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Strategic Planning

posted Apr 21, 2013, 1:07 AM by Jageshwar Tripathi
Strategic planning is an activity which identifies path to achieve organizations vision. In this process, current state of the organization, its long term objectives and path to reach long term objectives are few things which are considered.
In detail, it considers following:-

1. Mission:

The basic reason of organizations existence, why it exists? For example: " to work in advanced research for development of pharmaceutical and healthcare products, services and solutions affordable to common individuals"

2. Vision:

Where an organization wants to go or what it wants to become. Time bound target or goal to achieve. Often vision is a long term objective not year end or half yearly target. For example: "By 2020 we want to be one of the top 5 drug manufacturers in the area of advance treatment of cancer"

3. Strategy:

Is a path to reach to the end goal from current situation. 

Steps in strategic planning

Define/identify mission/vision

Identifying mission of the business/organization is the first step towards strategic planning which gives the basis for looking at future in specific space.

Development of vision which is realistic (based on company's mission and strength is key to successful strategic plan. It doesn't mean that a small size organization should think small and set small goals but it does mean that an organization in gas and natural gas wants to go in to shoe making business should not consider its experience in oil and natural gas, as its experience in shoe making company. It should consider itself a new player in that area and then can define its vision and strategy to become a leader in that area from zero to top.

Define objectives

Based on vision, leaders should define quantifiable financial, strategic objectives of the organization which should be measurable. Examples of measurable targets can be: sales targets, earnings growth, net profit, market share etc.

Collect information from environment

Collection of current situation of the organization from within the organization and its position in the market, its partners and competition is important to formulate future strategy to take the organization to the level where it wants to be.

Internal analysis includes listing of company products, services, specialties, strengths, weaknesses etc. This information becomes input for doing SWOT analysis.

External environment (its industry)  analysis includes competition, partners (suppliers, customers), similar products in the market etc. Porter's five force analysis can be used in this.

PETS (political, economical, technological and social) method can help analysis of external macro environment. Some times referred to as STEP.

Define strategy

Strategy is formulated based on information gathered from environment internal and external. Strategy formulation focuses on strengths to win opportunities and identifies ways to overcome weaknesses to handle threats.  

Implement strategy

Evaluate success of plan

It is important to measure success of any plan. To measure success of  strategy plan evaluation of objectives is important but final objective/goal achievement may be realized very late any at that point of time making any corrections to keep on track may not be possible because it would be too late. To evaluate success, success criteria should be identified and evaluation at regular interval should be performed. It is important to identify:

  • What should be measured (criteria)?
  • What should be the value of parameter to be considered as success or failure?
  • When should it be measured?

At the end of every milestone identified for evaluation, measurement should be done.

Make corrections using feedback

After getting the results of measurement, areas of improvement or best practices should be identified as a feedback for the next cycle so that best practices should be applied further to repeat the success and mistakes should be corrected to avoid failures.

Strategic planning tools, techniques and approaches

SWOT Analysis (Strengths, Weaknesses, Opportunities & Threats)

PEST Analysis (Political, Economical, Technological and Social)

Scenario Planning

EPISTEL (Environment, Political, Informatic, Social, Technological, Economic and Legal)

ATM (Antecedent Conditions, Target Strategies, Measure Progress and Impact)

Strategic planning models

There are various models and approaches to strategic planning, choice of one may depend upon organization culture (how organization functions), its current status (internal and external environment) , organization size but most importantly its leadership (how they function, what is their approach to deal with different things etc).

Vision bases (e.g. Goal based)

Subtypes may be known as: Six rings model, Outcome based model, Goal based model, Purpose driven model

Vision based models are focused on vision of the organization, one example of vision based model is goal based model which is described bellow.

Focus of goal based planning are objectives or goals. This can be suitable for smaller organizations to start with on strategic planning. Organization performs few steps initially and then go for more rigorous, defined steps in subsequent years. Initially for small period (for example one year) the organization can follow following steps:

  • Draft a mission statement
  • Identify and define vision
  • Define objectives or goals as per mission and vision
  • Identify strategy to achieve goals
  • Action plan to implement strategy
  • Execute the plan
  • Monitor and evaluate (review) the progress

Issue based

Some times organizations are struggling with issues like not achieving their targets, lack of resources and less time to think and implement about a formal strategic planning method. Focus on those organizations is handling their issues first. This approach is based on same thing, focus on issues to define strategy. Following steps can help adopting strategy planning in these cases:

  • List and prioritize the issues (to select most important and impacting few)
  • Identify approach to handle these issues (which can help in achieving some goals)
  • Document issue versus handling approaches (this document may become strategy document for the time being)
  • Execute (implement) the approaches to handle issues
  • Monitor and evaluate (review) the progress

Organic

Instead of a formal documented strategic planing process, self organized and evolving process to define and execute strategy can be adopted by organizations. Important part of this approach is dialog based, story boarding and learning based instead of method based evolving strategy. Following may be the some of the steps:

  • Using story board discuss culture of the organization and its mission
  • Using story boarding and dialog define vision of the organization
  • Evolve strategies, approaches and processes to achieve vision of the organization
  • This evolution can happen through regular meetings at frequent intervals
  • Keep learning from past and incorporate feedback from previous cycle

Alignment based

This model helps in aligning organization's resources with its vision/mission. It is suitable when organization is struggling with success of its strategies and wants to know and overcome difficulties. This is a topic of great discussion and debate, here are some important points:

  • Assessment and analysis of the organization.
  • Identify mission, vision, processes.
  • Identify which processes and programs are aligned towards mission of the organization and with each other.
  • Sort out processes not aligned.
  • Find out ways to align the processes and programs
  • Define methods and strategy to alignment in the organization 

There are two other techniques real-time planning and scenario planning

Interesting resources:

http://www.sba.oakland.edu/faculty/lauer/downloads/MIS625/Readings/strategic%20alignment.pdf


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