Operating without a strategic plan is like sitting in the passenger seat of your own business. You see it accelerate into overdrive and pass one milestone after another. Eventually, however, you helplessly watch as it swerves aimlessly or, worse, crashes and burns.
Strategic planning puts you behind the steering wheel. It serves as a roadmap that defines the direction a company must travel, and that helps leaders prepare for potential roadblocks. Companies without this foundation and foresight are far more likely to get lost, stuck, or wrecked.
Strategic planning is a systematic process for developing an organization’s direction. It also articulates the objectives and actions required to achieve that future vision, and outlines metrics for measuring success.
By helping you refocus on your foundational purpose, your goals and your opportunities, strategic planning reintroduces you to “the big picture.” It’s the basis for business owners to achieve their vision, which they communicate to stakeholders in a strategic business plan.
It’s common to confuse a strategic plan with a business plan, which is used to start a business, obtain funding, or direct operations and generally covers one year.
A strategic plan, on the other hand, is about high-level thinking and generally looks at 3 to 5 years. It can be created at any time and should be regularly revisited. Key points to review the plan include whenever a company begins a new venture (like launching a new product), if the economy or competitive landscape changes, or when new regulations or trends affect the business environment.
Taking the time to identify exactly where your business is headed (and how you’ll get there) can help mitigate the risks associated with business growth. In fact, the strategic planning process can fuel long-term success by bolstering these five key areas:
Having a clear picture of your company’s future, plus a roadmap to get there, allows your company to be far more proactive. Rather than constantly reacting to outside forces beyond your control, you can strategically make moves designed to help you achieve your long-term objectives.
Strategic planning can even help you anticipate unfavorable scenarios before they happen and take precautions to avoid them. You can keep up with market trends and avoid common industry pain points.
Every company has a finite amount of human and financial resources. By defining exactly what activities are needed to achieve objectives, a strategic plan helps you assess costs and means to allocate resources in the most efficient way.
CEOs must be selective about which new opportunities they invest in and which they avoid. The strategic planning process makes it clear when to spend and when to pass.
The business landscape changes at a rapid pace. CEOs must contend with new government regulations, shifting workforce demographics, technological advances, and economic uncertainty. A strategic plan puts these challenges into perspective.
The process of reviewing your company’s strengths, weaknesses, and opportunities can help you rise above tricky situations. You’ll be prepared to respond to a competitor’s new product launch, a technology upgrade on your production floor, or an unhappy customer base. This degree of foresight can result in increased profitability and market share.
The strategic plan is essential for communicating your vision to investors, managers, and employees. It ensures that all key stakeholders are on the same page, rather than struggling (perhaps inadvertently) against one another.
Even more than building consensus, the strategic planning process can improve performance. As an example, it may generate ideas for restructuring to help employees reach their full potential. Sharing realistic goals and metrics for measuring them also motivates employees to keep up their efforts.
Running a business is a tumultuous endeavor; many CEOs are familiar with the feast-famine, boom-bust cycle. And organizations that don’t have a solid foundation—like the one a strategic plan provides—are the most likely to struggle.
According to a TAB Pulse Survey, business owners who say they have a high-quality strategic plan are much more likely to forecast sharp increases in profits and sales revenue over the next year than are owners who lack a plan.
How do you build a strategic business plan? There are many different frameworks you can use, but generally the planning process addresses four considerations.
SWOT is perhaps the most common tool used in the strategic planning process, but it’s not right for everyone. Some critics think it’s too limited in scope and doesn’t encourage deep analysis. That’s why business advisors have created several alternatives, each with its own structure.
A strategic plan is useless if it sits on a shelf-collecting dust. That’s why implementation is perhaps the most critical step of the planning process. It’s what turns strategies and plans into actions and successes. The plan is the what and why, but implementation is the equally important who, where, when, and how.
Strategic plans fail for many reasons, including lack of ownership or confusion about the plan among stakeholders, lack of accountability or empowerment, not tying strategy to budgeting, not linking employee incentives to strategy.
Success hinges on a quality implementation plan. It starts with the top brass, who should take responsibility for spearheading execution. It’s essential, however, that all stakeholders are involved.
Start by assessing whether you have the appropriate and sufficient budget, people, resources, and systems in place to execute on the plan. Shore up any weaknesses before trying to put the plan in motion.
As with most things, communication is key. Educate stakeholders about why the company participated in strategic planning, how the plan and specific objectives support the company’s mission and values, and how employees’ day-to-day work affects the company’s success.
Establish responsibility for tasks to the appropriate parties, a scorecard for tracking and monitoring progress, and a performance management and reward system.
Educate managers on how employee work translates into meeting goals, and regularly check in with them on progress. In fact, it should become the norm to hold structured performance conversations throughout the entire company.
Hold quarterly strategic reviews to monitor progress and make adjustments as needed. During annual reviews, revisit all elements of the plan. Conduct new assessments and adjust objectives and KPIs accordingly.
Strategic planning should be an essential part of any company’s decision-making process. No matter how large or successful your organization is, TAB’s Strategic Business Leadership® (SBL) process can help you to excel when faced with tomorrow’s business challenges.
The SBL process provides an effective framework for transforming your personal vision of your company into a clear and concise road map that will help to guide your organization’s response to every new challenge and opportunity.