What is Strategic Planning? The Key Components, Process & Role Leaders Play in Ensuring a Strategy's Success
Strategic planning is a process that is essential for companies to ensure successful and sustainable growth.
An intelligent and actionable strategic plan is a vital part of competing within the marketplace. It directs businesses to take meaningful action to help them reach their organization's goals by mapping out a clear direction, creating measurable goals, and allocating resources to pursue these specific objectives.
What is Strategic Planning?
A strategic plan is an essential process and strategy execution document for any company looking to make the most of its resources and reach long-term organizational goals.
This vital and continually evolving document outlines a clear direction, sets objectives that must be achieved, and provides an actionable roadmap for success; it also helps organizations stand out from competitors by allowing them to differentiate themselves in the marketplace with their unique approach.
A well-crafted strategic plan will help companies stay focused on their mission while making decisions based on core values guiding them toward achieving desired results by ensuring everyone is moving in the same direction.
What are the Key Components of a Strategic Plan?
Several key components make up a well-developed strategic plan. These key components include:
A Mission Statement
An organization's mission statement states the company's purpose and the reasons why it exists. Although you might be already clear on the mission, reiterating your mission statement and connection to the plan acts as a foundation for the strategic plan and your strategy.
A Vision Statement
The company vision is the bigger objective that the company aspires to achieve. This may be as broad as making the world a better place through your product or service or ridding bathrooms of mildew. Whatever your vision, it should be connected to your strategic plan
Aligning the company mission and vision statements is the first crucial step to strategic planning.
An overall evaluation of the company's strengths, weaknesses, opportunities, and threats. Knowing these points will help you leverage your resources, shore up gaps, and realistically plan your path and the potential risks. Your SWOT analysis will help ensure that your strategic plan is based upon reality and play an important part in your strategic management process.
Goals & Objectives
Goals and objectives need specific, measurable, achievable, and time-bound targets the company wants to achieve. Ensure your goals are achievable, measurable, and can be clearly communicated as part of your strategic planning. High-level company objectives should cascade and align with the objectives of various divisions and teams. The Strategic plans of each division and team should map directly to broader company goals and methods.
The specific courses of action that the company will take to achieve its measurable goals and specific strategic issues.
Detailed project plans outlining the specific steps that will be taken to implement the strategies.
The allocation of financial, human, and other resources to implement the action plans.
Evaluation and Control
Evaluation and control are based on measures and systems to monitor the company's progress toward achieving its organization's goals, objectives, and financial plan and to make adjustments as necessary.
Who is Responsible for Creating a Strategic Plan?
In general, creating a strategic plan is the responsibility of the company's top management team - the CEO, CFO, other executives, etc.
However, though the top management will do the strategic thinking, it’s essential for key members throughout the entire organization to be involved in the strategic planning process as different departments, employees, and human resources will have valuable insights and perspectives to contribute to the strategy formation. Also, when various constituents are a part of and the planning process a sense of ownership and commitment to the strategic plan's success is reinforced.
It’s also common for companies to seek input from external stakeholders, customers, suppliers, and industry experts as part of the strategic planning process. As part of your planning process make sure to identify any critical stakeholders outside of your company.
What Makes the Strategic Planning Process Effective?
Below are some key factors that contribute to the overall effectiveness of a successful strategic plan and the strategic planning process. Understanding these points will help make your strategic planning process more effective:
The plan needs to be clear & concise, with specific strategic goals & objectives that are easy for everyone to understand. Senior leadership plays a critical role in ensuring that each objective is clear and how objectives will be achieved is understood.
The strategic plan needs to take the company's resources & capabilities into account, and the goals need to be realistic & achievable based on the market data.
The plan needs to be flexible enough to allow for adjustments to be made in response to changes in the external environment after deployment.
The plan must be aligned with the company's mission, vision & values and should support the organization's overall direction in terms of business plan and annual budgets.
The plan needs to be communicated effectively to all stakeholders & investors, including employees & customers.
The plan needs clear & actionable steps and a timeline for implementation. It must be followed consistently to ensure progress toward business goals like increasing sales and maximizing profit.
The plan needs to measure & evaluate progress, collect feedback, and be reviewed and updated regularly to ensure continuous progress toward company goals and that the plan remains relevant and practical and targets logical key performance indicators.
An effective strategic plan identifies potential factors that might derail the plan and, at a minimum, provides high-level alternatives should the plan become derailed.
When Do Strategic Plans Fail?
Listed below are a few potential reasons why strategic planning might fail. Understanding why strategic plans fail will help create more effective strategic planning outcomes:
Plans need to be clear and specific. If not, it may be difficult to understand and challenging to implement. When a strategic plan is ambitious it is tough for people to feel connected and motivated to take action.
Lack of Realistic Options and Objectives
Plans need to be realistic. If the plan cannot really be achieved, it'll be difficult to implement and lead to frustration, disappointment, and potential failure.
Lack of Flexibility
The plan needs to be flexible; if it's not is not flexible and doesn’t allow for adjustments in response to changes in the environment (internal and external) or from evaluation or measurement, it may become irrelevant or ineffective.
Lack of Alignment
The plan needs to be aligned with the company's mission, vision, and values; if not consistent with the organization's overall direction, it can quickly become out of sync with its underlying purpose and be ineffective in helping to reach desired goals.
Lack of Understanding
The plan needs to be communicated effectively to all key stakeholders and take feedback from all stakeholders; otherwise, it may be misunderstood or, worse - ignored or seen as not valuable.
Lack Actionable Steps
The strategic plan needs to be implemented swiftly and consistently; if the action steps are not clear or too hard to implement, they may not be implemented effectively.
Lack of Measurable Outcomes
The strategic plan needs to be reviewed and updated regularly, and its performance evaluated after implementation; otherwise, it may become ineffective or outdated, therefore ineffective at achieving desired outcomes.
Changes in the external environment can have a huge effect. Changes like shifts in the economy or customer preferences, if not accounted for, can seriously impact the effectiveness of a once brilliant strategic plan.
However, as in life and business, things change, and every business must be able to adapt quickly to changing circumstances. This is why an effective plan includes contingencies.
What is a Company Leader's Role in Ensuring the Strategic Plan is Implemented Successfully?
Company leaders are responsible for ensuring that the strategic plan is implemented successfully.
Some specific ways business leaders can ensure the plan is implemented properly are:
Clearly Communicate the Plan
Business leaders need to communicate the strategic plan effectively to all key stakeholders, including employees, customers, and investors. Any questions need to be answered and clarified, so everyone is aligned. The strategic plan should be shared in a way that you (the leader) demonstrate ownership and enthusiasm and can share with your team how each role is vital to achieving the plan's objectives.
Leaders need to ensure that resources, such as funding, personnel, and technology, are available to everyone needed in order to implement the plan successfully.
Leaders need to set clear expectations for implementing the plan and hold the designated employees accountable for meeting those expectations. Clear and achievable timelines need to be established and committed to by each stakeholder.
Leading by Example
Leaders need to model the behaviors and values outlined in the plan and encourage others to do the same.
Leaders need to provide support and guidance to employees as they work through problems toward achieving the strategic goals and objectives of the plan.
Leaders need to monitor the progress towards achieving the goals and objectives outlined in the plan and make adjustments in the operational plans as they see fit, as needed.
Leaders need to recognize and celebrate wins along the way to help keep morale high and encourage continued progress toward the ultimate goals.
What's the Role of Each Individual Employee in Implementing & Supporting the Strategic Plans Success?
Employees are the driving force and critical in implementing and supporting the strategic plan's success. Your employees will be the eyes and ears of how the strategic plan works. This is why it is vital for leaders to create a business environment where there is open communication and all types of information can be shared and reviewed in relation to its impact on the long-term strategy. Leaders must foster an open environment where questions can be asked and bad and good news shared. Leaders can help employees play their part by ensuring employees are supported and are clear on their ability to do the following:
Understand the Plan
Employees need to understand the strategic plan, how it aligns with the company's mission, the steps to take, and most importantly, the goals.
Aligning Work and Job Goals with the Plan
Leaders, managers, and employees need to align their work with the strategic plan and prioritize tasks that support achieving the plan's goals & strategic objectives.
Employees must consistently follow through on their assigned tasks and responsibilities to implement the plans, steps, and processes.
During the initial review of the organization's current status, employees must provide feedback and suggestions to improve the plan. During its implementation, employees need to provide feedback based on performance and potentially adjust the plan if needed for better performance and goals.
Communicate Laterally and Up
Employees need to communicate with coworkers to ensure everyone is working towards the same goals & objectives and, most importantly, employees need to communicate to their manager on how their contribution is proceeding.
Seek Support and Guidance
Employees need to seek support and guidance from leaders if they need help implementing any steps of the plan or achieving goals.
Do Some Companies Believe that Strategic Planning is a Waste of Time?
Sure. It's possible some companies may view strategic planning as a waste of time. This could be due to a variety of reasons: resources required upfront, lack of understanding of the benefits of strategic planning, a lack of buy-in from senior management, or a lack of resources to dedicate to the process.
However, for massively successful companies, strategic planning is recognized as an invaluable tool to help organizations achieve their long-term goals and be outstanding in a competitive marketplace.
Strategic planning can also help companies be more agile and adapt to changes in the external environment. For these reasons, it's generally recommended that companies engage in strategic planning and review results on a regular basis.
What Makes a Great Strategy?
What makes a great competitive strategy? Several characteristics are often considered to be key elements of great strategy execution:
A great strategy is clear & easy to understand, with specific goals & strategic objectives that are well-defined.
A great strategy is a focused strategy. A great strategy is focused on a specific area of the business and doesn't try to do too many things at once.
A great strategy is aligned with the company's overall mission, vision for the future, and values, supporting the organization's overall direction.
A great strategy is flexible and allows for adjustments to be made in response to results and changes in the external environment.
A great strategy is realistic & achievable, taking into account the company's resources & capabilities and what can actually get done.
The great strategy sets the company apart from its competitors in the marketplace and helps it to differentiate itself from competitors to customers.
A great strategy can be executed effectively, with clear action steps, a timeline for implementation, and who is responsible for each action step.
Evaluation & Feedback
The great strategy includes measures for evaluating progress and collecting feedback, and it needs to be reviewed regularly & potentially updated to ensure it remains relevant & effective.
When is a Great Strategy Not Enough to Ensure Company Success?
While a great strategy can certainly be a key factor in a company's success, it's not the only factor needed to be successful. There are a number of other internal and external factors that can impact a company's success, including:
Even the best strategy will not be a successful strategy if executed poorly.
A company needs resources, period. Resources like funding, personnel, and technology, are essential to implement strategy effectively.
Changes in external factors are equally important as the internal environment. For example, economic shifts or customer preferences can impact a company's success.
A company's success can also be impacted by its competitors' actions and even competitors' reactions to strategy implementation.
A company's success will depend partly on the market demand for its products or services. Demand should absolutely be a part of the strategy formulation.
A company's success will highly depend on the quality of its products or services and its ability for its products to meet customer needs.
The senior leadership of a company can play a key role in its success, or failure, as they set the vision & direction of the organization.
How Does Company Leadership Play a Critical Part in a Company's Strategic Success?
Without involved leadership, a strategic plan will more than likely fail. A company's leadership plays a critical role in strategic success in several ways:
Setting the Direction
A company's leadership is responsible for setting the organization's vision and direction and creating a strategic management plan that aligns with that direction.
A company's Leadership is responsible for ensuring that the necessary resources, such as funding, personnel, and technology, are available to implement the strategic plan.
Communicating the Plan
A company's leadership communicates the strategic management plan effectively and consistently to all stakeholders, including employees, customers, and investors.
Leading by Example
A company's leadership needs to model the behaviors and values aligned with the plan and encourage others to do the same.
A company's leadership needs to provide support & guidance to employees as they work towards achieving the goals and objectives of the strategic plan. This will help in employee retention and strategic success.
A company's leadership needs to monitor progress toward achieving the goals & objectives of the plan and make necessary adjustments as needed.
A company's leadership needs to recognize and celebrate successes along the way to help keep team morale high and encourage continued progress to achieve goals.
How Can Companies Prepare & Support their Leaders to Implement & Ensure Strategic Planning Success?
There are many ways in which companies can prepare and support their leaders to implement and ensure the success of their strategic planning initiative.
Provide Proper Training
Companies need to provide training & strategy development opportunities to help their leaders acquire the knowledge and skills they need to implement & support the strategic vision effectively.
Encourage Open Communication
Companies need to foster an environment of open, clear communication and encourage leaders to seek input & feedback from their teams within the strategic framework - even when the strategy map is not positive.
Align Leadership with Company Values
Companies must ensure that their leadership's values align with the company's values and culture and that their leaders are committed to the mission and vision of the organization.
Companies need to encourage collaboration & cross-functional teamwork as a part of project management to ensure that all departments work towards the same goals & objectives.
As part of the strategic planning process, companies need to ensure their leadership has the necessary resources, such as funding, personnel, & technology, to implement the strategic plan effectively for the entire duration.
Establish Clear Expectations
Companies must set clear expectations for how strategic planning should be activated and implemented and hold leadership accountable for meeting expectations as per the strategic plan document.
Company leaders need to monitor the progress toward achieving the goals and objectives of the strategic plan and provide their support and guidance as needed. Strategic planning is essential for business success, and the key to achieving successful results lies in the hands of leadership. For leaders to ensure a strategy's success, they must become strategic planners and the details of the business's strategic plan must be organized and understood by each person responsible.
Leaders and managers need to communicate the strategic plan through consistent discussions that foster collaborative decision-making. Responsibilities for the planning process and success also extend beyond the leader and onto each individual employee to help realize the steps of an effective strategic plan. Companies must set clear strategic objectives that align with their mission and strategic goals while preparing business leaders to carry out those plans. When done correctly, with careful attention paid to all levels of the organization, successful strategic planning can lead a company in the right direction toward long-term sustainability and future opportunities.
Having a clear strategic plan is one of those obvious items that every company should have in place yet many companies don't.
Although the effort of investing the time and resources into creating a strategic planning template can be demanding, the value and impact of your investment can return a healthy multiple.
Once your mission and vision statements and strategic plan are in place they become a touchstone to focus your business, align teams, and what makes your way of navigating your market and competition unique.
We hope that this resource provides a road map and helps facilitate the development of your strategic plan if you don't have one yet. For those that do have strategic plans, we hope this resource helps act as a checklist to fortify the strategy development you've already created.