Strategic Planning for Your Business

What Is Strategic Planning?

Strategic Planning is a management tool to help members of an organization do a better job. Strategic Planning ensures that all members of an organization are working towards the same goal, and helps assess and adjust an organization’s direction in an ever-changing business environment.

What Strategic Planning Is Not!

It is not a bag of tricks. It is analytical thinking and commitment of resources to a plan of action. It is not forecasting. People are not able to predict the future. It does not deal with future decisions. It deals with the futurity of present decisions. Strategic planning is not “what do we do tomorrow?” but, “what do we do today to be ready for tomorrow?”

Why Should Your Business Strategically Plan?

Business is fluid. The pace of business quickens and circumstances change on a regular basis. Think Darwin. Darwinian principles state the environment will weed out the losers and select the survivors. Organizations that resist change will fail to adapt and will lose out to their competition. Change is inevitable; if you can’t adapt you will not survive. Planning helps companies create a road map for tomorrow. Yesterday is history. It doesn’t matter anymore. What matters is what happens next.

Learn From the Past …

The Maginot Line was created at the end of World War I under the assumption that all future wars would be fought in the trenches with two opposing armies facing off against each other in close proximity. However, World War II was a far different war. World War II was fought with fast ground tanks, blitzkriegs and airplane bombs. Wars are the best example of this basic point: you can’t plan for the future by looking at the past.

Tailoring the Process to Your Organization

There is no standard process that all companies can follow when it comes to strategic planning. Strategic planning needs to be individualized for the particular situation. There is no “typical” process. Your job is to identify the variables, specific to your organization, that are important to your strategic planning process.

Small Companies

Characteristics: Typically firms with $5 million to $100 million in revenues with less than 2,000 employees. These firms are often family-owned or entrepreneurial in nature. There is not a lot of planning structure. Time, money and personnel geared toward strategic planning are limited.

Planning focus: Identify priority issues, usually “fix-the-ship” actions and positioning the company for future growth. Make key decisions regarding personnel changes, new products and markets and increasing existing business.

Keys to success: Must overcome the sense of inertia and the tendency to fall back on “that’s the way it has always been done” thinking. It is necessary to convince the organization to apply limited resources to strategic planning. Information gathering and communication is relatively easy.

Dangers: Often spend too much time on superficial or purely operational issues rather than strategy.

Big Companies

Characteristics: Typically firms with $50 million to billions of dollars, thousands of employees, multinational and multitiered. They have well-established cultures and are often slow to make decisions.

Planning focus: Because of an abundance of structure, firms should concentrate on upper-level management only meetings to set the overall corporate missions with minimal input from below. Priority issues should be broad and oriented toward internal improvements and creating positive environments for employees and business to flourish.

Keys to success: Make sure that the corporate mission, strategic issues and business priorities are aligned. Take advantage of extensive resources to study competition, markets and customers.

Dangers: Moving too slowly. Delayed decisions due to multiple layers of personnel. Taking too
much time to gather information.

Rapid-Growth Companies

Characteristics: Often start-ups and ventures in the advanced stages of financing and growth. Usually, growth is a result of quick actions and decisions in a narrow market. To sustain growth, this type of firm needs planning and structure.

Planning focus: Must focus on gaining market share and earning the advantage over competitors. Depending on financing levels the company must put energy into staying alive while mapping out a direction for future growth and market share.

Keys to success: Entrepreneurial nature of the companies allow them to often think two steps ahead in terms of a niche market or products.

Dangers: Limited resources, too many opportunities, focus on technology at the expense of sales and cost management are all issues.