering the Data: To gather the data you need to write an Interview Guide. Strategic planning is about interviewing the key people in the organization and any vendors, bankers, customers (clients) that are willing to participate.
Strategic Planning is not about focus groups yet many companies have used focus groups as the basis of fact finding to produce their strategic plan.
Focus groups are not the tool of choice for strategic planners. It is the Interview Guide. The Interview Guide should be sent down the chain of command. Asking the right questions is of the utmost importance. - Interpreting the Results: Here’s where it get tricky. In 1985, after 99 years with essentially the same taste, Coca-Cola decided to switch to a new, high-fructose corn syrup, to make Coke taste sweeter and smoother–more like its arch rival, Pepsi. This historic decision was preceded by a top-secret $4 million survey of 190,000 people, in which the new formula beat the old by 55 percent to 45 percent. In its survey and focus groups Coca-cola never bothered to ask the question, “Do you want a new coke?” Also Coca-cola apparently neglected to take into account that many of the 45 percent who preferred old Coke did so passionately. The 55 percent who voted for New Coke might have been able to live with the old formula, but many on the other side swore that they could not stomach the New Coke.
If the process of gathering data has been flawed, then maybe the interpretation of the results is flawed. Even if the data is correct, the interpretation can still be wrong. That is why in the best companies the results are not left to be interpreted solely by the data gatherers. - Presenting the Solution There are two key elements to successful strategic planning. The first is the “BUY-IN”, the second is IMPLEMENTATION. There should be no rollout, no launch of new ideas nor attempt at change without getting “buy-in” from the people responsible to implement the plan.
It is important to get “buy-in” at every step of the strategic planning process. - Implementing the Plan: Create an implementation guide or operation plan. In analyzing why strategic plans fail, it is not always that the strategies were bad; it is mostly that the execution or implementation of the plan failed. In the real world there is too often a gap, often extremely wide, between the strategic plan and its outcome.
Many organizations are filled with bright, hardworking people but that doesn’t mean they are effective. Ready – Fire – Aim is obviously not the correct launch sequence. - Managing the Process: Leadership, leadership, leadership. The main job of leadership should be to learn the process and direct the process of strategic planning. The purpose of the strategic plan should be to implement the vision of the organization. But what is the vision? This needs to be clearly defined and should be part of the strategic plan.
In conclusion: No strategic plan survives contact with the market place. Strategic plans need to be monitored and updated frequently. And as we said earlier, strategic planning requires strategic thinking, which requires strategic thinkers.