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How to Create a Strategic Plan

Looking for a way to take your company in a new and profitable direction? It starts with strategic planning. Keep reading to learn what a strategic plan is, why you need it and how you can strategically create one.

What Is a Strategic Plan?

When it comes to business and finance, strategic planning will help you allocate your resources, energy and assets. When implemented, a strategic plan will begin to move your operations in a more profitable direction. The primary goal of the plan is to ensure you and any other stakeholders are on the same page and striving to reach the same goal.

Creating a strategic plan requires a disciplined effort. Once you put the plan into action, it will influence the segment of customers that you target, how you serve those customers and the experience those customers have.

Assess the Current Infrastructure and Operations

The first step in creating a strategic plan is to carefully assess your existing infrastructure and operations. You can do this through a SWOT analysis, which is an analysis of the company’s strengths, weaknesses, opportunities and threats. The goal here is to pinpoint the resources that you use to carry out your day-to-day operations, to look at your monthly revenue patterns, to list any company challenges related to the customer experience and, most importantly, to look at your marketing methods and ways to improve the overall customer experience.

Creation of Mission Statement and Objectives

The next step is to create a mission statement. You may already have one, but it’s important to note your mission at the top of the strategic plan document you create. This ensures everyone is focused on the same goal. Your mission statement should cover why you started the company and what you intend to accomplish through the products and services that you offer.

In addition to the mission statement, make sure to outline both short- and long-term objectives. List the objectives according to their priority and designate certain managers or employees to be responsible for each one. Also, jot down the resources that will be used to achieve each objective.

Measure Performance

Now that you know what you’re trying to achieve and who is responsible for each goal, it’s time to deploy the plan and measure its progress. A weekly meeting is extremely important for all managers and stakeholders provide feedback. Your goal is to determine if the company is headed in the right direction. If not, you’ll need to revise the strategic plan accordingly.

Strategic Plans Are Ongoing

Once your strategic plan helps you achieve several objectives, it’s smart to regroup and set new objectives. As your company grows, you can set new goals to ensure the company keeps moving forward. You can share the success of your strategic plan with potential investors as a way to tap into new capital funding.

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strengths and weaknesses of formal strategic planning

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What are the strength of formal strategic planning? What are the weaknesses?. Management

Formal strategic planning ensures consistency between the strategies of corporate, business and functional managers and it also provides a sense of direction for the company. Furthermore, formal strategic planning may challenge the prevailing status quo in the company. Formal planning also forces the management to design the organizational culture and structure as well as control mechanisms which otherwise, may be left off. Additionally, formal planning enables the company to evaluate the progress made towards the achievement of specific goals.

One of the most important weaknesses is the fact that businesses are operating in a highly uncertain, complex and ambiguous environment. Consequently, the formal strategic plans are very likely to be negatively affected by unforeseen conditions. Rapid changes in the industry/national/world dynamics require flexible approach and quick adjustments that are profoundly impossible in the formal strategic planning. Moreover, the formal strategic planning if often criticized for not involving the lower-level managers (business and functional managers) sufficiently. In fact, the formal strategy planning is usually a duty of top corporate managers who are not deeply involved in the every-day actives of the company. In addition, the formal strategy planning does not account for serendipitous discoveries and events that may result in missed lucrative opportunities. Last but not least, the formal strategic planning is performed by people who are fallible beings affected by cognitive biases.

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Four Fatal Flaws of Strategic Planning

Strategy execution is drawing a lot of attention these days, but that in no way means companies have abandoned their time-tested strategic planning processes. In fact, as far as management tools are concerned, strategic planning is as popular as ever, with 88% of large organizations engaging in some form of formal strategic planning, according to […]

Strategy execution is drawing a lot of attention these days, but that in no way means companies have abandoned their time-tested strategic planning processes. In fact, as far as management tools are concerned, strategic planning is as popular as ever, with 88% of large organizations engaging in some form of formal strategic planning, according to Bain & Company’s 2007 Management Tools and Trends report. This number may still be on the rise as economic conditions force companies to search for new ways to jump-start business growth.

Yet despite this widespread adoption, managers continue to make fundamental mistakes that undermine otherwise well-intentioned strategy-formulation efforts. Here are four fatal flaws that consistently creep into strategic planning processes that, if avoided, can significantly improve both the process and the results.

Skipping Rigorous Analysis Many managers believe their business experience and knowledge base alone equips them with all the information they need to conduct effective strategic planning. This belief is almost always untrue and serves only to undermine the kind of critical thinking from which truly creative strategies are born. A good strategic planning process takes full advantage of the numerous tools of strategic analysis — such as the five forces model, strategic group maps, or the value chain — to gain key insights regarding how the industry is evolving, how competitors are changing positions, and where an individual firm’s sources of competitive advantage lie.

Eric Okerstrom, vice president of strategy management for Hagerty, a national specialty insurance agency that insures collectible automobiles and wooden boats, learned this lesson during his most recent strategic planning efforts. The company conducted extensive customer analysis and market segmentation work and, in so doing, realized that their brand wasn’t as well known as they first thought. “Our entire leadership team believed that most participants in the collector market knew who we were and wanted to do business with us. What we found out during our analysis was that while our brand was strong amongst our core client base, there was room for improvement.” It wasn’t that Hagerty didn’t have a known brand or delighted customers — they did. It was just that marketing perception and share data revealed that their name wasn’t as widely recognized as they previously thought. “We reoriented a significant portion of our strategy and reexamined who our true competitors were because of the data we encountered during the analysis,” says Okerstrom. They found that while the traditional end-user insurance purchaser was still important, it was equally important to focus more intensively on the general insurance agency channel that was recommending their product. Now they have adopted an innovative sales approach with a key distributor segment that will help them reach a major portion of the market they had not focused on previously.

Believing Strategy Can Be Built in a Day In Hagerty’s case, changing the minds of key managers took longer than one day. Yet many executive teams earnestly believe that effective strategies can be identified, explored, and agreed upon during abbreviated offsite meetings where the main driver of the agenda is the timing of snack breaks. While offsite meetings are useful forums in which to share information and address key issues, meetings should be adequately timed — over days or weeks if necessary — so that sufficient preparation and review and discussion can occur before and during the event.

MDI Group, one of Atlanta’s largest IT and financial staffing organizations, has engaged in annual strategic planning each year for the past decade. In preparation for their yearly offsite, the leadership team, after examining a comprehensive package of performance information, completes a series of templates including a SWOT analysis and a key capabilities review. “We would discuss our SWOT analysis in the morning of the first meeting day, summarizing critical issues as we went. Then we would brainstorm how to address those issues immediately following lunch, with a hard stop no later than 3:00pm,” recalls Mike Cleland, president of the IT division. “It always felt rushed, and it seemed like we never really got our arms around the underlying forces driving the key issues.” In reality, they didn’t. MDI leaders became frustrated as they kept encountering the same key issues year after year despite putting significant time and energy into the planning process.

So MDI modified its approach. For their most recent strategic planning efforts, the leadership team conducted the same up-front activities, but this time they identified four key issues a month before — not the day of — their meeting. Each key issue was assigned to an “issue team” comprised of senior managers for detailed analysis prior to the meeting. For three weeks each team applied a structured problem-solving approach to their issue, isolating root causes and identifying plausible courses of action. Teams then briefed their findings the day before the offsite to ensure all participants had a consistent understanding of the issue, the causes, the options, and — most important — the team’s recommended plan going forward. The result was a streamlined process and better decisions. “It really accelerated the meeting,” said MDI CEO Ella Koscik. “Also, we have a much higher level of confidence in our actions coming out of this meeting than we’ve ever had in the past.”

Failing to Link Strategic Planning with Strategic Execution According to a recent survey by the Conference Board, execution overall and strategy execution in particular hold the first and second positions when it comes to “top issues” in executive’s minds. It’s no wonder — executing strategy requires the work of the entire organization, whereas strategic planning only requires the top team. But part of a top team’s challenge in execution often stems from the failure to link their work with ongoing strategy execution. In his article, “Obstacles to Effective Strategy Implementation” (Organizational Dynamics, Vol. 35, No. 1, 2006), Lawrence Hrebiniak of the Wharton School notes that “Strategic success demands a ‘simultaneous’ view of planning and doing. Managers must be thinking about executing even as they are formulating plan.”

Prescolite and Progress Lighting — both brands of Hubbell (headquartered in Orange, Conn.) — show how to accomplish this in practice. Both businesses use what they dub the Long Range Strategic Planning (LRSP) process. This integrated strategic planning and execution system incorporates both strategy formulation activities, such as ongoing analysis of changes in market conditions, with execution activities like management of integrated strategic programs. At the start of the planning year, they perform a “deep dive” on critical competitive issues facing the businesses; the remainder of the year they focus on measuring and monitoring the progress they are making relative to the strategy. As they encounter unforeseen issues — which they usually do — they then analyze them within the confines of the LRSP process. They also maintain a running list of “must-do” integrated programs that they readjust as business conditions change. “We’ve refined the LRSP process over the past several years to not only make it more flexible and responsive to changes in market conditions, but to also make it more integrated,” says Charlie Harris, vice president and general manager of the Indoor Lighting division. “The process today is at the center of what we do and largely responsible for driving successful execution of our brands’ strategies.” These businesses have made their strategy process a continuous and dynamic one — a more realistic approach than the once-a-year planning meeting that still dominates many corporate strategic planning efforts.

Dodging Strategy Review Meetings Strategic plans quickly become obsolete when there is no activity in place to keep them alive. Worse, managers sometimes feel freed from execution accountability when reviews are continually rescheduled or dropped from the calendar altogether.

The most direct way to maintain a consistent focus on strategy is to schedule and hold regular strategy review meetings. At the end of the strategic plan formulation, managers should establish a strategic governance process where strategy review meetings — whether they are monthly or quarterly — are scheduled a year in advance. This way, managers can be sure the time for the sessions remains sacrosanct. A typical strategy review lasts anywhere between a half and a full day — so leaders must plan accordingly. To make the meetings productive, the leadership team should develop a standing agenda they can follow consistently each time they meet. The strategy that was created at the beginning of the execution cycle should be the topic of conversation at every meeting — no discussion of operational issues should be allowed. Consistent with avoiding fatal flaw number one, the necessary analysis should be prepared and the findings circulated before the meeting so that the session can be dedicated to guiding decision-making as opposed to conducting unbounded, unstructured discussion.

The Federal Bureau of Investigation (FBI) began holding regular strategy review meetings at the end of 2007, when they started developing a new strategy execution system. While the FBI maintains a vigilant 24-hour-a-day, 365-day-per-year focus on their top tactical priorities, they had never formally held strategy review meetings. “It was really interesting watching [Director Robert S. Mueller III] ask his staff how they were progressing on their parts of the strategy,” noted Executive Assistant Director Tom Harrington of the FBI’s Criminal, Cyber, Response, and Services branch. “People were watching to see if Mueller was serious about the strategy. By the end of the meeting, after some pretty intense questioning, it was clear he was.” The FBI has gone on to hold strategy review meetings quarterly at the mandate of Director Mueller. Further, both their reporting process and meeting approach has gotten more refined. “The meetings get better every time. They’re more focused now; we’ve come a long way from where we started,” says Ryan Kennedy, the strategy management analyst responsible for facilitating the process. Running effective strategy review meetings is a learned skill but one that starts with scheduling and sticking to the strategy in the first place.

Ed Barrows is a lecturer at Babson College and the founder of edbarrows.com . He specializes in coaching executive teams to improve their strategy processes. Reach him at [email protected] .

strengths and weaknesses of formal strategic planning

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Formal Planning’s Strengths and Weakness Report

Introduction, the human element, change from conventional paradigm, spirit of learning, unpredictable project environment, exclusion of lower level managers’ potential.

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Many organizations today spend a fortune in formal planning. In various contexts, organisations and researchers have had conflicting opinions on formal planning, with a faction affirming that it improves the overall profitability of a company (in addition to spurring project growth) while others note that it is not crucial at all in the realization of organizational goals (Mintzberg 1994, p. 150). Before sides are taken in the evaluation of the importance of formal planning, it is crucial to analyze what does it primarily encompasses. In the words of Armstrong (1982) “Formal strategic planning calls for an explicit process for determining the firm’s long-range objectives, procedures for generating and evaluating alternative strategies, and a system for monitoring the results of the plan when implemented” (p. 4). Formal planning when analyzed in this context involves a clear articulation of project goals, visions, roles, location, time frames (and the likes), in a developed document or semi document outlining the steps to be followed in the implementation of a given project. Usually, formal planning has been consistently analyzed alongside informal planning (a paradigm which erodes the importance of having formal plans in the first place), and many researchers have been divided between the merits and demerits of the two. Informal planning permanently outlines all managerial elements that generally fail to be institutionalized in formal documents and most cases; it receives less exposure because of formal planning out shadows its usefulness since it is much visible and more clearly articulated (Johnson 2009, p. 66). From this point of view, it is correct to dispute the emphasis created on formal planning because it is usually overrated at the expense of informal learning. These factors withstanding, this study advances the fact that formal education will not provide the intended outcome at a given point in time.

Conventionally, formal planning has been based on the “process” element as opposed to the “human” element. This is a wrong basis because the success of a process is generally based on the input of the workers involved. Moreover, humans invent “processes,” and therefore the success of a process depends on the humans involved. Scientists such as Taylor (cited in Campbell 2001, p. 99) have openly noted that one of the reasons why essential projects fail to attain their set out goals is because management focuses typically too much on the theoretical component of project success and fail to note the practical part of the same. The theoretical component usually is facilitated or emphasized by the formal planning process. Conversely, the informal planning process tends to focus more on the practical aspect of project operations, and this is the essential element needed for the realization of project success. From the number of large projects failing by the day, it is clear that most organizations fail to recognize the critical role humans play in the overall realization of organizational goals and the long-term global sustainability of business or project productivity. Campbell (2001, p. 100) also explains that in today’s fast-paced world, it is the human element of organizational processes that are going to sustain and catalyze the growth and success of organizations in the 21 st century.

For a long time, formal planning has been the conventional paradigm in project operations and management. Today, research studies tend to affirm the notion that a shift from this paradigm is likely to translate to positive results for organizations, in the sense that, an emphasis on informal planning is expected to improve project performance (Campbell 2001, p. 100). It is clear from recent research studies that formal planning has a precise articulation of roles and responsibilities that tend to be monotonous and less effective in the long run (Campbell 2001, p. 100). When this system is changed, research affirms that new skills and an improved sense of accountability will be realized (Hales 1993, p. 108). What new research tends to portray is that a shift from conventional practices is likely to impose a new system to measure employee contribution, which will, in turn, increase the level of motivation and ultimately increase the performance of employees in the long run. Formal planning is also quite monotonous with regards to the structure of control in the organization because it advances a cutout structure of authority where lower-level employees are subordinates to their bosses. This system is deemed to be less effective than a random and flexible structure where there are no clear distinctions of authority because if such arrangements are abolished; all employees are made equal members of teams and work groups (encompassing peers from inside or outside of the organization). This new paradigm is likely to instill a new spirit of cooperation in the organization and create a hybrid system of performance which is supported and coordinated by all members of the organization.

Formal planning essentially amounts to months or even years of endless planning to come up with specific projections; maybe encompassing financial cash flows, human capital projections, inventory requirements, and the likes. However, all these estimations and years of endless planning may go to waste if the project follows a different course from that envisioned in the formal plan. From this basis, critics have advanced the fact that experience is the best teacher and formal planning goes against this spirit (Campbell 2001, p. 102). They also promote the fact that continuous learning and experience is the key to project success and formal planning fails to merge with this spirit as well. In this regard, there is a growing body of research advancing the fact that formal planning does not make much difference to project performance when compared to projects started without formal plans (Campbell 2001, p. 102). Comparisons have also been made to businesses as is evidenced of Babson College which did a study, evaluating specific business parameters such as annual revenue, employee numbers net incomes (and the likes), and found out that there was no significant difference in the above parameters, when comparing businesses which started with formal plans and those which didn’t (Wall Street, 2010, p. 9). They, therefore, recommend that unless a business intends to seek to start up capital from a financial institution (say a bank) they do not need to come up with a formal business plan (Wall Street, 2010, p. 9).

Many critics of formal planning have consistently questioned the need for formal planning if the business environment is increasingly unpredictable. They, therefore, advance the fact that formal planning in the determination of future project productivity is mostly fruitless if the future is variable in the first place (Smit 2007, p. 113). Some formal plans may, therefore, render some projects utterly useless because they may fail to consider the unpredictable nature of future project environment. For instance, Smit (2007, p. 113) notes that it is quite challenging to apply formal planning to tourism projects in Africa because of the political uncertainty of the continent. He refers to the war uncertainty in Congo and the lack of petrol in Zimbabwe which makes formal planning an impossible process because these uncertainties are mostly unforeseeable in the long run and short run. Smit (2007) further affirms that “Setting oneself on a predetermined course in unknown waters is the perfect way to sail straight into an iceberg” (p. 114). It is, therefore, crucial for project managers to acknowledge the level of uncertainty, complexity, and ambiguity of the project environment because these elements have a very unpredictable and immense impact on the overall outcome of the project. In this context, it is correct to note that even the most carefully thought out formal plans are not immune to being rendered useless by random and unpredictable changes in the project environment. When this type of unpredictable and unprecedented changes are evident, project managers are supposed to be on toes by being able to effectively and promptly adjust to changes in the project environment by altering their project strategies to suit the new situations. This kind of flexibility mostly lacks in formal planning because formal planning is very rigid and involves clearly articulated project steps; regardless of the nature of the project environment. This is likely to lead to high levels of project productivity; an element which may be easily brushed off at the initial stages of formal planning processes. Hill (2008, p. 11) makes reference to this situation by citing Microsoft’s Chief executive officer, Bill Gates’ dramatic change of strategy, prompted by the 1994 – 1995 unprecedented emergence of the world wide web (www) where he dramatically changed the company’s strategy to deal with the new operations environment effectively. It later ultimately turned out as the antidote for Microsoft to deal with the latest changes in the information technology environment). Critics of formal planning processes say that such a dramatic change of strategy was not possible if Bill Gates operated under a formal planning process because, under the paradigm, Bill gate’s new strategy could not be accommodated within that specific period (Hill 2008, p. 11). This is true because usually under formal planning processes, the formal plan can only be reviewed annually, and before such a time reaches, the overall project strategies cannot be changed (Hill 2008, p. 11).

Many critics of the formal planning process have pointed out the fact that many formal plans emphasize a lot on the input of top-level managers and rarely factor in the potential lower-level managers can bring into project operations (Hill 2008, p. 11). New research studies point out that formal planning can probably plunge project operations processes into low levels of productivity because lower-level managers have a profound degree of influence over the overall realization of project productivity (Bass 2008, p. 315). For instance, Robert Bulgelman of Stanford University cited in (Hill 2008, p. 11) gives an example where Intel’s CEO, Andy Grove, together with his top-level management team, devised a strategy to enter the DRAM memory chip market (a move which was to plunge the company into financial problems because of the unreliability of the market) but was talked out of it when lower level managers discouraged the top-level management team and the company’s CEO out of the move (thereby saving the company millions of dollars in investments which were to be lost in the venture). Instead, they advised the company to venture into the market of RISCH-based microprocessors; a move which saw the company soar into high levels of profitability. This move also saw Microsoft Company move its strategies to be of conformance to internet innovation (Hill 2008, p. 11). From this analysis, formal planning, therefore, makes many project managers rigid to the input of lower-level managers (a move which may potentially be fatal for the company as can be evidenced in the Intel case study analysis) and project managers need to change tact to avert such eventualities.

This study notes that formal planning can potentially render projects utterly useless if they are followed to the latter. This study sources its strengths and arguments from the fact that the project environment today is very unpredictable and requires a lot of flexibility by project managers to attain optimum levels of project success. Formal planning’s most significant weakness comes from its high level of rigidity and its high emphasis on top level management’s decisions (and more so, the CEO’s); an attribute which is potentially dangerous for project operations. From this point of view, it is correct to note that formal planning will not always provide the outcomes required at a given moment in time.

Bass, B. (2008) The Bass Handbook Of Leadership: Theory, Research, And Managerial Applications. New York, Simon, and Schuster. Campbell, S. (2001). New Developments In Reengineering Organizations. Management Research News , 24(3), 99–103. Hales, C. (1993) Managing Through Organisation: The Management Process, Forms Of Organisation, And the Work of Managers . London, Taylor & Francis. Hill, C. (2008) Essentials of Strategic Management . London, Cengage Learning. Johnson, P. (2009) Fundamentals of Collection Development and Management . New York, ALA Editions. Mintzberg, H. (1994) The Rise and Fall of Strategic Planning: Reconceiving Roles For Planning, Plans, Planners. New York, Free Press. Smit, P. (2007). Management Principles: A Contemporary Edition for Africa . London, Juta and Company Ltd. Wall Street. (2010) Do Start-Ups Really Need Formal Business Plans? [Online] Web.

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Advantages and disadvantages of strategic planning

This detailed article explores the key advantages and disadvantages of strategic planning. When done correctly, strategic planning can help organisations make the most of their resources, create a sense of direction, and remain competitive. However, it has several drawbacks as well.

What is strategic planning?

According to Cote (2020) strategic planning is the ongoing organisational process of using available knowledge to document a business’s intended direction. 

It is a process used by organisations to plan for the future and set long-term goals. It involves analysing the current situation of the business, forecasting potential changes, and creating plans to achieve desired outcomes.

While strategic planning has a number of advantages, it in fact has some disadvantages too.  However, advantages usually outweigh disadvantages and therefore, many organisations spend a considerable amount of time and money in strategic planning.

List of the advantages of strategic planning

Sense of direction

Strategic planning helps to create a sense of direction and focus. It helps to ensure that everyone in the organisation is working towards the same goals, and that their efforts are being directed towards the most important tasks. This can help to improve employee morale.

Risk management

No business is without risks. Therefore, organisations need to have some mechanisms in place to identify these risks. One of the most important advantages of strategic planning is that it helps organisations identify and manage risks.

Strategic planning forces managers to think. It can encourage creativity and initiative by tapping the ideas of the management team (BPP Learning Media, 2010). It may include both top-down and bottom-up approaches to engage employees in the strategic planning process.

Clarification of aims and objectives

Aims and objectives may sometimes need clarity. Strategic planning clarifies aims and objectives of an organisation. It requires planners to define what they would like to achieve.

Identifying resistance to change

Managers entrusted with strategic planning need to inform the whole organisation of the aims and objectives, strategic changes, future plans etc. This dissemination of information helps them identify resistance to change and take remedial actions as necessary.

Collaboration

Organisations consist of different departments and carry out a number of tasks. Consequently, they need collaboration and cooperation across the spectrum.  

However, managers in finance, marketing, operations, HRM etc. often compete rather than collaborate. So, what is the solution? The solution is strategic planning as it facilitates collaboration among the managers.

Allocation of resources

Organisations need to allocate resources e.g. people, money, land, and time to implement strategic plans. Moving people from one team to another or moving the facilities from one country to another may be necessary sometimes. This allocation of resources help organisations identifies right resources for right place which is a key to the success of strategic planning.

List of the disadvantages of strategic planning

Vulnerable to outside influences

Strategic plans often fail due to outside influences such as changes in the economic environment, competitor actions and/or technological change. Macro-environmental factors may sometimes change extremely rapidly which may frustrate any strategic plans.

Costly and time-consuming

If organisations carry out strategic planning thoroughly, it becomes a costly, rigid, and time-consuming process. It may sometimes take five or more years to implement a strategic plan. Consequently, benefits of strategic planning may not be immediately visible.

Organizations must dedicate resources to analyse the current situation, forecast changes, and create plans to respond to them. This can be difficult for smaller organisations, especially if they lack the resources or expertise needed to develop a comprehensive plan.

Strategic planning is a very complex process. It involves addressing several things: hence the complexity.  

Lack of success

According to several studies cited in Olson (2022) 60-90% of strategic plans never fully launch. When implemented, some of them fail as well.

Components of a good strategic plan

Creating a successful strategic plan requires careful consideration and a thorough understanding of the organisation and its goals. Here are some of the key components of a good strategic plan:

Mission statement

A mission statement should clearly articulate the organisation’s purpose and goals.

Aims and objectives

Clear aims and objectives. Objectives should follow the SMART criteria i.e. Specific, Measurable, Achievable, Realistic, and Time-bound.

Strategies should be developed to achieve the aims and the objectives. They should be designed to take advantage of the organisation’s strengths and address its weaknesses.

Action plans

Action plans should be developed to ensure that the strategies are implemented in a timely manner. They should include a timeline, a budget, and a list of tasks to be completed.

Strategic plans should be evaluated regularly to ensure that they are still relevant and are achieving the desired results.

Strategic planning tools

There are a number of tools available to help organisations with their strategic planning. Here are some of the most popular ones:

SWOT Analysis

A SWOT analysis is a tool used to assess an organisation’s Strengths, Weaknesses, Opportunities, and Threats.

Gap Analysis

A Gap analysis is a tool used to assess the gap between an organisation’s current state and its desired state. It can help organisations identify areas for improvement and develop strategies to bridge the gap.

PESTEL Analysis

A PESTEL analysis helps organisations identify different macro-environmental factors that can impact on their plans and operations.

Summary of the advantages and disadvantages of strategic planning

Strategic planning is a valuable tool for managing a business. It involves looking at the big picture, allowing organisations to identify opportunities for growth and create plans to capitalise on them.

By leveraging strategic planning, organisations can ensure that they are well-positioned for long-term success. However, as discussed above, strategic planning has several drawbacks that they need to be aware of.

We hope the article on the ‘Advantages and disadvantages of strategic planning’ has been helpful. Please share the article link on social media to support our work. You may also like:

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Last update: 03 January 2023

References:

BPP Learning Media (2010) Business Essentials: Business Strategy, 2 nd edition, London: BPP Learning Media Ltd

Cote, C. (2020) What is strategic planning, available at: https://online.hbs.edu/blog/post/why-is-strategic-planning-important (accessed 02 January 2023)

Olson, A. (2022) 4 common reasons strategies fail, available at: https://hbr.org/2022/06/4-common-reasons-strategies-fail (accessed 03 January 2023)

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Author: joe david.

Joe David has years of teaching experience both in the UK and abroad. He writes regularly online on a variety of topics. He has a keen interest in business, hospitality, and tourism management. He holds a Postgraduate Diploma in Management Studies and a Post Graduate Diploma in Marketing Management.

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Strategic Planning

5 benefits of strategic planning.

strengths and weaknesses of formal strategic planning

By Mary King

20 january 2023.

Image of a goal planner

Many organizations understand the importance of strategic planning, and they’ll invest a great deal of time and money coming up with the strategic plan itself. But once the strategic planning process is complete, it’s really common for that plan to just… well, sit there. Maybe it gets reviewed once a year–an obligatory thing your company or organization simply “has to do.” Or worse, it becomes a glossy (and expensive) document that sits gathering dust on the shelf.

Well, as the leading provider of strategic planning and execution software , we disagree! A strategic plan is the compass for your goals, and we’re here to re-ignite that strategic planning spark. To get you started, you can grab our Free Strategic Plan Template , which you can download as a PDF.

In this post, we are going to look at five of the major benefits of a strong strategic plan, the purpose of strategic planning in the first place, and how it will improve virtually every aspect of your operations – from employee engagement, to plan execution, to leadership.

“If you don’t know where you are going, you are certain to end up somewhere else.” – Yogi Berra

A strategic plan is so much more than words on a page (or a shelf!)

If you have a strategic plan that you (and your employees) reference regularly, then it becomes a living document, a dynamic process that guides, responds to, and helps actualize large-scale dreams.

Here are five benefits of strategic planning.

1. It makes your organization proactive rather than reactive

Why is strategic planning important?

A strategic plan allows organizations to anticipate things that are most likely to happen and prepare accordingly. Through strategic planning, companies can anticipate certain unfavorable scenarios before they happen and take necessary precautions to avoid them. And, if something unfortunate–whether a small scale mishap, or a full blown crisis–does happen, then you already have something in place to ensure you’re able to get back on track.

When a crisis hits, such as the COVID-19 pandemic, having a strategic plan versus not having one can make a huge difference. For example, instead of having to halt construction plans, further disrupt learning, and be stuck in a pattern of only reacting during the pandemic, White Bear Lake Area Schools, MN, leaned on their strategic plan :

“We’ve completed projects already. Construction continued throughout the pandemic, which was really exciting for us. And through it all, our strategic plan has continued to inform our decisions about what type of learning environment we’re building for our students. That’s been invaluable . We’ve had to make decisions on learning models, remote work, distance learning… we’ve been able to root those decisions in asking what does our strategic plan compel us to do, and what opportunities have emerged along the way?” – Dr. Alison Gillespie, the Assistant Superintendent for Teaching and Learning with WBLAS.

Of course, the importance of strategic planning and being proactive is not just for catastrophe prevention, or mitigating poor outcomes. Another benefit of a strategic plan is it also gives you a competitive edge.

When you make being engaged with your strategic plan a habit, an integral part of how your organization operates, it means your overall vision, and the steps required to be there, are front of mind. This will keep your team alert, attentive, and able to keep up with changing trends.

While other strategic plans for other organizations may sit on the shelf, excellent strategic planning is enough to maintain a competitive edge. Staying one step ahead of what everyone else is doing requires a clear idea of what exactly you are doing. Rather than just always reacting to the trends, you want to be anticipatory. Better yet, be the trendsetter.

A strategic plan gives you this ability to be truly proactive – and, therefore, flexible – in your vision.

2. It instills a shared sense of responsibility

A strategic plan helps to define the direction in which an organization must travel, and aids in establishing realistic objectives and goals that are in line with the vision and mission charted out for it. But it also creates a sense of collaboration and collective responsibility.

The key to successful strategic planning is to engage everyone with the plan as early as possible in the planning process, and build in measures and implementation steps that allow you to monitor the results at regular intervals. When you do this, goals become stepping stones to even greater goals, and everyone becomes familiar with the aspirations and pain-points of your overall vision, and their contribution to it.

When everybody has a sense of purpose in their role within the greater organization, they are going to care about the outcomes. Everybody wants to feel important, needed, valued, and heard. One benefit of a strategic plan is that it formalizes this process. It’s really important to make sure everyone implementing a plan feels responsible for their part in it; when people are intrinsically motivated to complete their tasks, this creates energy and momentum on all organizational levels.

For the people involved in the actual strategic planning process itself, it creates a sense of democratic engagement. People are able to bring their own perspectives, thoughts, and ideas to the table, and will be encouraged when they see their strategies and actions come to life. For people carrying out those actions, they will feel more encouraged to be responsible for those outcomes when the goals are attainable and clear. A strategic plan makes those actions clear.

A strategic plan offers both the much-needed foundation from which an organization can grow, but also helps establish the roles and boundaries for everyone, thus improving efficient decision making and creating a greater sense of overall momentum and direction.

Ensuring employees feel engaged and responsible is one of the most important strategic planning benefits.

3. It increases operational efficiency among leadership

When discussing the importance of strategic planning in an organization, we need to consider leadership. One way that an organizational vision can fall short in its implementation is when there isn’t a clear enough idea of what change is needed where, and how complex that level of change needs to be. That’s where we can really see the value of strategic planning. In terms of strategic management, a plan provides leaders with the roadmap to align the organization’s functional activities to achieve set goals.

At Envisio, we aren’t afraid of complex plans. In fact, we love them. Because we exclusively work with publicly accountable organizations, such as local governments, our clients frequently have really complex plans that can span years (sometimes even decades)!

What we’ve learned is that there is no need to shy away from a grand vision; what matters is making sure the strategy to get there is clear.

People in leadership roles are often juggling many different priorities and ideas, and they are overseeing the entire operation. Management discussions, meetings, and decision making can sometimes suffer from not being able to see the forest from the trees–meaning, everyone is capable of losing perspective. A strategic management plan helps carry some of that load for leadership.

A strategic plan also increases operational efficiency in that it helps determine those important, practical, company-wide leadership considerations, such as budget requirements to accomplish set objectives. These practical, operational considerations illustrate why strategic planning is important.

4. It improves staff satisfaction and retention

Research has shown that over the course of COVID-19, local government employees are feeling as though they lack autonomy in their jobs, are feeling burnt out, and are experiencing disconnection from their work and colleagues.

As previously mentioned, a strategic plan can help empower your employees to feel responsible and engaged with their work, but it can also be used to plan initiatives like improved career advancement, perks and benefits, and improving workplace culture.

The reality is that public sector workplaces (local government and beyond) need to find ways to empower and support employees, otherwise these sectors will experience high turnover. Incorporating improved onboarding processes, feedback processes, and building in a process for positive recognition are all things that can be formalized in a strategic plan. Having a strategic plan can also reduce the experience of being “micro-managed,” which can increase senses of autonomy, and therefore satisfaction, in the workplace.

5. It manages expectations and bolsters trust

A strategic plan increases transparency, which helps build trust and eliminate ambiguity–both inside the organization and among key stakeholders. Strategic planning done well is beneficial because it creates more opportunities for collaboration across teams. Working together to see what each department is doing, rather than having disjointed groups, improves trust in the overall direction of the organization. Because so much of strategic planning refers to determining organizational goals, this helps set expectations across the different areas of your organization, and improves the overall functioning of the company.

Public sector work requires a lot of passion and care; it tends to attract value-driven people. Ensuring that the values of the organization are built into the strategic plan communicates to staff a sense of openness, and helps assure them (and remind them) about the overall mission.

One of the other benefits of having a strategy is it shows how information is being managed, in a modernized, quantifiable, secure manner. Being able to back up decisions using data, for example, is an objective, non-partisan way to communicate the rationale behind the moves your organization is making. All of this goes a long way in improving trust – both internally, and externally, to the community being served.

And if you really want to boost trust with your external stakeholders, consider sharing your organizational progress against your strategic plan via a public strategic plan dashboard .

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Mary King is a professional writer and researcher based in Toronto. She comes to Envisio with a Masters Degree, where she researched the relationship between the disappearance of urban public spaces, and high level decision-making processes in local governments. For nearly a decade, Mary has worked as a community organizer, promoter, and supportive researcher in a variety of nonprofits and think-tanks, and her favorite area of focus was in connecting local artists with marginalized youth. Since 2017, her writings and research on policy, local governance, and its relationship to public art and public space has been presented at conferences internationally. She has also served as both a conference chair and lead facilitator on professional and academic conferences across Canada on how to better bridge academic research with local change-agents, policy makers, artists, and community members. Envisio’s mission of excellence and trust in the public sector maps onto Mary's interest in local government and community mobilization. She loves working at Envisio because she cares about having well organized, strategic, and transparent public organizations and local governments. Mary is also a creative writer and musician and has been supported in her practice by the Canada Council for the Arts. Her stories can be found in literary journals across Canada.

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