Strategic Planning ideas

Why plan?

I have worked with many businesses over the years to look at the whole area of strategic and business planning.

Whilst there is value in the finished product, perhaps the strongest reason for doing a strategic plan lies in the process of research and thinking about your organisation in a systematic way. The act of planning helps you to think things through thoroughly, to study and research when you are not sure of the facts, and to look at your ideas critically. It takes time, but avoids costly, perhaps disastrous, mistakes later.

Yes, the critics will say that a plan becomes redundant from the moment you have completed it, but if its got some future proofing, and some measure of flexibility, and isn’t “war and peace” in length, it is worth the effort.

People in business have an awareness of the high level of business failure after start up; the figures change periodically, but fair to say over the last few years (especially in times of recession) over 50% of businesses fail in the first 3 years. This is often due to a range of factors: sales are less than expected, customers pay too slowly, an inability to access funds for growth: within these various factors emerging strongly is the lack of planning for different contingencies.

It also helps develop a sense of shared purpose in the organisation or the Team creating it that goes way beyond the exercise itself, providing the potential to sustain a shared approach and future.

  • First and foremost, it is an ongoing management tool
  • It can be used as a financing tool for funding
  • It creates a direction of travel, milestones for the journey and the physical and financial resources required
  • It provides a historical record, that might be required later in the event of due diligence being required

Strategic versus Business Plan?

While a strategic plan is a type of business plan, there are several important distinctions between the two types that are worth noting.

A strategic plan is primarily used for implementing and managing the strategic direction of an existing organisation. A business plan tends to be used to initially start a business, obtain funding, or direct operations.  The two plans cover different timeframes as well. A strategic plan generally covers a period of 3 to 5 years, whereas a business plan is normally no more than one year.

A strategic plan focuses on building a sustainable competitive advantage and is futuristic in nature. A business plan is used to assess the viability of a business opportunity, and is more tactical in nature.

Another way to differentiate is by understanding the difference in scale between a strategic plan and a business plan. Larger organizations with multiple business units and a wide variety of products frequently start their annual planning process with a corporate-driven strategic plan.  It is often followed by departmental plans and marketing plans that work down from the Strategic Plan.  Smaller companies and start-up companies typically use only a business plan to develop all aspects of the business on paper, obtain funding and then start the business.  Many smaller companies – including start-ups never develop a Strategic Plan.

Business Models

Sometimes, organisations will take a strategic step back before they plough into the nitty gritty of creating a plan.

Most people are aware of the ubiquitous SWOT Analysis to look at strengths, weaknesses, opportunities and threats which can be used at organisational, Department or Team level as an internal critical review approach.The PEST Analysis is often the way that organisations will look at external factors affecting them.

There are some really useful models that are worth taking a look at before embarking on the plan. Two examples of these are the Business Excellence framework, and the balanced Business scorecard

The Business Excellence Model provides a framework for assessing the aspects of performance which make an organisation successful.

The Balanced Business Scorecard Model is a strategic planning and management system that is used extensively in business and industry, government, and non-profit organizations worldwide to align business activities to the vision and strategy of the organisation, improve internal and external communications, and monitor organisation performance against strategic goals.

There are a wide range of Organisational assessment tools that can be used as “diagnostic tools” before detailed planning.

Format of the Plan

There are many different suggested formats to Strategic plans, and many of them are far too long, which either puts off a wider readership, or means the whole plan is much harder to review and sustain over time. The rule of thumb tends to be for Strategic plans to be no longer than 25-30 pages, and if possible shorter.

Typical contents of a Strategic plan include:

  • —  Vision statement
  • —  “PEST”/ “SWOT” market/internal analysis
  • —  3 year and annual “headline” targets
  • —  Financial (Cash flow, Key financial strategies relating to turnover, profit)
  • —  Operations “headline plans” (Production, Sales, Finance etc.)
  • —  Management (Board, Operations Team)
  • —  Infrastructures/building
  • —  Staff training and development

There are plenty of ways to be imaginative with planning, rather than a long treatise in a word document!


The “Vision thing”

There is rightly a good deal of cynicism in organisations about future visions.

An effective vision is much broader than a vision statement stuck up somewhere on the corporate head office wall. Effective visions are a combination of ideas that express the following:

  • The organisation’s purpose, their reason for existence
  • The organisation’s core values, who they are and striving to become
  • The organisation’s value proposition, what makes them unique, what they are good at and why it matters
  • The organisation’s strategic intent, a stretch goal and future aspirations

The 4 step Model in the diagram above is a useful step by step approach to setting out the vision, the strategy for achieving the vision, articulating the key goals of the strategy, and key performance indicators (KPIs) as ongoing measures.


Sustaining the Plan

There is often a huge amount of effort put into the creation of a Strategic plan. I have memories of various business advice approaches helping organisations create plans, which have been helpful as one off exercises, but struggle to be sustained over time.

Michael Porter’s contributions to the field of strategy go without saying. He has established
himself as the moderen strategy guru, refining strategy beyond what his predecessors were able to achieve by introducing new concepts and tools. He highlights the importance of the structural evolution of organisations as well as the their aspiration to reach a unique
position within that sector, by presenting an organisation which needs continuity in
its basic position but still advocates a “feverish and ongoing process of change” to adapt to changing circumstances.

Porter does not believe that radical change is frequent, rather it is a very rare phenomenon and Managers should focus on incremental changes that can better add value. To cope with uncertainty, Porter advocates the need to institute  learning in organisations and couple it with different generic strategies such as making periodic big bets and experimentation. So an organisation has a consistent strategy, but employs “continuous improvement approaches in how the strategy is manifested.

This applies to sustaining and periodically refining the Strategic plan in light of what’s happening in the market place, whether this is through Away days, Management meetings, or formal review processes.