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20 strategic planning models to consider, missing a piece of your strategic puzzle these planning models are sure to help..
In this article, 1. balanced scorecard, 2. strategy map, 3. swot analysis, 4. pest model, 5. gap planning, 6. blue ocean strategy, 7. porter’s five forces, 8. vrio framework, 9. baldrige framework, 10. okrs (objectives and key results), 11. hoshin planning, 12. issue-based strategic planning, 13. goal-based strategic planning, 14. alignment strategic planning model, 15. organic model of strategic planning, 16. real-time strategic planning, 17. scenario planning, 18. ansoff matrix, 19. 7s model, 20. constraints analysis (theory of constraints), is one strategic planning model better than the others, is there ever a need to switch strategic planning models, using clearpoint to track your strategic planning models.
Strategic planning models are designed to help organizations develop an action plan to achieve their goals. There are a lot of strategic planning models out there. We know. Which is why we pulled together a list of 20 of the most popular ones and describe the scenario that they are most useful.
I’m willing to bet one of these situations sounds familiar:
- The strategy at your organization is nonexistent, and you’re assigned to find a strategic planning model so that you can kick off your strategic planning process.
- Your company-wide strategy is in place, but entirely ineffective—and you have a hunch that using a strategic planning model (and strategy software ) will make a big difference.
- Your organization-wide strategy is fine, but there’s one area in your business environment (or internal process) that needs to be realigned with your strategy.
If you can identify with one of these scenarios, this article is for you!
Read through each of the models or find the ones you're looking for from the list below and jump right to them. Then stick around for some insight on how you can make the most of whatever strategic planning model you choose—and increase the likelihood of its success. (Hint: It’s all about performance tracking.)
The Balanced Scorecard is a strategy management framework created by Drs. Robert Kaplan and David Norton. It takes into account your:
- Objectives , which are high-level organizational goals.
- Measures , which help you understand if you’re accomplishing your objective strategically.
- Initiatives , which are key action programs that help you achieve your objectives.
There are many ways you can create a Balanced Scorecard, including using a program like Excel , Google Sheets, or PowerPoint or using reporting software. For the sake of example, the screenshot below is from ClearPoint’s reporting software.
This is just one of the many “views” you’d be able to see in scorecard software once your BSC was complete. It gives you high-level details into your measures and initiatives and allows you to drill down into each by clicking on them. At a glance, you can tell what the RAG status of each objective, measure, or initiative is. (Green indicates everything is going as planned, while yellow and red indicate that there are various degrees of trouble with whatever is being looked at.)
All in all, a Balanced Scorecard is an effective, proven way to get your team on the same page with your strategy.
See Also: A Full & Exhaustive Balanced Scorecard Example
A strategy map is a visual tool designed to clearly communicate a strategic plan and achieve high-level business goals. Strategy mapping is a major part of the Balanced Scorecard (though it isn’t exclusive to the BSC) and offers an excellent way to communicate the high-level information across your organization in an easily-digestible format.
A strategy map offers a host of benefits:
- It provides a simple, clean, visual representation that is easily referred back to.
- It unifies all goals into a single strategy.
- It gives every employee a clear goal to keep in mind while accomplishing tasks and measures.
- It helps identify your key goals.
- It allows you to better understand which elements of your strategy need work.
- It helps you see how your objectives affect the others.
See Also: A Strategy Map Template For Medium-Sized Companies
A SWOT analysis (or SWOT matrix) is a high-level model used at the beginning of an organization’s strategic planning. It is an acronym for “strengths, weaknesses, opportunities, and threats.” Strengths and weaknesses are considered internal factors , and opportunities and threats are considered external factors .
Below is an example SWOT analysis from the Queensland, Australia, government:
Using a SWOT analysis as part of your strategic business model helps an organization identify where they’re doing well and in what areas they can improve. If you’re interested in reading more, this Business News Daily article offers some additional details about each area of the SWOT analysis and what to look for when you create one.
See Also: SWOT Analysis Template (+ Seven Other Strategic Planning Templates)
Like SWOT, PEST is also an acronym—it stands for “political, economic, sociocultural, and technological.” Each of these factors is used to look at an industry or business environment, and determine what could affect an organization’s health. The PEST model is often used in conjunction with the external factors of a SWOT analysis. You may also run into Porter’s Five Forces (see #7 below), which is a similar take on examining your business from various angles.
You’ll occasionally see the PEST model with a few extra letters added on. For example, PESTEL (or PESTLE) indicates an organization is also considering “environmental” and “legal” factors. STEEPLED is another variation, which stands for “sociocultural, technological economic, environmental, political, legal, education, and demographic.”
See Also: PEST Analysis Template (+ Seven Other Strategic Planning Templates)
Gap planning is also referred to as a “Need-Gap Analysis,” “Need Assessment,” or “the Strategic-Planning Gap.” It is used to compare where an organization is now, where it wants to be, and how to bridge the gap between. It is primarily used to identify specific internal deficiencies.
In your gap planning research, you may also hear about a “change agenda” or “shift chart.” These are similar to gap planning, as they both take into consideration the difference between where you are now and where you want to be along various axes. From there, your planning process is about how to ‘close the gap.’
The chart below, for example, demonstrates the difference between the projected and desired sales of a mock company:
See Also: Gap Planning Template (+ Seven Other Strategic Planning Templates)
Blue Ocean Strategy is a strategic planning model that emerged in a book by the same name in 2005. The book—titled “Blue Ocean Strategy: How to Create Uncontested Market Space and Make Competition Irrelevant”—was written by W. Chan Kim and Renée Mauborgne, professors at the European Institute of Business Administration (INSEAD).
The idea behind Blue Ocean Strategy is for organizations to develop in “uncontested market space” (e.g. a blue ocean) instead of a market space that is either developed or saturated (e.g. a red ocean). If your organization is able to create a blue ocean, it can mean a massive value boost for your company, its buyers, and its employees.
For example, Kim and Mauborgne explain via their 2004 Harvard Business Review article how Cirque du Soleil didn’t attempt to operate as a normal circus, and instead carved out a niche for itself that no other circus had ever tried.
Below is a simple comparison chart from the Blue Ocean Strategy website that will help you understand if you’re working in a blue ocean or a red ocean:
See Also: Blue Ocean Analysis Template (+ Seven Other Strategic Planning Templates)
Porter’s Five Forces is an older strategy execution framework (created by Michael Porter in 1979) built around the forces that impact the profitability of an industry or a market. The five forces it examines are:
- The threat of entry. Could other companies enter the marketplace easily, or are there numerous entry barriers they would have to overcome?
- The threat of substitute products or services. Can buyers easily replace your product with another?
- The bargaining power of customers. Could individual buyers put pressure on your organization to, say, lower costs?
- The bargaining power of suppliers. Could large retailers put pressure on your organization to drive down the cost?
- The competitive rivalry among existing firms. Are your current competitors poised for major growth? If one launches a new product or files a new patent—could that impact your company?
The amount of pressure on each of these forces can help you determine how future events will impact the future of your company.
See Also: Porter’s Five Forces Template (+ Seven Other Strategic Planning Templates)
The VRIO framework is an acronym for “ v alue, r arity, i mitability, o rganization.” This strategic planning process relates more to your vision statement than your overall strategy. The ultimate goal in implementing the VRIO model is that it will result in a competitive advantage in the marketplace.
Here’s how to think of each of the four VRIO components:
- Value: Are you able to exploit an opportunity or neutralize an outside threat using a particular resource?
- Rarity: Is there a great deal of competition in your market, or do only a few companies control the resource referred to above?
- Imitability: Is your organization’s product or service easily imitated, or would it be difficult for another organization to do so?
- Organization: Is your company organized enough to be able to exploit your product or resource?
Once you answer these four questions, you’ll be able to formulate a more precise vision statement to help carry you through all the additional strategic elements in your plan.
See Also: VRIO Analysis Template (+ Seven Other Strategic Planning Templates)
The Malcolm Baldrige National Quality Award is “the highest level of national recognition for performance excellence that a U.S. organization can receive.” Created in 1987, the goal of Baldrige is to help organizations innovate and improve, while achieving their mission and vision. The award is currently open to manufacturing, service, small business, nonprofit, government, education, and healthcare sectors.
When applying to win the Baldrige award at the national level, organizations undergo a competitive process that involves the implementation of the Baldrige framework. The framework outlines the “Baldrige Criteria For Performance Excellence,” where organizations must demonstrate achievement and improvement to an independent board of examiners in these seven areas:
- Planning and strategy
- Measurement, analysis, and knowledge management
To implement the Baldrige framework in your organization, start with two questionnaires that help you self-assess based on the seven Baldrige Criteria categories, and get a snapshot of your strengths and opportunities for improvement.
The strategic planning model of choice for Google, Intel, Spotify, Twitter, LinkedIn, and many other Silicon Valley successes, the OKR framework , is one of the more straightforward strategic planning tools. It’s designed to create alignment and engagement around measurable goals by clearly defining:
- Objectives: What you want to achieve. Choose three to five objectives that are brief, inspiring, and time-bound.
- Key Results: How you’ll measure progress toward your achievements. Set three to five key results (they must be quantitative) per objective.
The strategic planning model of choice for many businesses—including Google, Intel, Spotify, Twitter, LinkedIn, and many other Silicon Valley successes— the OKR framework is also effective because goals are continually set, tracked, and re-evaluated so organizations can quickly adapt when needed. This is a fast-paced, iterative approach that flips the traditional top-down strategic models. The RACI matrix is a helpful visual for defining the role each person in your organization has for projects and processes, ensuring it aligns with their OKRs.
See a strategic planning model fits your business? Download one of these free templates to put your planning process in play instantly.
The Hoshin Planning approach aligns your strategic goals with your projects and tasks to ensure that efforts are coordinated. This strategic management model is less focused on measures and more on goals and initiatives.
Some sources cite up to seven steps in the Hoshin Planning model, but the four most critical are:
- Identify key goals. Ideally you’d focus on three to five goals.
- Play “catchball.” Share goals from top to bottom of your organization to obtain buy-in.
- Gather intel through “gemba.” Track the execution of your key goals and gather feedback from employees, using a defined process.
- Make adjustments. Initiate change based on feedback and repeat the steps of catchball and gemba.
You visualize your objectives, measures and targets, measure programs, and action items in a Hoshin Planning matrix. Four directional quadrants (north, south, east, west) inform each other and demonstrate alignment.
The issue-based strategic model is oriented in the present and projects into the future. It aims to identify the major challenges your organization faces now —in other words, you start with the problems to iron out issues before expanding, shifting your strategy, etc. This is typically a short-term (6-12 months), internally-focused process. Issue-based planning is ideal for young or resource-restricted organizations.
The leadership team or stakeholders identify the major issues and goals as a first step. Next, your organization will create action plans to address the issues, including budget allocation. From there, you will execute and track progress. After an issues-based plan has been implemented and the major issues you identified are resolved, then your organization might consider shifting to a broader, more complex strategic management model.
Goal-based strategic planning is the reverse of issue-based. This approach works backward from the future to the present. It all starts with your organization’s vision.
By nature, vision statements are aspirational and forward-thinking, but they need specifics in order to be realized. Goal-based planning tackles that challenge by setting measurable goals that align with your vision and strategic plan. Next, you define time frames for goal achievement. This is a long-term strategic planning tool, so goal time frames are typically about three to five years. From there, stakeholders will create action plans for each goal and begin tracking and measuring progress.
You want your department to be able to see their goals and the steps to achieve them. Use a Department Business Plan Dashboard
Similar to issue-based planning, the alignment model focuses on first looking internally to develop a strategy. This model is designed to sync the organization’s internal operations with its strategic goals.
Your strategic planning will start by identifying a goal and analyzing which operations or resources need to be aligned with that goal. Then you’ll identify which parts of operations are working well and which are not, brainstorming ideas from the successful aspects on how to address problems. Finally, you’ll create a series of proposed changes to operations or processes to achieve goals that will create the desired strategic alignment. The alignment strategic planning model is particularly useful when a company needs to refine its objectives or address ongoing challenges or inefficiencies that are blocking progress.
The organic model takes an unconventional approach because it focuses on the organization’s vision and values, versus plans and processes. With this model, a company uses “natural,” self-organizing systems that originate from its values and then leverages its own resources to achieve goals, conserve funds, and operate effectively.
The organic model takes an unconventional approach because it focuses on the organization’s vision and values, versus plans and processes. Click To Tweet
In the simplest form, there are three basic steps to follow when implementing the organic model of strategic planning:
- Stakeholders clarify vision and values. This is a collaborative process that could involve both external and internal stakeholders—who’s in the meeting depends entirely on your organization’s ultimate purpose for the planning. The goal is to establish common visions and values for all stakeholders.
- Stakeholders create personal action plans. The unconventional aspect of this model comes into play here. Divided into small groups, stakeholders determine the actions and responsibilities for each person to work toward the vision (according to the values).
- Stakeholders report results of action plans. Each person will take ownership of their plan and update the group on their progress. This is a communal approach to accountability and the progress reported can lean toward qualitative, versus quantitative, results.
What type of company would the organic strategic planning model work best for? If your organization has a large, diverse group of stakeholders that need to find common ground, a vision that will take a long time to achieve, and a strong strategic emphasis on vision and values (instead of structure and procedures), this may be the right model for you. It would also be beneficial for younger organizations that need to gain funding without presenting a formal strategic plan.
Similar to the organic model, real-time strategic planning is a fluid, nontraditional system. It’s primarily used by organizations that need to be more reactive, and perform strategic planning in “real time.” For these companies, detailed, long-term plans tend to become irrelevant within the typical three- to five-year planning cycle because the environment they operate in rapidly changes. Many nonprofits use this model—for example, a disaster relief agency needs the ability to respond quickly and adapt its strategy to immediately address a crisis.
Real-time strategic planning involves three levels of strategy: organizational, programmatic, and operational. For the first level, you’ll define the organization’s mission, vision, market position, competitors, trends, etc. Then, the programmatic strategy requires research into the external environment to identify approaches and offerings that would help the organization achieve its mission. The research should cover opportunities, threats, competitive advantages, and other points to spur strategic brainstorming.
The final operational level analyzes internal processes, systems, and personnel to develop a strategy that addresses “in-house” strengths and weaknesses. Looking at all three levels as a whole, strategy leaders can form criteria for developing, testing, implementing, and adapting strategies on an ongoing basis, allowing for quick and thoughtful responses when needed.
In planning for their own future, too few organizations take the time to consider the multitude of external changes that could take place that would impact their plans. A healthcare company that fails to anticipate certain regulatory actions, an energy company that ignores the possibility of rising oil prices, and a global organization that hasn’t examined the potential for supply chain disruptions may all be impacted by those changes to some degree if they happened. And it isn’t just about mitigating the possible risks; it’s also about pursuing potential opportunities.
Scenario planning involves examining the variable elements of your environment, evaluating them for plausibility and impact, and factoring those scenarios that are most relevant into your decision-making. Two to five scenarios is the ideal number—this lets you explore a variety of themes without getting mired down in too many possibilities. Other frameworks (like SWOT or PESTLE) can be useful in developing those scenarios.
You can use scenario planning at the individual and departmental levels, but it is especially useful for organizational strategy planning. If your company is part of an industry that tends to be volatile or your organization itself has had to navigate costly, unexpected changes in the past, scenario planning is an excellent tool for developing your strategic vision. It can also be used to foster managerial thinking, encouraging leaders to consider the broadest range of future possibilities, and provide guidance when evaluating new projects or investment proposals.
(Image Source SME Strategy )
The Ansoff Matrix was developed to help organizations plan their strategies for growth. It is a 2x2 matrix with product on one axis and markets on the other axis. Depending on the box you are in, you may choose a different strategy for growth:
- Market penetration: Expand sales of an existing product in an existing market
- Product development: Introduce a new product into an existing market
- Market development: Introduce an existing product into an entirely new market
- Diversification: Introduce a new product into a new market
The level of risk increases with each strategy, with market penetration being the least risky and diversification being the most risky.
The Ansoff Matrix is useful for organizations that are actively trying to grow. Not only does it help you analyze and clarify your current strategy, but it also helps evaluate the risks associated with moving to a new strategy. SWOT and PEST are often used in combination with the Ansoff Matrix; business strengths and weaknesses as well as external factors should all play into your choice of growth strategy.
Developed by McKinsey consultants, this strategic business planning model emphasizes the importance of aligning an organization’s key internal elements to achieve strategy. Those key elements are:
- Structure: The organizational chart or chain of command
- Strategy: The future plan of action, supported by an organization’s mission and vision
- System: The technical infrastructure that enables daily workflows
- Skill: The capabilities of team members
- Style: The management style of leaders
- Staff: Employees and how they are recruited, trained, and motivated
- Shared value: The norms, values, and beliefs that guide actions and decisions
The first step in applying the 7S model is to examine the current interconnectedness of these elements within your own organization; are there areas of weakness or inconsistencies? For example, you might discover that your skills training for employees is hindered by antiquated workflows and technology. Once you understand the relationships between these elements, you can work toward creating synergies that better support your strategy, whatever it may be.
The 7S model is best used during a strategy change, or whenever a major shift is occurring in any one of the seven areas.
Constraints analysis is predicated on the idea that there are clear obstacles to strategy execution within your organization. Eliminating the weak link (or at least improving performance in that area) is the key to better results.
To apply constraints analysis correctly, you must first identify the constraint, or the main factor that limits your success. Process bottlenecks, faulty thinking, labor shortages, an unhealthy company culture, market conditions, or any number of other issues could be the culprit. While you might identify more than one problem area, constraints analysis focuses on improving one area at a time to achieve quick, impactful results.
That’s a great question—and the answer isn’t cut and dried. Some of these frameworks have been around longer than others, or have been used in various case studies in different ways. And sometimes managers are more comfortable with one over another, for any number of reasons.
We recommend determining which of these strategic planning models applies most to your organization’s way of thinking. For example, if you still need to work out your vision statement, it may be wise to begin with the VRIO framework and then move to something like the Balanced Scorecard to track and manage your ongoing strategy.
If you are set on pitching a particular strategic planning model to management, be prepared to give your boss or board of directors an example of another successful company that has utilized that particular model. An actual demonstration of success will make a somewhat abstract concept become more concrete.
If you are evaluating different approaches, I would recommend thinking about both creating your strategic plan and also executing on your plan. It doesn’t do you any good to have a strategic plan and not put it to use.
Yes. As your organization grows and changes, the frameworks you use to manage your strategy will change too. There are a lot of options out there—even more than the 20 we’ve explored above! It’s reasonable to expect that the framework you use today won't necessarily match your organization’s needs 10 or even five years from now. The added complexities of a growing business may make it necessary to rethink your approach to strategy planning. For example, the Balanced Scorecard might work well for tracking organizational and departmental plans, but you may eventually want a system that easily extends to the individual level. For that, you might add OKRs to your management framework.
You can also combine strategic planning models. Some organizations use elements of two or more frameworks to create a custom approach. Great! Every organization manages differently; your planning model should reflect your approach. But it’s always easier to have a starting point, which is why these frameworks exist in the first place.
Framework choices—and even strategies themselves—are flexible, but what’s not flexible is the need for software to track your performance.
Tracking is the only way to know if your strategic plan is working—if the data shows your actions aren’t making an impact, you need to make a change. While most organizations understand that tracking itself is a necessity, they’re using the wrong tools to do it.
The most common alternative to strategy software is Excel. Excel may be a familiar and affordable tool, but it’s costing your organization dearly in ways you may not have thought of:
For decision-makers, Excel-based reports are difficult to digest, which negatively impacts decision-making. Excel was built for numbers but it wasn’t built to easily show analysis and recommendations or real-time data, all of which are essential components of tracking. On top of that, spreadsheets simply make it harder to understand performance data. As a result, your leadership team isn’t getting all the information they need to make strategic decisions.
For the strategy and reporting teams, the use of spreadsheets and the manual collection and updating they require is a tremendous waste of time and a constant headache. There is also inherent risk—even with the most meticulous and careful management—in manual updating and version control across large and elaborate spreadsheets.
No doubt about it, Excel is, in fact, a somewhat costly tool. There is a better way—software exists that automates data updating and collects everything in one place for faster, safer, and better reporting.
Strategy software like ClearPoint was built exclusively for strategy performance reporting. So not only does it solve the above issues but it actually improves the likelihood of executing your strategy successfully. Here’s why:
- You’ll have a “set it and forget it” system in place for performance tracking. There’s no need to recreate new reports for every reporting period, or run around collecting data repeatedly from across the company. ClearPoint automatically pulls in your strategic data from the various repositories you set, making the process automatic. That means you’re more likely to stick with it over the long term.
- You can create either high-level summary reports or detailed data reports (or both!).
- You can use the executive dashboard template (or any other type of dashboard ) to develop a summary presentation of the strategic information your leadership needs to quickly grasp what's going well and what’s not.
- You can incorporate qualitative data and analysis into your reports, giving you a more nuanced, effective way to tell the story of performance.
- You can use real-time data to make sure your reports are as up-to-date as possible.
- You’ll be confident you’re working on the right things. In ClearPoint you can connect projects and measures directly to your overall goals so you can clearly see how your activities support your objectives.
- Your employees’ work will support organizational goals. You can create a comprehensive performance plan in ClearPoint that includes individual performance management, so your employees will understand how their daily activities contribute to the larger goals of the company.
Another important benefit: ClearPoint will improve your strategy team’s productivity by simplifying the strategy reporting process. (One ClearPoint customer was able to reduce the cost of its monthly management board reporting by 70%!) To learn more about how ClearPoint addresses the day-to-day challenges of strategy reporting, read our Ultimate Guide on the subject.
If you’d like to learn more about ClearPoint, we’d love to talk with you! ClearPoint works with any and all of the strategic planning models mentioned above (the same can’t be said for other strategy software tools), so no matter which direction you’re planning to go, we can go with you. See how ClearPoint can help you achieve more— reach out to us today!
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ClearPoint’s 15 Most Popular Strategic Planning Templates
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Strategic Planning Models: The 5 Best Strategy Models
by Tom Wright, on Nov 25, 2022
Table of Contents
New business models, global disruptions, and a need for rapid changes inspired various approaches to strategic planning, also known as strategic planning models.
What all planning models have in common is that they help you translate strategies into action and aim to provide you with structure in the process of creating a strategic plan. But there are now countless frameworks, each with its own approach.
We summarized the 5 most popular strategic planning models in one place so you can start building your own strategic plan in no time.
To get there, let’s explore:
- What is a Strategic Planning Model?
- Planning or strategy: Where to start?
The Cascade Model
The hoshin kanri model, balanced scorecard.
Strategic Planning Process Model vs Strategic Frameworks
- Strategy Model: Which One Is Right For You?
What is a Strategic Planning Model?
A strategic planning model is a collective term for several elements contributing to the strategic planning process. The core components of a strategic planning model include:
- A templated structure for creating strategic goals.
- A loose structure of governance to help you manage and track your strategy.
You can think of strategic planning models as “templates” into which you can drop your own ideas. In the end, you'll come out with a strategic plan which is sensibly structured and gives you a clear roadmap to hit your business goals.
Now that we've defined what a strategic planning model actually is, let's look a bit deeper into each element that one should contain.
2 essential elements of any effective strategic planning model
- Structure refers to the different elements of your strategic plan and how they all fit together. For example, your structure may start with a Vision and Mission Statement, then flow into Values, Focus Areas, and any number of Goal levels.
- Governance refers to how you'll go about actually tracking and reporting on the execution of your strategy.
Planning or strategy: Where to start?
Before we move into the planning section of this article, let’s clarify a common confusion around strategy and strategic planning. What’s the difference and what comes first?
First, do not mistake strategy for a plan. In short, strategy is the act of making strategic choices, while a plan is a roadmap with timelines, owners, and deliverables.
Before laying out your plan, you should get a better understanding of your internal and external business environment so you can make strategic choices and prioritize initiatives.
“ The heart of the strategy is the matched pair of Where-to-Play and How-to-Win. ” - Roger Martin , Bestselling Author and Strategy Advisor
You should always start with strategic analysis. Through this process, you will be able to identify competitive advantage, assess organizational capacity, analyze external factors that might impact your strategy, and find other opportunities you could exploit.
Feel free to use multiple strategic analysis tools since each has its own purpose.
📚Here’s a list of the most popular strategic tools and frameworks that can help you brainstorm your strategy:
- VRIO Framework
- SWOT Analysis
- PESTLE Analysis
- Porter’s Five Forces
- Ansoff Matrix
- McKinsey 7S Model
- Blue Ocean Strategy
Once you have a clear picture of where you want your organization to be in the short-term and long-term future (and where you do NOT want it to be), you can start building a strategic plan that will take you to your destination. And this is where strategic planning models come into play.
Note: Every organization is unique and has different stakeholder needs. Thus, every strategic plan is unique. The goal here is to give you perspective on how you can approach your planning before you dive into the details.
Below, you’ll find examples of strategic planning models that include both Structure & Governance since both are critical to implementing your strategic plan. Because, what's the point in having an awesome strategy on paper if you have no effective way to actually execute it?
The Cascade model is hands-down the most effective example of a strategic planning model that you can find.
It is simple to understand and easy to implement, facilitating the execution of your strategy. Its straightforward structure is suitable for organizations and teams of any size and industry.
Here's a snippet of the structure:
Let's dive into the key elements of the Cascade Strategic Planning Model, its structure and governance.
The structural elements of the Cascade strategic model:
- Identify your vision statement . This statement(s) describes why the organization exists, i.e., its basic purpose.
- Define your company’s values . Describe how you want your organization to behave as it strives towards its Vision.
- Craft your focus areas . They articulate the key areas on which you'll be focusing your efforts to help deliver your Vision.
- Create your objectives . Your strategic objectives define more specifically the outcomes you want to achieve under each of your Focus Areas.
- Define your KPIs . Each of your Objectives should contain at least one or two KPIs to help you measure whether or not you're close to reaching your desired outcomes (Objectives).
- Create your projects . These are one of the most critical elements in your strategic planning model, as they state exactly what actions you will take to deliver against your Objectives.
The governance elements of the Cascade strategic model:
- Monthly Strategic Reports . Team members can create reports at the objective, team, individual, KPI, and action levels. Using Cascade, users can add text, charts, and tables to their reports to provide more context for the reader.
- Project Updates. These are ad hoc updates made against the Project level of the plan and include general project management updates and progress.
- KPI Dashboards. In addition to providing real-time data, they allow users to look back and understand what happened over time using data sources that are available. Live dashboards are essential for identifying deviations from KPI tolerance levels, explaining the difference, and setting an action plan to resolve the issue.
When you combine the goal and the governance elements of this strategic planning model, you get a comprehensive set of tools that you can use not just for creating your plan but also for executing it.
📚 Recommened reading:
- How To Write A Strategic Plan + Example
- 18 Free Strategic Plan Templates (Excel & Cascade) 2023
The Hoshin Kanri model is a strategic planning model that organizations use to drive a consistent focus throughout many levels of their structure.
This makes it ideal for large organizations with different layers of management, including “top-level” executive management, “middle managers,” and “front-line” staff.
Much of the work we did to create the Cascade Strategic Model was inspired by Hoshin Kanri.
So it's certainly a strategic planning model that we respect and admire here at Cascade. Let's dive into the detail of the Hoshin strategic planning model with a quick visual:
The structural elements of the Hoshin Kanri strategic model:
- The first level of the Hoshin Kanri strategic planning model refers to your vision . A distant horizon that will guide everything that sits beneath.
- Then you move on to your 3-5 Year Strategies . These are high-level summaries of what you want to achieve (qualitatively and quantitatively).
- Beneath that, you define Annual Objectives , which will be split between different departments.
- Finally, you determine your Action Items . They are specific things you are going to do to reach your Annual Objectives.
The governance elements of the Hoshin Kanri strategic model:
- Monthly Reviews . These are done against the Annual Objectives and require the goals' owners to provide descriptive progress updates.
- Annual Reviews . These are also done against the Annual Objectives. However, they happen at the end of the time period and encompass a decision point on whether to mark the Annual Objective as complete or roll it over into another year.
There are many different ways to implement the Hoshin Kanri strategic planning model. Above is a simplified explanation that covers most of the core elements.
- Hoshin Kanri: Close Strategy Execution Gap In 7 Steps
OKRs (Objectives and Key Results)
The OKR model is a goal-setting and planning framework that focuses on quarterly sets of OKRs and is reviewed by every management level in the organization.
The basic structure of the OKR strategic planning model looks something like this:
As with the Cascade Strategic Planning Model and Hoshin Kanri, the OKR strategy model has the following key elements.
The structural elements of the OKRs strategic model:
- Objectives. These describe the outcome you are looking for in the current quarter.
- Key Results. These are specific metrics that describe your progress toward your Objective in numerical terms.
- Initiatives. These are tasks or projects that sit against each of your Key Results. Once completed, they should help you reach your Key Results.
The governance elements of the OKRs strategic model:
- Weekly Check-Ins. Each Key Result should have a weekly check-in that covers your confidence level in achieving that OKR, action plan, and general progress updates.
- Quarterly Review. For each Objective, a formal quarterly review should be undertaken where that OKR is given a “score” (usually from 0 to 1) and a decision is made on what to do with that OKR in the next quarter.
- OKRs: How To Avoid The Trap That Kills Performance
- The OKR Framework: How To Implement It & Mistakes To Avoid
- Using Cascade as your OKR Software
Balanced scorecard (also known as BSC) helps organizations drive and assess business performance by organizing key performance indicators (KPIs) into four focus areas: Financial, Customer, Internal Processes, and Learning & Growth.
Here is an example of a basic Balanced Scorecard structure:
The structural elements of the Balanced Scorecard:
- Four perspectives that act as your focus areas.
- Strategic objectives where you define your desired outcomes.
- Projects that outline specific initiatives, timelines, and resources.
- KPIs that measure progress and success.
The governance elements of Balanced Scorecard:
- Strategy dashboards where you should see the real-time status of each perspective and a summary of your key objectives, projects, and KPIs.
- Weekly or Monthly reports where each owner provides progress updates and short-term action plans.
- The strategy map shows how are four perspectives layered and cause-and-effect connections between strategic objectives.
- How To Implement The Balanced Scorecard Framework (With Examples)
- Balanced Scorecard Template (Free)
V2MOM is one of the most simple strategic planning and alignment models out there. Developed by Salesforce's cofounder, Marc Benioff, it helps you implement and drive alignment across your organization.
The model can be used in a variety of organizations, including small businesses, startups, and nonprofits.
As a top-down approach, V2MOM scales across your organization at all levels, including the business unit, department, team, or individual. However, this model won't work if your organization is siloed, as each V2MOM document should be aligned with the top-level V2MOM plan.
An example of a basic V2MOM structure would look like this:
The structural elements of the V2MOM:
- Vision. Like with the Cascade Model, this is where you define your vision of the future.
- Values. A set of values that drive your company’s culture.
- Methods . Strategic objectives, projects, or other strategic initiatives that will help your organization get one step closer to its vision.
- Obstacles. Compared to other models, this is a unique element. It should identify all possible obstacles and risks that can prevent you execute the plan.
- Measures. A set of KPIs that will measure your performance and progress.
The governance elements of V2MOM:
The original V2MOM approach only outlines the structure, but it does not offer a solution to track and measure performance. To meet the needs of our clients, we leveled up V2MOM to help teams measure their performance against set goals in a strategy execution platform :
- Customizable strategy dashboards where leadership teams and team members can get insight into what’s happening across the organization or with specific initiatives.
- Reports that analyze in-depth raw data of the past, and turns it into actionable narratives for regular review meetings and faster decision-making.
An example of a report in Cascade
📚 Recommended reading:
- The V2MOM: Overview, How To Use It, Examples (2022)
It's important to distinguish between strategy frameworks and strategic planning models before you jump into the strategic planning process. Online resources use these terms interchangeably, but they are in fact quite different.
Strategic planning models provide a way to structure the information of your strategy and the content of your strategic plan.
Strategic frameworks , including analysis tools, provide the context that surrounds your strategic plan, and the information that helps you define your strategy.
There are a few different views on this subject, but here is what we think makes the most sense:
- A strategic framework is a general term that covers different types of frameworks, including strategic analysis frameworks, goal-based frameworks, and strategic planning frameworks (in this case, also called strategic planning models).
- A strategic planning model refers to the overall structure you apply to your strategic planning process. It roughly describes the various components and how they interact with one another. For example, imagine an architect building an airport.
A model of the airport would show you at a high level how the approach roads connect to the departure hall and how the departure hall connects to immigration, which then connects to the terminals, the runways, etc.
A strategic planning model functions much the same way in that it describes each of the elements of a coherent strategy: what they do, how they fit together, and in what order.
Strategy Model: Which One Is Right For You? 👀
The examples of strategic planning models we've picked have a lot in common. There's a good reason for it.
The best strategic planning models are simple, contain all the right elements, and combine goal setting with governance.
As a result, they serve you well when it comes to building a highly effective strategic management process and executing your strategy.
You can't really go wrong with any of the strategic planning model examples we've outlined above: Cascade Model, Balanced Scorecard, V2MOM, Hoshin Kanri, or OKRs.
In the Cascade strategy execution platform , you can import or create a strategic plan no matter the model you use since our strategic planning tool is sophisticated enough to customize it to your way of doing strategy.
Interested in seeing Cascade in action? Start building your strategic plan for free or book a demo with a Cascade expert.
What is the difference between strategic planning and strategic management?
The main difference between strategic planning and strategic management is that strategic planning is just a stage within the strategic management process.
What are the 5 models of strategic management?
There are more than five models of strategic management. A strategic management process involves multiple stages, including strategic analysis, strategy formulation, strategy execution, and strategy evaluation. There are multiple models and frameworks suitable for each stage of the strategic process.
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Strategic Planning Models: An Introduction to 5 Popular Models
Organizations are always looking for ways to improve. It’s how they stay relevant and, more importantly, profitable. But you don’t get better just by desiring it. It takes strategy, and then a model to implement that strategy.
No surprise, there are models to accomplish this called strategic planning models. They’re great for businesses, big and small, and assist in project planning and implementing organizational goals in a thorough and structured manner. Once you have decided on an objective, then you must plan a model that will execute it successfully.
There are quite a few strategic planning models, and they can be very different from one another. Often the type of organization will dictate which strategic planning model is used. After a brief explanation, we’ll dig into five of the more popular ones. You’re sure to find a strategic planning model among them that works for you.
What is a Strategic Planning Model?
It’s easy to define what a strategic planning model is because the definition is embedded in its name! A strategic planning model is how an organization takes its strategy and creates a plan to implement it to improve operations and better meet their goals.
How they get to this point requires identifying what the company wants, and how it hopes to achieve those goals in the near term. Once they have that target clearly defined, then it’s a matter of working backwards to figure out how to get there.
This, of course, is easy to say and extremely difficult to do. In fact, sometimes the complexity involved in trying to put together a plan to strategically meet your goals can feel like it needs a strategic planning model all its own! That’s why there are classic models already in place to help you accomplish your goals.
Do You Need a Strategic Planning Model?
If all this sounds like a fancy way of saying you need a plan to achieve your goals, well, you’re right. But that doesn’t dismiss its usefulness in achieving those objectives. No matter if you’re a startup or an established, market-dominant brand, if you don’t have a plan to reach your goals, you’re bound to fail. That could be losing market share or shuttering, neither of which is a path forward for a viable enterprise.
The benefits of having a strategic planning model are manyfold. For one, it provides a clear path that the organization uses and shares with everyone on its staff. Having all departments work together for a common goal is powerful. The opposite is disastrous. You can’t hit your target, whether it’s a year or five or 10 years in the future, if everyone doesn’t know what it is and how you plan to get there.
Think of it as being focused. There are a lot of distractions that occur everyday in every business. Knowing what your topline is helps you prioritize and keep your energies directed on the overall strategy for the company.
Another positive from having a strategic planning model is that it improves your knowledge of what works best in the organization. You know your strengths and weaknesses, as well as getting a clear picture of where you are in the marketplace. It even helps you get a clear idea of who your competition is and how you can differentiate yourself from them.
Best Practices for Strategic Planning Models
We’ll get to the examples in a moment, but regardless of which you choose as most appropriate for your needs, there are best practices to make sure you succeed. When doing the research, assemble a group that is diverse but also appropriate for the goal. Diversity brings more ideas to the table. You’ll want between six and 10 people.
Once you start, give it time. The team needs to come up with creative solutions, and then season them, to make sure they’re the right course of action. You might want to remove the team from the work site. A change of environment, without the distractions of the office, can help them settle into a more contemplative state where they can come up with better ideas.
Of course, you need to get buy-in from the team or else your hard work will be for naught. Once you have them fully on board, build trust. You want everyone to participate, and to do so in a free and open discussion. That means from the boss on down. It might help to hire an outside facilitator to manage the process.
When you have a plan, it must be realistic. If you can’t execute it, then you’ve not done your job. Therefore, it must be actionable, with clearly defined goals , tasks, responsibilities outlined, accountability, deadlines—and all this must be clear to everyone involved. But that doesn’t mean you can’t be flexible. Plans change, so it’s best to not be rigid about it.
Finally, don’t think of creating a strategic planning model for your business as a one-and-done process. Not only must your plan be open to edit as internal and external forces demand, but these meetings should be regularly scheduled. Think of it as a process. Meet monthly if you can, or at least quarterly. You can discuss how the plan is being executed and hold people accountable for what they’ve been tasked to execute. This is how you make sure your plan becomes a reality.
5 Popular Strategic Planning Models
As we said, there are many models, and we deeply encourage you to go down that rabbit hole. You never know what you might find. But for our purposes, let’s narrow the scope down to five with proven results.
1. Alignment Model
This strategic alignment model (SAM) is among the most used. It’s made up of two parts—strategic fit and functional integration. What that means is that the model aligns business and IT strategies . To do this requires identifying the key goals of an organization and then what the steps are to reach those goals. The plan must maximize the process to best achieve those goals.
There are four perspectives to guide you in this model:
- Strategy execution, which is that the business strategy is driving the model.
- Technology potential, which also sees the business strategy as the driver, but with an IT strategy to support it.
- Competitive potential deals with using emerging IT capabilities to create new products and services.
- Lastly, there’s the service level, which is focused on creating the best IT system in the organization.
Here, business strategy is important, but only the launching pad.
2. Balanced Scorecard
The balanced scorecard (BSC) is made up of clear communications on what is being accomplished. It aligns the work with overall strategy, and prioritizes, measures and monitors progress. The idea is that the model balances strategy with financial measurements. One of the reasons to use BSC is that it helps you see the connections between various parts of your strategic management and planning .
Using BSC means exploring four different aspects of your organization.
- One is the financial performance of the company and what financial resources have been most effective.
- You also want to gauge the performance of your stakeholders or customers and how you serve them.
- Internal processes should be judged on their efficiency, too, but also quality.
- Then there’s the organizational capacity, which looks at your personnel, infrastructure, tech, culture and whatever else can be used to meet your goals.
3. Basic Model
Also called the simple model, this one is often used by newer organizations who don’t have a history of strategic planning to help guide them in making decisions. But it’s also a fine model for any organization that doesn’t have the time or resources to spend on deep and extensive strategic planning.
First, you establish the mission statement for your organization, if you don’t already have one. That is, a summary of your goals that is created to inspire and transform the organization. Next, you want to figure out what goals must be achieved in order to fulfill the mission statement. From that, break down the tasks that will reach those goals. Schedule, monitor and report on your progress.
4. Blue Ocean Strategy
The blue ocean strategy is designed for taking your product to a market where there is none or little competition. Therefore, the research is heavily tilted towards finding a niche that can be exploited for profit, such as where there are few businesses offering a product people have expressed an interest in, and there is little to no pricing pressure.
Unlike red ocean strategy, which describes a market that is saturated and products are threatened by pricing pressure that could threaten the business, blue ocean strategy looks for markets where there is room to grow. You’re looking to capture new demand, where your product is either unique or so much better as to make competition irrelevant.
5. Issue (Or Goal) Based
The issue-based model (also called goal-based) is the next step up from the basic strategic planning model. It builds on the basic model and is intended for businesses that are more established. Thus, it’s more in-depth and possibly the most popular of all the models we’ve highlighted.
To begin, use a SWOT analysis, which is an acronym standing for Strengths, Weaknesses and Threats Analysis. It helps you identify and analyze internal and external factors that impact your business, product or service. Next comes the mission statement, then planning, creating a budget and a schedule to implement it. After a year, you’ll want to monitor the results and report on its progress , making adjustments as needed.
How ProjectManager Executes Strategic Planning Models
Now that you know about strategic planning models, and have chosen one to reach your organization’s objective, you have a lot of work ahead of you. ProjectManager is an award-winning tool that organizes strategic plans, so you can execute, monitor and report on their progress.
Start Planning In-Depth with Gantt Charts
You have decided on your target, now you need to know how you get there. That’s as simple as breaking down the goal into realistic tasks, or steps, that end at your objective. You can use a work breakdown structure or collect them on a spreadsheet. Now the fun starts. Upload your tasks into our software, and you get to the planning part of your strategic planning model.
Add duration to your tasks, and they instantly populate the Gantt chart tool timeline. Now, you can see your whole project from start to finish. Add priorities, so your team knows what’s important, and break up the project into phases with our milestone feature. There’s a space on each task to write descriptions that guide your team, and they can collaborate by commenting with one another at the task level to facilitate productivity.
Multiple Views to Tackle Your Projects
There are many ways to work, and we have many tools to get that work done. Besides the Gantt, you can use a task list, calendar or kanban board to manage your work. The board view is especially helpful, as it breaks production into phases and provides transparency into the process, so you can keep traffic flowing and avoid costly bottlenecks.
Monitor Your Progress with Real-Time Dashboards
Part of any strategic planning model is not just the planning and execution, but monitoring progress to make sure you’re hitting your targets. We have a real-time dashboard that tracks several project metrics, including project variance, which is automatically calculates your planned vs. actual progress.
ProjectManager is a cloud-based software made to help teams and projects get better organized. We help you deliver on your strategic plan with tools to help you through every phase of the project. See why tens of thousands of teams are already using our software and take our free 30-day trial today.
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9 Strategic Planning Models and Tools for the Customer-Focused Business
Updated: September 06, 2022
Published: June 23, 2021
What's a plan without a strategy?
As the economist and business strategy guru, Michael Porter, says, "The essence of strategy is choosing what not to do."
With strategic planning , businesses identify their strengths and weaknesses, choose what not to do, and determine which opportunities should be pursued. In sales operations, having a clearly defined strategy will help your organization plan for the future, set viable goals, and achieve them.
So, how do you get started with strategic planning? You'll begin with strategic planning models and tools. Let's take a look at nine of the most prominent ones here.
Strategic Planning Models
Strategic planning is used to set up long-term goals and priorities for an organization. A strategic plan is a written document that outlines these goals.
Don't confuse strategic planning and tactical planning . Strategic planning is focused on long-term goals, while tactical planning is focused on the short-term.
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Here are a few strategic planning models you can use to get started.
1. The Balanced Scorecard
The Balanced Scorecard is one of the most prominent strategic planning models, tailored to give managers a comprehensive overview of their companies' operations on tight timelines. It considers both financial and operational metrics to provide valuable context about how a business has performed previously, is currently performing, and is likely to perform in the future.
The model plays on four concerns: time, quality, performance and service, and cost. The sum of those components amount to four specific reference points for goal-setting and performance measurement:
- Customer — how customers view your business
- Internal Process — how you can improve your internal processes
- Organizational Capacity — how you can grow, adapt, and improve
- Financial — your potential profitability
Those four categories can inform more thoughtful, focused goals and the most appropriate metrics you can use to track them. But the elements you choose to pursue and measure are ultimately up to you. They will vary from organization to organization — there's no definitive list.
That being said, there's a universally applicable technique you can use when leveraging the model — creating a literal scorecard. It's a document that keeps track of your goals and how you apply them. Here's an example of what that might look like:
Image Source: IntraFocus
The Balanced Scorecard is ideal for businesses looking to break up higher-level goals into more specific, measurable objectives. If you're interested in translating your big-picture ambitions into actionable projects, consider looking into it.
Example of the Balanced Scorecard
Let's imagine a B2B SaaS company that sells a construction management solution. It's been running into trouble from virtually all angles. It's struggling with customer retention and, in turn, is hemorrhaging revenue. The company's sales reps are working with very few qualified leads and the organization's tech stack is limiting growth and innovation.
The business decides to leverage a Balanced Scorecard approach to remedy its various issues. In this case, the full strategic plan — developed according to this model — might look like this:
- The company sets a broad financial goal of boosting revenue by 10% year over year.
- To help get there, it aims to improve its customer retention rate by 5% annually by investing in a more robust customer service infrastructure.
- Internally, leadership looks to improve the company's lead generation figures by 20% year over year by revamping its onboarding process for its presales team.
- Finally, the business decides to move on from its legacy tech stack in favor of a virtualized operating system — making for at least 50% faster software delivery for consistent improvements to its product.
The elements listed above address key flaws in the company's customer perception, internal processes, financial situation, and organizational capacity. Every improvement the business is hoping to make involves a concrete goal with clearly outlined metrics and definitive figures to gauge each one's success. Taken together, the organization's plan abides by the Balanced Scorecard model.
2. Objectives and Key Results
As its name implies, this model revolves around translating broader organizational goals into objectives and tracking their key results. The framework rests on identifying three to five attainable objectives and three to five results that should stem from each of them. Once you have those in place, you plan initiatives around those results.
After you've figured out those reference points, you determine the most appropriate metrics for measuring their success. And once you've carried out the projects informed by those ideal results, you gauge their success by giving a score on a scale from 0 to 1 or 0%-100%.
For instance, your goal might be developing relationships with 100 new targets or named accounts in a specific region. If you only were able to develop 95, you would have a score of .95 or 95%. Here's an example of what an OKR model might look like:
Image Source: Perdoo
It's recommended that you structure your targets to land at a score of around 70% — taking some strain off workers while offering them a definitive ideal outcome. The OKR model is relatively straightforward and near-universally applicable. If your business is interested in a way to work towards firmly established, readily visible standards this model could work for you.
Example of the Objectives and Key Results
Let's consider a hypothetical company that makes educational curriculum and schedule planning for higher-education institutions. The company decides it would like to expand its presence in the community college system in California — something that constitutes an objective.
But what will it take to accomplish that? And how will the company know if it's successful? Well, in this instance, leadership at the business would get there by establishing three to five results they would like to see. Those could be:
- Generating qualified leads from 30 institutions
- Conducting demos at 10 colleges
- Closing deals at 5 campuses
Those results would lead to initiatives like setting standards for lead qualification and training reps at the top of the funnel on how to use them appropriately, revamping sales messaging for discovery calls, and conducting research to better tailor the demo process to the needs of community colleges.
Leveraging this model generally entails repeating that process between two and four more times — ultimately leading to a sizable crop of thorough, actionable, ambitious, measurable, realistic plans.
3. Theory of Change (TOC)
The Theory of Change (TOC) model revolves around organizations establishing long-term goals and essentially "working backward" to accomplish them. When leveraging the strategy, you start by setting a larger, big-picture goal.
Then, you identify the intermediate-term adjustments and plans you need to make to achieve your desired outcome. Finally, you work down a level and plan the various short-term changes you need to make to realize the intermediate ones. More specifically, you need to take these strides:
- Identify your long-term goals.
- Backward map the preconditions necessary to achieve your goal, and explain why they're necessary.
- Identify your basic assumptions about the situation.
- Determine the interventions your initiative will fulfill to achieve your goals.
- Come up with indicators to evaluate the performance of your initiative.
- Write an explanation of the logic behind your initiative.
Here's another visualization of what that looks like.
Image Source: Wageningen University and Research
This planning model works best for organizations interested in taking on endeavors like building a team, planning an initiative, or developing an action plan. It's distinct from other models in its ability to help you differentiate between desired and actual outcomes. It also makes stakeholders more actively involved in the planning process by making them model exactly what they want out of a project.
It relies on more pointed detail than similar models. Stakeholders generally need to lay out several specifics, including information related to the company's target population, how success will be identified, and a definitive timeline for every action and intervention planned. Again, virtually any organization — be it public, corporate, nonprofit, or anything else — can get a lot out of this strategy model.
Example of the Theory of Change
For the sake of this example, imagine a business that makes HR Payroll Software — one that's not doing too well as of late. Leadership at the company feels directionless. They think it's time to buckle down and put some firm plans in motion, but as of right now, they have some big picture outcomes in mind for the company without a feel for how they're going to get there.
In this case, the business might benefit from leveraging the Theory of Change model. Let's say its ultimate goal is to expand its market share. Leadership would then consider the preconditions that would ultimately lead to that goal and why they're relevant.
For instance, one of those preconditions might be tapping into a new customer base without alienating its current one. The company could make an assumption like, "We currently cater to mid-size businesses almost exclusively, and we lack the resources to expand up-market to enterprise-level prospects. We need to find a way to more effectively appeal to small businesses."
Now, the company can start looking into the specific initiatives it can take to remedy its overarching problem. Let's say it only sells its product at a fixed price point — one that suits midsize businesses much more than smaller ones. So the company decides that it should leverage a tiered pricing structure that offers a limited suite of features at a price that small businesses and startups can afford.
The factors the company elects to use as reference points for the plan's success are customer retention and new user acquisition. Once those have been established, leadership would explain why the goals, plans, and metrics it has outlined make sense.
If you track the process I've just plotted, you'll see the Theory of Change in motion — it starts with a big-picture goal and works its way down to specific initiatives and ways to gauge their effectiveness.
4. Hoshin Planning
The Hoshin Planning model is a process that aims to reduce friction and inefficiency by promoting active and open communication throughout an organization. In this model, everyone within an organization — regardless of department or seniority — is made aware of the company's goals.
Hoshin Planning rests on the notion that thorough communication creates cohesion, but that takes more than contributions from leadership. This model requires that results from every level be shared with management — from the shop floor up.
The ideal outcomes set according to this model are also conceived of by committee — to a certain extent. Hoshin Planning involves management hearing and considering feedback from subordinates to come up with reasonable, realistic, and mutually understood goals.
Image Source: i-nexus
The model is typically partitioned into seven steps: establishing a vision, developing breakthrough objectives, developing annual objectives, deploying annual objectives, implementing annual objectives, conducting monthly and quarterly reviews, and conducting an annual review.
The first three steps are referred to as the "catchball process." It's where company leadership sets goals and establishes strategic plans to send down the food chain for feedback and new ideas. That stage is what really separates Hoshin Planning from other models.
Example of Hoshin Planning
For this example, let's imagine a company that manufactures commercial screen printing machines. The business has seen success with smaller-scale, retail printing operations — but it's realized that selling almost exclusively to that market won't make for long-term, sustainable growth.
Leadership at the company decides that it's interested in making an aggressive push to move up-market towards larger enterprise companies — but before they can establish that vision, they want to ensure that the entire company is willing and able to work with them to reach those goals.
Once they've set a tentative vision, they begin to establish more concrete objectives and send them down the management hierarchy. One of the most pressing activities they're interested in pursuing is a near-comprehensive product redesign to make their machines better suited for higher volume orders.
They communicate those goals throughout the organization and ask for feedback along the way. After the product team hears their ideal plans, it relays that the product overhaul that leadership is looking into isn't viable within the timeframe they've provided. Leadership hears this and adjusts their expectations before doling out any sort of demands for the redesign.
Once both parties agree on a feasible timeline, they begin to set more definitive objectives that suit both the company's ambitions and the product team's capabilities.
Strategic Planning Tools
There are additional resources you can use to support whatever strategic planning model you put in place. Here are some of those:
1. SWOT Analysis
SWOT analysis is a strategic planning tool and acronym for s trengths, w eaknesses, o pportunities, and t hreats. It's used to identify each of these elements in relation to your business.
This strategic planning tool allows you to determine new opportunities and which areas of your business need improvement. You'll also identify any factors or threats that might negatively impact your business or success.
Image Source: HubSpot
2. Porter's Five Forces
Use Porter's Five Forces as a strategic planning tool to identify the economic forces that impact your industry and determine your business' competitive position. The five forces include:
- Competition in the industry
- Potential of new entrants into the industry
- Power of suppliers
- Power of customers
- Threat of substitute products
To learn more, check out this comprehensive guide to using Porter's Five Forces .
3. PESTLE Analysis
The PESTLE analysis is another strategic planning tool you can use. It stands for:
- P: Political
- E: Economic
- T: Technological
- E: Environmental
Each of these elements allow an organization to take stock of the business environment they're operating in, which helps them develop a strategy for success. Use a PESTLE Analysis template to help you get started.
Visioning is a goal-setting strategy used in strategic planning. It helps your organization develop a vision for the future and the outcomes you'd like to achieve.
Once you reflect on the goals you'd like to reach within the next five years or more, you and your team can identify the steps you need to take to get where you'd like to be. From there, you can create your strategic plan.
5. VRIO Framework
The VRIO framework is another strategic planning tool that's used to identify the competitive advantages of your product or service. It's composed of four different elements:
- Value : Does it provide value to customers?
- Rarity : Do you have control over a rare resource or piece of technology?
- Imitability : Can it easily be copied by competitors?
- Organization : Does your business have the operations and systems in place to capitalize on its resources?
By analyzing each of these areas in your business, you'll be able to create a strategic plan that helps you cater to the needs of your customer.
With these strategic planning models and tools, you'll be able to create a comprehensive and effective strategic plan. To learn more, check out the ultimate guide to strategic planning next.
Editor's note: This post was originally published on May 17, 2019 and has been updated for comprehensiveness.
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7 strategic planning models, plus 8 frameworks to help you get started
Strategic planning is vital in defining where your business is going in the next three to five years. With the right strategic planning models and frameworks, you can uncover opportunities, identify risks, and create a strategic plan to fuel your organization’s success. We list the most popular models and frameworks and explain how you can combine them to create a strategic plan that fits your business.
A strategic plan is a great tool to help you hit your business goals . But sometimes, this tool needs to be updated to reflect new business priorities or changing market conditions. If you decide to use a model that already exists, you can benefit from a roadmap that’s already created. The model you choose can improve your knowledge of what works best in your organization, uncover unknown strengths and weaknesses, or help you find out how you can outpace your competitors.
In this article, we cover the most common strategic planning models and frameworks and explain when to use which one. Plus, get tips on how to apply them and which models and frameworks work well together.
Strategic planning models vs. frameworks
First off: This is not a one-or-nothing scenario. You can use as many or as few strategic planning models and frameworks as you like.
When your organization undergoes a strategic planning phase, you should first pick a model or two that you want to apply. This will provide you with a basic outline of the steps to take during the strategic planning process.
During that process, think of strategic planning frameworks as the tools in your toolbox. Many models suggest starting with a SWOT analysis or defining your vision and mission statements first. Depending on your goals, though, you may want to apply several different frameworks throughout the strategic planning process.
For example, if you’re applying a scenario-based strategic plan, you could start with a SWOT and PEST(LE) analysis to get a better overview of your current standing. If one of the weaknesses you identify has to do with your manufacturing process, you could apply the theory of constraints to improve bottlenecks and mitigate risks.
Now that you know the difference between the two, learn more about the seven strategic planning models, as well as the eight most commonly used frameworks that go along with them.
1. Basic model
The basic strategic planning model is ideal for establishing your company’s vision, mission, business objectives, and values. This model helps you outline the specific steps you need to take to reach your goals, monitor progress to keep everyone on target, and address issues as they arise.
If it’s your first strategic planning session, the basic model is the way to go. Later on, you can embellish it with other models to adjust or rewrite your business strategy as needed. Let’s take a look at what kinds of businesses can benefit from this strategic planning model and how to apply it.
Small businesses or organizations
Companies with little to no strategic planning experience
Organizations with few resources
Write your mission statement. Gather your planning team and have a brainstorming session. The more ideas you can collect early in this step, the more fun and rewarding the analysis phase will feel.
Identify your organization’s goals . Setting clear business goals will increase your team’s performance and positively impact their motivation.
Outline strategies that will help you reach your goals. Ask yourself what steps you have to take in order to reach these goals and break them down into long-term, mid-term, and short-term goals .
Create action plans to implement each of the strategies above. Action plans will keep teams motivated and your organization on target.
Monitor and revise the plan as you go . As with any strategic plan, it’s important to closely monitor if your company is implementing it successfully and how you can adjust it for a better outcome.
2. Issue-based model
Also called goal-based planning model, this is essentially an extension of the basic strategic planning model. It’s a bit more dynamic and very popular for companies that want to create a more comprehensive plan.
Organizations with basic strategic planning experience
Businesses that are looking for a more comprehensive plan
Conduct a SWOT analysis . Assess your organization’s strengths, weaknesses, opportunities, and threats with a SWOT analysis to get a better overview of what your strategic plan should focus on. We’ll give into how to conduct a SWOT analysis when we get into the strategic planning frameworks below.
Identify and prioritize major issues and/or goals. Based on your SWOT analysis, identify and prioritize what your strategic plan should focus on this time around.
Develop your main strategies that address these issues and/or goals. Aim to develop one overarching strategy that addresses your highest-priority goal and/or issue to keep this process as simple as possible.
Update or create a mission and vision statement . Make sure that your business’s statements align with your new or updated strategy. If you haven’t already, this is also a chance for you to define your organization’s values.
Create action plans. These will help you address your organization’s goals, resource needs, roles, and responsibilities.
Develop a yearly operational plan document. This model works best if your business repeats the strategic plan implementation process on an annual basis, so use a yearly operational plan to capture your goals, progress, and opportunities for next time.
Allocate resources for your year-one operational plan. Whether you need funding or dedicated team members to implement your first strategic plan, now is the time to allocate all the resources you’ll need.
Monitor and revise the strategic plan. Record your lessons learned in the operational plan so you can revisit and improve it for the next strategic planning phase.
The issue-based plan can repeat on an annual basis (or less often once you resolve the issues). It’s important to update the plan every time it’s in action to ensure it’s still doing the best it can for your organization.
You don’t have to repeat the full process every year—rather, focus on what’s a priority during this run.
3. Alignment model
This model is also called strategic alignment model (SAM) and is one of the most popular strategic planning models. It helps you align your business and IT strategies with your organization’s strategic goals.
You’ll have to consider four equally important, yet different perspectives when applying the alignment strategic planning model:
Strategy execution: The business strategy driving the model
Technology potential: The IT strategy supporting the business strategy
Competitive potential: Emerging IT capabilities that can create new products and services
Service level: Team members dedicated to creating the best IT system in the organization
Ideally, your strategy will check off all the criteria above—however, it’s more likely you’ll have to find a compromise.
Here’s how to create a strategic plan using the alignment model and what kinds of companies can benefit from it.
Organizations that need to fine-tune their strategies
Businesses that want to uncover issues that prevent them from aligning with their mission
Companies that want to reassess objectives or correct problem areas that prevent them from growing
Outline your organization’s mission, programs, resources, and where support is needed. Before you can improve your statements and approaches, you need to define what exactly they are.
Identify what internal processes are working and which ones aren’t. Pinpoint which processes are causing problems, creating bottlenecks , or could otherwise use improving. Then prioritize which internal processes will have the biggest positive impact on your business.
Identify solutions. Work with the respective teams when you’re creating a new strategy to benefit from their experience and perspective on the current situation.
Update your strategic plan with the solutions. Update your strategic plan and monitor if implementing it is setting your business up for improvement or growth. If not, you may have to return to the drawing board and update your strategic plan with new solutions.
4. Scenario model
The scenario model works great if you combine it with other models like the basic or issue-based model. This model is particularly helpful if you need to consider external factors as well. These can be government regulations, technical, or demographic changes that may impact your business.
Organizations trying to identify strategic issues and goals caused by external factors
Identify external factors that influence your organization. For example, you should consider demographic, regulation, or environmental factors.
Review the worst case scenario the above factors could have on your organization. If you know what the worst case scenario for your business looks like, it’ll be much easier to prepare for it. Besides, it’ll take some of the pressure and surprise out of the mix, should a scenario similar to the one you create actually occur.
Identify and discuss two additional hypothetical organizational scenarios. On top of your worst case scenario, you’ll also want to define the best case and average case scenarios. Keep in mind that the worst case scenario from the previous step can often provoke strong motivation to change your organization for the better. However, discussing the other two will allow you to focus on the positive—the opportunities your business may have ahead.
Identify and suggest potential strategies or solutions. Everyone on the team should now brainstorm different ways your business could potentially respond to each of the three scenarios. Discuss the proposed strategies as a team afterward.
Uncover common considerations or strategies for your organization. There’s a good chance that your teammates come up with similar solutions. Decide which ones you like best as a team or create a new one together.
Identify the most likely scenario and the most reasonable strategy. Finally, examine which of the three scenarios is most likely to occur in the next three to five years and how your business should respond to potential changes.
5. Self-organizing model
Also called the organic planning model, the self-organizing model is a bit different from the linear approaches of the other models. You’ll have to be very patient with this method.
This strategic planning model is all about focusing on the learning and growing process rather than achieving a specific goal. Since the organic model concentrates on continuous improvement , the process is never really over.
Large organizations that can afford to take their time
Businesses that prefer a more naturalistic, organic planning approach that revolves around common values, communication, and shared reflection
Companies that have a clear understanding of their vision
Define and communicate your organization’s cultural values . Your team can only think clearly and with solutions in mind when they have a clear understanding of your organization's values.
Communicate the planning group’s vision for the organization. Define and communicate the vision with everyone involved in the strategic planning process. This will align everyone’s ideas with your company’s vision.
Discuss what processes will help realize the organization’s vision on a regular basis. Meet every quarter to discuss strategies or tactics that will move your organization closer to realizing your vision.
6. Real-time model
This fluid model can help organizations that deal with rapid changes to their work environment. There are three levels of success in the real-time model:
Organizational: At the organizational level, you’re forming strategies in response to opportunities or trends.
Programmatic: At the programmatic level, you have to decide how to respond to specific outcomes or environmental changes.
Operational: On the operational level, you will study internal systems, policies, and people to develop a strategy for your company.
Figuring out your competitive advantage can be difficult, but this is absolutely crucial to ensure success. Whether it’s a unique asset or strength your organization has or an outstanding execution of services or programs—it’s important that you can set yourself apart from others in the industry to succeed.
Companies that need to react quickly to changing environments
Businesses that are seeking new tools to help them align with their organizational strategy
Define your mission and vision statement. If you ever feel stuck formulating your company’s mission or vision statement, take a look at those of others. Maybe Asana’s vision statement sparks some inspiration.
Research, understand, and learn from competitor strategy and market trends. Pick a handful of competitors in your industry and find out how they’ve created success for themselves. How did they handle setbacks or challenges? What kinds of challenges did they even encounter? Are these common scenarios in the market? Learn from your competitors by finding out as much as you can about them.
Study external environments. At this point, you can combine the real-time model with the scenario model to find solutions to threats and opportunities outside of your control.
Conduct a SWOT analysis of your internal processes, systems, and resources. Besides the external factors your team has to consider, it’s also important to look at your company’s internal environment and how well you’re prepared for different scenarios.
Develop a strategy. Discuss the results of your SWOT analysis to develop a business strategy that builds toward organizational, programmatic, and operational success.
Rinse and repeat. Monitor how well the new strategy is working for your organization and repeat the planning process as needed to ensure you’re on top or, perhaps, ahead of the game.
7. Inspirational model
This last strategic planning model is perfect to inspire and energize your team as they work toward your organization’s goals. It’s also a great way to introduce or reconnect your employees to your business strategy after a merger or acquisition.
Businesses with a dynamic and inspired start-up culture
Organizations looking for inspiration to reinvigorate the creative process
Companies looking for quick solutions and strategy shifts
Gather your team to discuss an inspirational vision for your organization. The more people you can gather for this process, the more input you will receive.
Brainstorm big, hairy audacious goals and ideas. Encouraging your team not to hold back with ideas that may seem ridiculous will do two things: for one, it will mitigate the fear of contributing bad ideas. But more importantly, it may lead to a genius idea or suggestion that your team wouldn’t have thought of if they felt like they had to think inside of the box.
Assess your organization’s resources. Find out if your company has the resources to implement your new ideas. If they don’t, you’ll have to either adjust your strategy or allocate more resources.
Develop a strategy balancing your resources and brainstorming ideas. Far-fetched ideas can grow into amazing opportunities but they can also bear great risk. Make sure to balance ideas with your strategic direction.
Now, let’s dive into the most commonly used strategic frameworks.
8. SWOT analysis framework
One of the most popular strategic planning frameworks is the SWOT analysis . A SWOT analysis is a great first step in identifying areas of opportunity and risk—which can help you create a strategic plan that accounts for growth and prepares for threats.
SWOT stands for strengths, weaknesses, opportunities, and threats. Here’s an example:
9. OKRs framework
A big part of strategic planning is setting goals for your company. That’s where OKRs come into play.
OKRs stand for objective and key results—this goal-setting framework helps your organization set and achieve goals. It provides a somewhat holistic approach that you can use to connect your team’s work to your organization’s big-picture goals. When team members understand how their individual work contributes to the organization’s success, they tend to be more motivated and produce better results
10. Balanced scorecard (BSC) framework
The balanced scorecard is a popular strategic framework for businesses that want to take a more holistic approach rather than just focus on their financial performance. It was designed by David Norton and Robert Kaplan in the 1990s, it’s used by companies around the globe to:
Align their team’s daily work with their company’s strategy
Prioritize products, services, and projects
Monitor their progress toward their strategic goals
Your balanced scorecard will outline four main business perspectives:
Customers or clients , meaning their value, satisfaction, and/or retention
Financial , meaning your effectiveness in using resources and your financial performance
Internal process , meaning your business’s quality and efficiency
Organizational capacity , meaning your organizational culture, infrastructure and technology, and human resources
With the help of a strategy map, you can visualize and communicate how your company is creating value. A strategy map is a simple graphic that shows cause-and-effect connections between strategic objectives.
The balanced scorecard framework is an amazing tool to use from outlining your mission, vision, and values all the way to implementing your strategic plan .
You can use an integration like Lucidchart to create strategy maps for your business in Asana.
11. Porter’s Five Forces framework
If you’re using the real-time strategic planning model, Porter’s Five Forces are a great framework to apply. You can use it to find out what your product’s or service’s competitive advantage is before entering the market.
Developed by Michael E. Porter , the framework outlines five forces you have to be aware of and monitor:
Threat of new industry entrants: Any new entry into the market results in increased pressure on prices and costs.
Competition in the industry: The more competitors that exist, the more difficult it will be for you to create value in the market with your product or service.
Bargaining power of suppliers: Suppliers can wield more power if there are less alternatives for buyers or it’s expensive, time consuming, or difficult to switch to a different supplier.
Bargaining power of buyers: Buyers can wield more power if the same product or service is available elsewhere with little to no difference in quality.
Threat of substitutes: If another company already covers the market’s needs, you’ll have to create a better product or service or make it available for a lower price at the same quality in order to compete.
Remember, industry structures aren’t static. The more dynamic your strategic plan is, the better you’ll be able to compete in a market.
12. VRIO framework
The VRIO framework is another strategic planning tool designed to help you evaluate your competitive advantage. VRIO stands for value, rarity, imitability, and organization.
It’s a resource-based theory developed by Jay Barney. With this framework, you can study your firmed resources and find out whether or not your company can transform them into sustained competitive advantages.
Firmed resources can be tangible (e.g., cash, tools, inventory, etc.) or intangible (e.g., copyrights, trademarks, organizational culture, etc.). Whether these resources will actually help your business once you enter the market depends on four qualities:
Valuable : Will this resource either increase your revenue or decrease your costs and thereby create value for your business?
Rare : Are the resources you’re using rare or can others use your resources as well and therefore easily provide the same product or service?
Inimitable : Are your resources either inimitable or non-substitutable? In other words, how unique and complex are your resources?
Organizational: Are you organized enough to use your resources in a way that captures their value, rarity, and inimitability?
It’s important that your resources check all the boxes above so you can ensure that you have sustained competitive advantage over others in the industry.
13. Theory of Constraints (TOC) framework
If the reason you’re currently in a strategic planning process is because you’re trying to mitigate risks or uncover issues that could hurt your business—this framework should be in your toolkit.
The theory of constraints (TOC) is a problem-solving framework that can help you identify limiting factors or bottlenecks preventing your organization from hitting OKRs or KPIs .
Whether it’s a policy, market, or recourse constraint—you can apply the theory of constraints to solve potential problems, respond to issues, and empower your team to improve their work with the resources they have.
14. PEST/PESTLE analysis framework
The idea of the PEST analysis is similar to that of the SWOT analysis except that you’re focusing on external factors and solutions. It’s a great framework to combine with the scenario-based strategic planning model as it helps you define external factors connected to your business’s success.
PEST stands for political, economic, sociological, and technological factors. Depending on your business model, you may want to expand this framework to include legal and environmental factors as well (PESTLE). These are the most common factors you can include in a PESTLE analysis:
Political: Taxes, trade tariffs, conflicts
Economic: Interest and inflation rate, economic growth patterns, unemployment rate
Social: Demographics, education, media, health
Technological: Communication, information technology, research and development, patents
Legal: Regulatory bodies, environmental regulations, consumer protection
Environmental: Climate, geographical location, environmental offsets
15. Hoshin Kanri framework
Hoshin Kanri is a great tool to communicate and implement strategic goals. It’s a planning system that involves the entire organization in the strategic planning process. The term is Japanese and stands for “compass management” and is also known as policy management.
This strategic planning framework is a top-down approach that starts with your leadership team defining long-term goals which are then aligned and communicated with every team member in the company.
You should hold regular meetings to monitor progress and update the timeline to ensure that every teammate’s contributions are aligned with the overarching company goals.
Stick to your strategic goals
Whether you’re a small business just starting out or a nonprofit organization with decades of experience, strategic planning is a crucial step in your journey to success.
If you’re looking for a tool that can help you and your team define, organize, and implement your strategic goals, Asana is here to help. Our goal-setting software allows you to connect all of your team members in one place, visualize progress, and stay on target.
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9 effective strategic planning models for your business
Strategic planning models can make a big difference to your organization. That remains true whether you’re a startup developing an overall strategy or an established business fine-tuning internal processes.
But there are many strategic planning models, and it’s vital to pick one that suits your purpose and needs. The right framework will help you streamline processes, drive alignment, and propel your business.
To help your research process, we’ve compiled a list of the most effective strategic planning models and their top use cases. Let’s take a look.
🧐 Looking for a flexible framework to help you reach your business objectives? Leapsome’s goal management tools fit any strategic planning process. 👉 Learn more
What is a strategic planning model?
A strategic planning model is a framework that allows organizations to map out their short- and long-term business plans. They can help:
- Identify and overcome obstacles
- Improve and streamline operations
- Reach overarching business goals
- Create alignment between different departments
- Track progress over time
And you don’t have to limit your organization to one strategic planning model. Businesses can benefit from using multiple approaches, even simultaneously. But different strategic planning models are best suited for different situations, so make your choice based on your business type, growth stage, priorities, and goals.
9 models for strategic planning
These are some of the most popular strategic planning models. Our list covers a definition of each model, an example of it in action, and which use cases it works best for.
1. Objectives & key results (OKRs)
OKRs are a popular goal-setting framework that organizations, teams, and individuals use to define long-term objectives and track progress. To better understand the meaning of OKRs , let’s unpack the acronym:
- Objectives — ambitious but achievable long-term goals
- Key results — milestones used to measure progress toward each objective
When establishing your OKRs, create quarterly objectives for all company levels — Leapsome has a free OKR template to help you get started. Then, revisit your OKRs regularly to monitor your progress and make adjustments if necessary. You can also introduce regular OKR meetings to your organization’s internal processes.
Here’s an example of an OKR for a B2B SaaS company:
Objective | Obtain 1 million subscribers by the end of 2023
- Key results:
- Increase sales conversion rate from 25% to 30%
- Reduce user churn from 5% to 3%
- Publish a successful case study on our website every quarter
- Achieve a minimum of 4.7 out of 5 rating across all major review sites
OKRs work best for organizations that want to create more alignment behind their goals. By breaking down company-wide objectives into smaller, more manageable tasks, OKRs ensure everyone works toward a common purpose.
OKRs also show employees how their work contributes to the big picture, giving them a sense of purpose and boosting employee engagement . Research by Gallup links engaged employees to lower turnover rates, better work performance, and a thriving work culture. Consequently, OKRs help companies build successful workplaces.
💡 Wondering how to introduce OKRs to your organization? Use Leapsome’s flexible framework to set company-wide objectives and track them in one intuitive place. 👉 Learn more
2. SWOT analysis
SWOT stands for strengths , weaknesses , opportunities , and threats . Use the SWOT model to define internal and external factors affecting your business. Then, compare the different factors to assess the risk of a potential strategy.
For example, if your organization’s strengths match opportunities in the market — say, you have a lot of capital, and your competitors don’t — you know you have a competitive advantage. In that scenario, you can take an offensive business strategy with relatively low risk.
Here’s a SWOT example for a sales-based organization:
- Strengths — We have an excellent rapport with our customers and a loyal customer base.
- Weaknesses — Our current supply chain is inadequate.
- Opportunities — There’s high customer demand for one of our products.
- Threat — Our main competitor is developing a similar product.
Based on this SWOT analysis, our example organization isn’t in a strong strategic position. There’s a risk they won’t produce or distribute enough of their product to meet demand, and their competitor has the potential to outperform them. They should prioritize optimizing their product offering and solving supply chain issues over generating leads or working on an aggressive marketing campaign.
Any business can benefit from SWOT analysis. However, it’s best to use it at the beginning stages of a new strategy and with a specific goal in mind. You could try a SWOT approach when deciding priorities, like implementing new technology or restructuring your organization.
3. PEST or PESTLE analysis
PEST analysis focuses on external factors that can affect your organization. The letters stand for:
And depending on your industry, you might add legal and environmental factors to make PESTLE.
PEST or PESTLE example
Here’s an example of a PESTLE analysis for a multinational confectionery company:
- Political factors — The government of a country where we sell many products is planning to raise import tariffs.
- Economic factors — Our target demographic (13 to 21-year-olds) has more disposable income now that Covid-19 restrictions have been lifted.
- Socio-cultural factors — Surveys report that customers consider our products healthy.
- Technological factors — Engineers devised a more efficient way to farm the main ingredient in half our products.
- Legal factors — The FDA approved our latest chocolate bar.
- Environmental factors — NGOs are pressuring us to use more environmentally friendly processes.
PEST analysis lets you assess the business environment for a product or service, so it’s best used during the beginning stages of a project.
4. The Balanced Scorecard framework
The Balanced Scorecard framework lets you take a holistic approach to business planning that doesn’t just focus on economic performance. Instead, you look at four perspectives:
- Financial perspective — how well your organization is performing economically
- Customer perspective — your customer satisfaction and retention levels
- Internal business perspective — the quality and efficiency of your internal operations
- Innovation and learning perspective — your ability to improve, pivot, and grow your business
Then, create objectives and define measures to track your progress for each perspective. Those measures will support you in planning and executing initiatives to achieve your goals. And as you carry out this strategy, you can update your scorecard to show your progress.
Balanced Scorecard example
The management at ECI (Electronic Circuits Inc.) wanted to improve their delivery times. But when they talked to customers about the issue, the organization received unreliable feedback — different people had different definitions of being ‘on time.’
Using the Balanced Scorecard framework, managers shifted focus to their operations and checked the efficiency of their manufacturing process. They discovered ways to optimize the business’s cycle time, yield, and costs.
Despite not having a reliable customer perspective, the Balanced Scorecard’s comprehensive overview of the ECI organization provided a versatile solution for reducing delivery times and streamlining the business’s overall operations.
The Balanced Scorecard framework is best for understanding your business health and creating alignment across your company.
5. Porter’s Five Forces
Porter’s Five Forces is an approach that lets you assess your product or service’s competitive advantage in the market. Identifying potential threats can guide your organization in developing a more dynamic strategic plan.
The ‘Five Forces’ that may affect your product are:
- The threat of new competitors — Are many new businesses popping up in your industry? How easy is it for new companies to develop a product or service similar to yours?
- The number of existing competitors — How many direct competitors are you contending with? What about adjacent competitors? Are any of them growing quickly?
- The bargaining power of suppliers — Could suppliers put pressure on you to lower costs or change your business model?
- The bargaining power of customers — Are your products or services available elsewhere? Is there a demand for them? Do people have issues with your pricing or quality?
- The threat of a substitute — How likely is a similar product or service to enter the market?
Porter’s Five Forces example
Let’s take the example of a cosmetics company planning to release a shampoo with SPF 50:
- The threat of new competitors — The shampoo requires expertise to develop, which is an obstacle for competitors entering the market.
- The number of existing competitors — Two companies with similar products are poised to grow. They could create an almost identical product and pressure them to lower costs.
- The bargaining power of suppliers — There’s a large number of suppliers, so they have little bargaining power.
- The bargaining power of customers — Depending on where customers live, they’ll consider the shampoo a seasonal product. As it’s almost winter in the countries with the largest customer base, demand is lower.
- The threat of a substitute — Research suggests that no products currently in development could fill the same need (protecting the scalp from sunburn).
Porter’s Five Forces are best for evaluating your product or service after development but before entering the market. It’s also helpful for assessing an organization’s overall competitive position.
6. The VRIO framework
The VRIO framework helps organizations determine whether they can turn a resource into a competitive advantage. These can be physical resources like inventory, tools, and technology, or nonphysical ones like patents, skills, and work culture.
Let’s break down the VRIO acronym to understand how to evaluate each resource:
- Valuable — The resource increases revenue or decreases operational costs.
- Rare — The resource is limited or you control the supply.
- Inimitable — The resource is unique or complex, meaning it’s difficult for competitors to copy.
- Organizational — Your organization can exploit the full potential of the resource.
Here’s an example of a delivery company determining whether they can exploit their resource — distribution centers — to gain a competitive advantage:
- Valuable — All the distribution centers are in strategic positions, which makes them a valuable resource as the company can use their location to create more efficient delivery routes.
- Rare — The distribution network is a scarce resource because there are only a few ports for international delivery.
- Inimitable — Competitors could build distribution centers in nearby locations.
- Organizational — Delivery drivers aren’t using the most efficient routes between distribution centers.
The delivery company could have a temporary competitive advantage, but they’re not exploiting this resource. Management needs to address whatever stops delivery drivers from using the fastest route before rival delivery companies copy and control the same resource.
The VRIO framework works best for businesses deciding how to launch a new product or service or determining how to improve their existing business model.
Specifically, the organizational metric shows how efficiently your organization uses its resources. If you have a high score for the first three metrics but consistently fail to capture the value of your resources, it’s a sign you need to improve your internal processes.
Combine the VRIO framework with Porter’s Five Forces for a clear strategic direction when launching a new product.
7. The Hoshin Planning framework
The Hoshin Planning framework is mainly a top-down approach. This method outlines seven strategic planning stages, which are:
- Define your vision to clarify your organization’s primary purpose.
- Develop your main objectives to give your organization a competitive advantage.
- Break down objectives into smaller annual goals.
- Set goals across your entire organization — at C-level, managerial, departmental, and individual levels.
- Implement your plans.
- Perform monthly reviews to reflect and monitor progress.
- Do an annual review to determine if you’ve achieved your goals and what to work on next.
It’s worth noting that the Hoshin Planning framework doesn’t have to be strictly top-down. Another core idea behind this method is that managers should ‘play catch ball’ — that is, bounce ideas between management, department heads, and team members during the first four stages.
Hoshin Planning example
Here’s how a car manufacturer might implement the Hoshin Planning framework:
- Management shares their vision of developing the most innovative technology on the market.
- They decide their main goal is to develop the first self-driving car by the end of 2025. But when leadership talks to the head of engineering, they say this breakthrough won’t be possible by 2025. They collectively adjust the deadline to 2027.
- Management breaks this goal down into smaller targets. One of them is mapping out what the self-driving car should be able to do in every scenario. The engineering department agrees with this plan.
- Those targets inform detailed initiatives, like observing real-life driving incidents and collecting data on traffic and accidents.
- All parties carry out the agreed-upon initiatives. After a month, management conducts a meeting to check everyone’s progress.
- A year later, the engineering department has data on most scenarios the self-driving car would encounter on the road.
Companies with complex processes — like manufacturing and tech businesses — are more likely to use the Hoshin Planning framework. Their operations benefit from the ‘catch ball’ idea because it’s easier to spot problems when you filter them through diverse teams.
The Hoshin Planning Framework is also ideal for creating alignment within your company. Consider it for a larger organization that’s experienced project issues and bottlenecks.
8. The Theory of Change model
The Theory of Change model involves establishing long-term goals and working backward. Start with your desired outcome and go through all preconditions necessary for it to become a reality. During this process, you determine what needs to change to reach your objectives.
Theory of Change example
Nonprofit organizations with specific missions often use the Theory of Change model. Take adult literacy, for example. The project team would start with an ideal situation — like their country having a 100% literacy rate — and work backward to find out what’s preventing them from achieving that aim. The issues might range from a lack of funding to a need to increase awareness about resources that are already available. Then, the nonprofit team could start addressing the issues they identified.
Any organization can benefit from the Theory of Change framework. Still, it works best for specific projects, like expanding your company abroad or opening a new department, as it involves scenario planning.
9. The Blue Ocean strategy
The Blue Ocean strategy is a strategic planning model that’s become popular recently. Developed in 2004, this method assesses whether your organization operates in a saturated market. If so, the underlying assumption of the Blue Ocean strategy is that it’s better to create new demand.
In the strategy, the ‘ocean’ is a metaphor for the market. The ‘red ocean’ is full of predators (large companies) competing for food (customers) and turning the water red, whereas the ‘blue ocean’ is deep, unexplored water that’s full of potential (uncontested market space). Here’s a list of indicators that you’re in a ‘blue ocean’:
- You’ve found uncontested market space
- You’ve made the competition irrelevant
- You’re creating and capturing new demand
- You’re breaking the value-cost trade-off
Blue Ocean example
Apple is a famous example of a business that operates in a ‘blue ocean.’ Although it’s one of the leading technology companies in the world, the Apple team still prefers to innovate new products rather than beat the competition.
The Blue Ocean strategy is ideal for small businesses and start-ups trying to establish themselves among larger organizations. Established companies in dynamic industries like tech can also use it to stay ahead of their competition.
How to implement a strategic planning model
Once you’ve set up your strategic plan, you’ll want to utilize it to its full potential. Here are some tips to make sure your strategy goes into action.
Align your approach to strategic planning with your values
There are many strategic planning models to choose from, and your organization can only implement so many. Although all of them have pros and cons, none are necessarily better than the others. So, choose the strategic planning models that reflect your organization’s values. That way, it’ll be easier to introduce your strategy and get all team members on board.
If you’re a people-first organization, OKRs are an ideal choice. OKRs involve your employees in company initiatives, make internal decisions more transparent, and give everyone a sense of purpose.
Allocate resources to the strategic planning process
Strategic planning is like any other task: It requires resources like funding, time, and research. You should have a budget and schedule for every part of the process.
The employees helping you with strategic planning and implementation are also vital assets — offer them training and consistent support. Free up their schedule for strategic planning and create a timeline for the entire process to set your team up for success.
Review your progress
Aside from planning and implementing your strategy, you’ll need to check on your progress regularly. That means monthly and annual reviews at all levels.
Many strategic planning models already have reviews built into their stages. But even if they don’t, you should reevaluate at regular intervals. You can define some key performance indicators (KPIs) to measure the success of your initiatives and your overall business health. Popular KPIs include revenue growth, client retention rate, and employee satisfaction.
Be ready to adjust your strategic plan
As the saying goes, even the best-laid plans often go awry. You may find that conditions change as you implement your strategic plan or that you didn’t predict certain issues. The key isn’t necessarily to strategize better, but to have a dynamic strategy. This will allow you to adjust your plan and deal with problems as they arise.
For instance, you might opt for the PEST analysis, but be open to considering important legal and environmental factors when they come up. You can try to predict what new legislation or world events may affect your industry. Then, if any conditions arise that affect your business, you’ll be able to pivot your strategy without too much additional effort.
Boost your organization’s performance with strategic planning models
Strategic planning models help you assess the current state of your organization, decide which direction to take in the future, and communicate your plans to your employees. They can be the difference between your business merely sustaining itself and thriving.
If you’re wondering how to implement a new strategic planning model, Leapsome can offer professional support. Our Goals and OKR Management Software provides an adaptable framework for your chosen strategic model.
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Comparison of Strategic Planning Models and Frameworks
There are a number of business frameworks that can be applied during the strategic planning process. Let’s analyse the differences between them, their advantages and application areas.
Comparative Table of Strategic Planning Frameworks
The table below shows where each framework contributes most to the strategic planning process .
While the contribution score is quite subjective, we can see that conceptually, there are two types of frameworks:
- Strategy execution frameworks . Such as the Balanced Scorecard for the overall strategy and the more lightweight OKR framework for specific challenges.
- Strategy formulation frameworks . SWOT, Three Horizons, Constraints Analysis, PESTEL, etc. that help organizations to generate new ideas (step 2 of the strategic planning process). Most of such frameworks also help to describe those ideas on certain diagrams (step 3 of strategic planning) but provide no guidance for strategy cascading.
Below, we discuss these two types of frameworks. We will also talk about the role of software in the automation of strategy planning and execution.
Understanding Strategic Planning
Each business framework has its own application area. In the previous article we discussed the typical steps of strategic planning, we are going to get back to these steps often, so let’s list them once again:
- Step 1. Define top-level goals. In this step, an organization defines its mission , vision, core values, strategic priorities.
- Step 2. Formulating business hypothesis. Following the ideas formulated in step 1, we can now focus on more specific goals that would help us to achieve the vision.
- Step 3. Strategy description. Any strategy is better when it is written down in some form. In this step, we use strategy maps and similar techniques to articulate strategy.
- Step 4. Strategy cascading. Having a single top-level strategy is not enough. We need to find ways to explain it to all business units, teams, and individuals.
- Step 5. Strategy execution. In this step, our focus is on action plans and performance indicators. We also learn during execution and will use those insights in step 2.
Strategy Execution Frameworks
Strategy execution frameworks address a wide range of strategy-related challenges, from strategy formulation and description to strategy cascading and execution.
Balanced Scorecard Framework
This is one of the most used business tools in general, specifically for strategic planning. The concept evolved from a measurement system (“balancing” indicators across the perspectives) to the recognized strategy execution framework.
- The main part of a properly designed Balanced Scorecard is a strategy map
- A strategy map includes strategic themes and four categories ( perspectives )
- Goals on the strategy map are connected by cause and effect logic
- Leading and lagging performance indicators are aligned with the goals
- Action plans or initiatives explain how exactly the goal will be executed
- The strategy is cascaded (aligned) across the organization
Like any business tool, in the wrong hands, it might not work as expected. Before starting the Balanced Scorecard project, it makes sense to understand its advantages and possible drawbacks.
Starting as a lightweight goal setting framework, it was adopted by many tech companies. OKR is now getting the fame of agile strategy execution tool.
- OKR framework suggests focusing on a few important goals (“Objectives”) and tracking their execution with several lagging indicators (“Key Results”)
- The OKR process consists of four steps that end with a results review
- The recommended process cycle time is one quarter
The comparison of BSC and OKR frameworks indicates that the frameworks solve similar business challenges on different levels. BSC is more suitable for overall strategic planning, while OKR works better on the lower levels and during the execution stage.
Hoshin Kanri framework is similar to OKR and BSC:
- The framework focuses on continuous improvement (Plan-Do-Check-Act cycle)
- Underlines the importance of strategy alignment and discussion (Catchball)
- Suggests tracking an individual’s performance
The Hoshin Kanri Matrix provides an alternative tool for strategy description by giving a one-page overview of the top-level strategic priorities and their connection to the specific improvement goals and targets.
In the case of Hoshin Kanri, strategic planning and cascading come under the term “ strategy deployment .” The strategy deployment process is similar to the classical steps of strategy planning .
OGSM Model – Objectives, Goals, Strategies, Measures
The OGSM model looks very similar to the Hoshin Kanri framework. Both models appeared in Japan in the 1950s ; both models suggest looking at strategy from the four different levels of abstraction. Similar to Hoshin Kanri, OGSM is a one-page document, but there is no X-matrix.
Here is a comparison table of the models’ vocabulary:
While the OGSM model is simple, there are certain problems that each organization solves in its own way:
- Goals vs. Objectives. Even in the same organization, there is no clear agreement about the difference between goals and objectives. Time horizon is no longer a reliable differentiator. Are the objectives strategic in their nature and goals operational?
- Strategies . The term might be confusing. As we discussed before , there are at least 10 different schools of strategy. Most agree that strategy is a hypothesis, and it should give a clear context for future actions. In the paradigm of OGSM, the strategies look more like simple action plans.
- Measures. There is no agreement about what should be quantified by the measures – the strategies, the goals, or the objectives. Or should we have the measures on all these levels?
- Leading vs. Lagging Measures. Similar to Hoshin Kanri, OGSM doesn’t make any specific difference between leading measures and lagging measures. We can only imagine that most of the strategies will be quantified by the leading measures, while goals and objectives will be validated by the lagging metrics.
The MBO framework was one of the first strategy execution frameworks that suggested an effective way to cascade objectives from the top level to the level of individuals.It shares a lot of ideas with BSC and OKR frameworks. MBO established certain requirements for the objectives:
- They should be ordered according to their importance
- They have to be quantitative
- They have to be realistic
- They have to be in line with organizational policies
- They have to be compatible with each other
The framework is not as sophisticated on the strategy description step as BSC or Hoshin Kanri, but on the level of strategy execution, its simple approach adds value.
Strategy Formulation Frameworks
As the comparative table shows, many popular business frameworks are excellent tools for formulating business strategy. Those frameworks help to have a different perspective when looking at the challenges of the organization.
McKinsey’s Three Horizons
McKinsey’s Three Horizons framework addresses innovation planning challenge. It suggests to prioritize innovation efforts according to three time-frames (horizons):
- Now . Something that an organization needs to do today, e.g. innovating its core business
- Near-term future. Innovations that address the challenges in the comfort zone.
- Future . Focusing on trends that might soon become disruptive.
The framework is strong in the context of strategy formulation, especially when we are talking about innovation strategy.
Strategic Change Agenda
Understanding the reasoning behind the goal is critical for acceptance of strategy and successful strategy execution. Strategic Change Agenda is a powerful tool that helps organize the insights of strategic analysis and convert them into contextual goals on the strategy map.
- Analyze the outputs of other strategy formulation frameworks like PESTEL, Five Forces, or VRIO to formulate possible change dimensions .
- Describe the current states (“Past”) and the desired states (“Future”) across the change dimensions.
- Formulate goals on the strategy map using the change dimensions and the past/future states as a context.
The framework solves two problems of strategy execution:
- Formulating goals is much easier when the expected change is explained in the context of a change dimension.
- Formulated goals have a rationale “by design,” making it easy for a strategy team to answer “why?” questions and update goals if needed.
A classical SWOT framework helps to analyze the company’s position from the four perspectives – Strengths, Weaknesses, Opportunities, and Threats.The action plan for SWOT analysis is:
- Match strength and opportunities, or
- Convert weaknesses and threats into strengths or opportunities
With the SWOT+S framework , we make SWOT analysis more specific by focusing on different projections of its components. For example, instead of simply talking about strengths, we are looking at the strength from a customer, internal, innovation, and financial perspective.
Such an approach also makes it easier to use the results of SWOT analysis for further strategy description on a K&N strategy map.
The goal of VRIO analysis is to find a sustainable competitive advantage and the resources that are needed to achieve it. VRIO is often used to explain why certain companies are successful. In practice, VRIO analysis helps to look at the potential of certain “resources” to help achieve sustainable competitive advantage.
Formal VRIO analysis is thought-provoking on the stage of strategy formulation. Its potential to describe strategy is limited by a simple table diagram that could point to improvement directions but won’t provide a space for specific action plans or performance indicators.
The 7-S framework is another strategy formulation framework. In this case, a business challenge is analyzed from the perspective of 7 factors (the Ss). These 7 factors are divided into:
- Hard Ss – Strategy, Structure, System, and
- Soft Ss – Shared Values, Skills, Style, Staff
Can a 7-S framework be used together with BSC? The findings of 7-S can organically form the business goals that are mapped on the strategy map. Here is what Robert Kaplan, one of the authors of the BSC framework, said on the topic:
I believe that the BSC is not only fully consistent with the 7-S framework, but that it can also enhance it in use.
Robert Kaplan in “How the Balanced Scorecard complements the McKinsey 7-S model” 
PEST or PESTEL analysis refers to the analysis of the external factors. What are those factors?
The findings of PESTEL analysis can be used on the strategy formulation step of strategic planning process either as an input to other business tools, like, for example, SWOT or directly, as strategy map goals that address specific challenges.
Scenario planning is a disciplined approach to converting driving forces and their uncertainties into strategic hypotheses. The analysis of driving forces can be performed with PESTEL, Five Forces or other relevant frameworks. The found uncertainties can be classified according to their estimated business impact. Respectively, we can have:
- Scenarios related to the business continuity planning
- High-priority scenarios that can be aligned with existing strategy as a strategic hypothesis
- Scenarios for monitoring with possible response plan
Depending on the type of scenario, we can use different tools to quantify them:
- Business continuity scenarios can be validated with wargaming exercise and quantified with readiness indicators
- The high-priority scenarios are quantified with relevant impact indicators
- The scenarios for monitoring are quantified with early sign indicators
Porter’s Five Forces
The Five Forces framework focuses on the challenges of competitive analysis. Instead of focusing on undifferentiated competition , the framework suggests building a competitive model first using the prism of five forces:
- Existing competition
- New entrants
- Customers power
- Suppliers power
A strategist is supposed to find the factors of competition in the context of each of the forces and formulate the response strategy accordingly.
There are other strategic planning frameworks that will help with competitive analysis.
- Compared to SWOT, the Five Forces suggests a more disciplined approach to competitive analysis by providing a competitive model to start with.
- By default, there is no time perspective included in Five Forces; in this sense, it can be used together with Three Horizons.
- The Five Forces approach is from general to specific . In some cases, starting from specific and moving to general (VRIO framework) is more effective.
Check out a more detailed comparative analysis in the article about Five Forces .
Different business frameworks could generate a lot of competing strategic hypotheses. Pareto analysis helps to pick the few to focus on right now.
The key idea of Pareto analysis in the context of strategic planning is to compare:
- Resources needed to try certain hypotheses versus
- Expected benefits from successful validation of the hypothesis (achieving business goals)
By focusing on the most promising hypothesis, an organization could achieve expected results with fewer resources.
Constraints Analysis or TOC theory was formally introduced in “The Goal” book by Dr. Goldratt with some good examples from manufacturing.
This analysis helps to determine the constraints (bottlenecks) of the system and optimize performance following these five steps:
- Analysing constraints
- Response plan in the context of constraint
- System update to fulfil response plan
- Updating constraints
- Getting back to step 1
Shifting from manufacturing to a technological economy, we are still facing constraints, but their number increases and their impact is often not clear. Similar to Pareto Analysis, the main focus area of constraints analysis in the context of strategic planning is step 2 – strategy formulation.
The gap analysis is another business tool that helps in finding improvement points by comparing expected performance with actual results. The steps of gap analysis are the following:
- Gap Identification. Understanding where the organization is now and how its actual performance is compared to the expected performance.
- Root-cause Analysis. Understanding the reasons of gap.
- Improvement Plan. Developing the improvement plan.
Here is how Gap analysis helps in the different steps of the strategic planning process:
- On the strategy formulation step, gap analysis will help to come up with improvement direction based on historical results
- During strategy description , the results of gap analysis are presented in the form of indicators and the gap (the difference between the indicator’s current value and target value)
- On the strategy execution step , understanding where the gap is (based on indicators’ data) helps to introduce corrective actions quickly
Strategy is about making choices, and choices are about analyzing alternatives and defining their priorities.
- How are these priorities calculated ?
In strategic planning, basic prioritization is done by such tools as:
- SWOT Analysis – the priority goals are the result of matching strength and opportunities or converting weaknesses and threats into strengths or opportunities
- Gap Analysis – the priority is on the goals with higher absolute weight and biggest performance gaps
- Pareto Analysis – suggests to focus the efforts on 20% of the most promising goals; however, not giving a specific way to spot those goals
- Strategic Themes of the Balanced Scorecard – that work as high-level priorities for the rest of the strategic goals
Mentioned frameworks are a starting point for prioritization on a strategic level . When we move to operational level (think about product development, for example), we need different tools that could calculate a specific priority score.
We have discussed some popular prioritization frameworks in a separate article with some specific examples for the users of BSC Designer.
In the context of strategic planning, those frameworks might be considered as part of a strategy formulation toolkit, respectively. In the comparison table, we can put them into the Step 2 column.
Strategy Planning Software
Depending on the strategic planning model, the need for automation software change. Here are some thoughts about the effective use of automation tools.
- Understand the concept first. Automating wrong things will do more harm than good. Give a new framework a try on paper before moving to automation software.
- Write down rationale. In many cases, we get the results from the strategy formulation framework (for example SWOT or Three Horizons) and add it as a goal to the strategic plan. What is important is to write down the reasoning behind those findings. It will be helpful in the review stage.
- Focus on one tool. If we look at strategic planning tools from an abstract perspective, then everything rotates about three artefacts – goals, indicators, and supporting documentation. Your organization will benefit if it uses one tool to manage all the artefacts related to strategic planning instead of supporting various software that approach the same problem from different sides.
Where Strategy Planning Software Can Help
Bsc designer software.
Where BSC Designer can help in the context of automation:
- Our main focus is Balanced Scorecard framework and its strategy map
- We do excellent support for Key Performance Indicators
- In the templates section, you will also find some examples that will help you to get started with other business frameworks easier.
Most business frameworks could provide additional value to the organization. The question is, how to pick the right one and use it for the correct challenge.
In this article, we analyzed the most popular frameworks for strategic planning and discussed their best application areas.
CEO | Trainer | Author
BSC Designer is a Balanced Scorecard software that is helping companies to better formulate their strategies and make the process of strategy execution more tangible with KPIs.
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