If you don’t know your organization’s strategy, there’s a good chance company progress can be derailed. Change that equation with a dynamic and effective strategic plan.
In business, information is a valuable commodity. Knowledge gained from strategic planning may be the most important asset a company possesses.
How valuable is strategic planning to a company? Nearly immeasurable, management experts say.
“Strategic planning is a way of creating accountability around organizational dynamics and how companies can deliver on those dynamics,” said Tara Chrisco, director of People and Organization Development at HORNE. “It creates alignment from the top of the organization down and gives people clarity about the company’s purpose and their role in the company’s mission.
“After all, it is purpose that keeps getting team members involved and staying with an organization.”
A good strategic planning effort also allows organizations to assess what it’s doing right and where it’s falling short.
“Every business plan is built on some assumptions and some of those assumptions are weaker than others,” said Rory Tyer, director of HORNE Accelerate. “A strategic planning cycle allows companies to test and iterate those assumptions. It’s effectively the answer to the question, ‘How can we fix the assumptions that aren’t correct?’”
Direct Benefits of Strategic Planning
While gaining accountability and testing for operational efficiency are top-of-the-line benefits derived from strategic planning, they’re not the only ones.
If your company is kicking some tires on the strategic planning front, forge ahead knowing these benefits are on the horizon.
Move from reactive to proactive. A good strategic plan allows companies to look into the future, assess what that looks like and adjust their organizational models as necessary.
Define your company’s path forward. A robust strategic planning program enables company leaders to plan, control and execute the direction the organization takes going forward. By laying out a complete strategic plan, companies set reachable goals that match their organizational vision and lay out a path to meet that vision.
Improve day-to-day efficiencies. A solid strategic planning initiative enables companies to boost daily operation efficiencies. Companies achieve this by influencing decision making and giving leaders a blueprint for deploying resources across the organization, improving overall productivity.
Lay the foundation for increasing profits.
A strategic plan also enables companies to access and evaluate critical data and insights on markets and customers that can lead directly to stronger bottom-line revenues.
Build a company that lasts. There’s no guarantee that a company in bloom this year won’t be a bust next year. Companies can better ride out inevitable low-performance cycles with a strong foundation and a sharper focus on where the company is going – a foundation and focus that a good strategic plan can provide.
The “Planning” Phase of Strategic Planning
The goal with any strategic planning program is to set the stage for positive long-term performance. A landmark study of 200 companies titled “What Really Works” found that “devising and maintaining an engaged, focused strategy was the first of four essential management practices that best differentiated between successful and unsuccessful companies.”
“Based on these and other studies, it can be concluded that strategic management is crucial for long-term organizational success,” the study said.
Companies looking to start or improve on their strategic plans should implement these planning steps for organizational success.
Start with an overall company “scan.” The goal with any strategic planning initiative is to establish where the company stands between its current state and optimal state.
To understand where your company is now, conduct an organization-wide scan of all departments and stakeholders to assess your current status and to find out what programs and policies work and which do not.
That environmental scan should include internal factors, such as all organizational resources, financial data sets, technology performance, employee performance and management performance. External factors should include industry trends, market research, competitor research and technological advancements that would improve performance if implemented.
By conducting an overall scan of your company, you’ll be armed with its strengths and weaknesses, along with industry opportunities and threats.
“It starts with meeting each company stakeholder and having an action plan,” Tyer said. “It’s all about gathering data and gathering information and figuring out what options you have as a team.”
Assess areas where your firm is lacking. A good second step is performing a gap analysis to see where the company is maximizing its resources and where it isn’t.
A gap evaluation takes the relevant data points and financial documents collected in step one to benchmark the gaps between where the company currently stands on performance and where performance is lacking.
Once leaders identify the gap, they can reroute resources like cash, technology, management and staffers to where they’re needed most.
“In this scenario, you want to be asking why things work or why they don’t, so you’re making decisions based on root causes,” Tyer said.
Identify how close you are to meeting your company vision. Executives tasked with leading a strategic planning program should make defining the organization’s vision and values a priority.
Once that vision is assessed and clarified through a strategic planning effort, it’s easier to understand where the firm stands, why it exists and where the company is in relation to its core values.
With that information, companies can establish SMART (specific, measurable, attainable, realistic and timely) goals and objectives.
Check your competition. Knowing where your competitors stand in terms of strengths, weaknesses, opportunities and threats is a vital component to any strategic planning initiative.
When you understand how your primary competitors are performing and where their performance gaps lie, your organization is in a premium position to leverage previously hidden opportunities with new products and services.
Put it together into an action plan. Now that your company holds a treasure trove of information and you know its position relating to performance, operations and internal visions and values, you can use that information to shift resources, better allocate budgets and put team members and technologies where they’re needed most.
“You don’t want any surprises on the assumptions, data and potential outcomes you’ve developed,” Tyer said. “The good news is that by now, your strategic planning process should be moving naturally.”
Communicate your new action plan with everyone inside the company. A good strategic development plan is only as good as the information it sends to all company stakeholders.
Create a strategic planning communication document that’s easily disseminated and shared inside the company.
“That document will make your strategic planning goals and objectives real in the minds of your team members who are ultimately tasked with making your new strategic plan a reality,” Chrisco said.
Also, know that your strategic planning communication plan can look different within various departments within the same company.
“There can also be a communications plan from different executives, depending on what channels they use, that addresses each issue and how everyone can work together to meet those goals,” Chrisco said.
The Takeaway on Planning Your Strategic Objectives
Essentially, a solid strategic planning initiative qualifies what a company does, who it is and why it exists.
If an organization can answer those questions, they’ve executed their strategic planning program with maximum impact.
One caveat – once executives start seeing results, that doesn’t mean the strategy planning initiative is over – far from it.
“Executives need to avoid getting bogged down and not keeping an eye on their strategic plan,” Chrisco said. “It’s important to keep strategic planning a significant company priority on an ongoing basis.”
Next week: Implementing your strategic plan
As your business grows, so will your needs. At HORNE, our strategic consulting services can help you manage growth and profitability and position you to address challenges and opportunities as they arise. Contact us today to see how we can help with your strategic planning.