Thinking about Strategic Planning

Strategic planning is viewed by some as an absolute waste of time and energy and by others as an absolutely critical part of managing a business.

value in strategic planning

Figure 1 – Process Value vs Plan Value

The object of this post is not to resolve that dispute but to provide some insights for those who wish to ensure their strategic planning efforts deliver value to their organization. There are four main points to be made in this post:

  • The Value is in the Process
  • Fit the Process to Your Company
  • The Process is Iterative, not Linear
  • It is a Human Process

The Value is in the Process

sources of value in strategic planning

Figure 2 – Sources of Value

The first thing to know about strategic planning is that its greatest value is to be found in the process, not in the plan. That’s right; most of the value of strategic planning stems from the thinking, discussion, debate, analyses, insights, common understandings and commitments to action made during the process, not their documentation in the form of a written plan. This is not to say that there is no value in the plan itself but the value of the plan is far less than that obtained from the process. Graphically, this can be illustrated as shown in Figure 1. Another way of illustrating the disproportionate value from the process and the plan is a simple pie chart (see Figure 2).

Fit the Process to Your Company

PEST structure

Figure 3 – PEST Analysis

The next thing to know is that one of the biggest mistakes you can make is to assume there is one right way to do strategic planning and that your company should do it that way.

linear process

Figure 4 – Linear Process

To plan – strategically or otherwise – is to do two things: (1) specify a set of desired outcomes and (2) identify the actions that will lead to them. What it takes to accomplish this twofold aim varies with the type of business, the people involved, their values, the information and data available or obtainable, time pressures and many other considerations. To be sure, there are some elements of strategic planning that many people would agree should be present in all cases (e.g., a scan of the environment, mission and vision statements, objectives, strategies, action plans, etc); however, the emphasis given each will vary. For example, a non-profit company is likely to place more importance on mission than a for-profit company. Some additional variations follow.

A PEST analysis (see Figure 3) involves an examination of the political, economic, social and technological aspects of a company’s environment. In the course of performing a PEST analysis, a high-tech firm is likely to pay more attention to the technological environment than a grocery wholesaler. And a defense contractor is likely to pay more attention to the political segment of the environment than a large clothing retailer. The strategic planning process can also vary in terms of sequencing. Some argue that a SWOT analysis (Strengths, Weaknesses, Opportunities, Threats) should be performed after objectives have been established because the SWOT should focus on and apply to those objectives; others argue that a SWOT analysis should be performed in relation to the company, not its objectives and thus a SWOT analysis can and should be performed before any objectives have been established and serve as a basis for establishing those objectives. To reiterate the key point being made here: You should fit the strategic planning process to your company and its requirements instead of picking up an already-defined strategic planning process and trying to force your company into that mold.

The Process is Iterative, not Linear

Most people who have any experience with strategic planning and many authorities will agree that the process is iterative, not linear. There is a certain amount of “bouncing around” from issue to issue and there is interaction between the various stages so that each affects the other. Thus, later stages can “feed back” and lead to revisions in earlier stages and early work clearly carries implications for later stages, which is to say it “feeds forward.” Yet, despite its non-linearity, the strategic planning process is often depicted in a remarkably linear and sequential manner (see Figure 4).

Some attempt to get around this linear depiction by illustrating the process in a cyclical manner (see Figure 5 below). Yet, even a cyclical model is linear in its own way. Neither a linear or cyclical model really gets at the truly interactive and interdependent nature of the stages of strategic planning. On my part, I prefer a model like that shown in Figure 6. It, or a model like it, makes clear that there are options for moving in all directions from any one element to any other. That reflects reality.

strategic planning process as a cycle

Figure 5 – A Cyclical View

interactive strategic planning cycle

Figure 6 – An Interactive View

Whatever model you choose to use, keep in mind that it will shape your thinking and your approach so choose it and use it carefully. This is especially important in light of the requirement to fit the process to your company instead of the other way around. So find one that seems reasonable and then adapt it to fit your company.

Strategic Planning is a Human Process

The last point to be made in this post is an obvious one: the strategic planning process is carried out by people (see Figure 7). There are no software packages that will decide upon a mission, interpret the implications of a complex business environment, set objectives, formulate a strategy or implement it. Consequently, another obvious point is that you need to involve the right people in the process and you need to make certain the process accommodates human beings.

people

Figure 7 – People Do the Planning

Here are some factors to consider:

  • Involving key stakeholders
  • Bringing to bear a variety of viewpoints, especially the process perspective
  • Ensuring adequate representation of functional and operational areas
  • Legitimizing honest debate and disagreement
  • Keeping the process open to skepticism, criticism and suggestions for improvement
  • Getting your best thinkers involved, regardless of their technical specialty
  • Including the decision-makers in all stages of the process

Finally, remember the age-old advice derived from centuries of military planning and operations: “No plan ever survives first contact with the enemy.” You must be alert to and willing and able to adjust and adapt your strategy and tactics to the circumstances you encounter, not those you assumed or hoped would exist. Strategy, then, is always an emergent phenomenon and strategic planning is really nothing more than a process for thinking through and getting clear about the results you’re after and how you intend realizing them. All are subject to change.

By Fred Nickols.

Source: Smart Draw

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