Strategic planning is the process of developing high-level, “big picture” plans to set a company’s strategic direction and overall planning framework within a short (one year) to medium (three to five years) timeframe.
With potential threats such as terrorist attacks, and factors such as war, globalisation and severe drought, companies will need to take time out to consider the impact of this changing environment as part of their planning process.
What is strategic planning?
Strategic planning is the process of developing high-level, “big picture” plans to set a company’s strategic direction and overall planning framework within a short (one year) to medium (three to five years) timeframe.
Strategic plans usually include:
- development of a longer-term and inspiring vision;
- core values / business principles;
- analysis of the current business environment and company performance; and
- development of high-level goals.
Once the high-level planning is complete, companies can then develop operational plans with detailed action plans outlining how the goals will be achieved. Ideally the senior management team reviews progress against the plan on a regular basis throughout the year and undertakes a more thorough review annually.
Stratplanning quiz
If you can answer “yes” to all the following questions, then your planning is sound. If not, you will need to address these vital questions.
- Do you know how marketplace trends will affect your business over the next 12 to 18 months?
- Have you established your company’s goals and priorities for the next financial year, and three to five years beyond?
- Have you set financial targets for the next financial year?
- Do you have a method for measuring your company’s performance against your goals, priorities and financial targets?
- Do your staff know your company’s goals and financial targets for the next financial year and what they need to do to meet them?
Why planning is important
Planning helps in the following practical ways:
- Ensures the company and its key staff have a future focus;
- The planning process itself focuses the management or senior personnel on what is realistic, the scope of the strategies and actions to be undertaken, and the commitment needed both in physical and financial terms;
- Highlights areas of deficiency where additional resources and/or external assistance will be required;
- Enables targets to be set and monitored as part of the management process; and
- Helps to recognise peaks and troughs in the work cycle and how these can be smoothed out.
Myths and realities of planning
- A strategic/business plan is no guarantee of success, however the chances of business success are increased with the frequency and quality of planning.
- Planning is for all organisations, regardless of their size. Planning principles should include consideration of the following:
- Select the most appropriate planning timeframe e.g. one to three years, three to five years, and every couple of years consider a longer planning e.g. 10 years;
- The plan needs to be documented, but should be straightforward and not complicated;
- Strategic and operational planning need to be integrated; and
- The agreed action plans need to be monitored and updated regularly rather than put on the shelf to gather dust.