Where will your business be five years or 10 years from now? If you don’t want your business to suffer, it’s important to ask yourself this question. To be profitable and competitive, a company needs an effective business strategy detailing its vision and mission – but that’s not all. It also needs careful planning to implement that strategy. This is called strategic planning.
Simply put, strategic planning is the process that provides a road map for a business to get from where it is now to where it wants to be in, say, five years or more. Strategic planning helps an organization compete and win in the long run. But developing and implementing a successful strategy is a tall order. Many companies either don’t have a strategy to begin with or give up on strategic planning when they hit the first hurdle. Gartner’s 2018 CIO Survey reports that only 23% of respondents say their organizations are “effective” or “very effective” at business strategy and planning. Another Gartner study says only 8% of strategy leaders report a success rate of 90% or more on long-term strategic action.
But don’t be discouraged. Like any other skill, strategic planning can be learned. And it can be perfected with practice. By making strategic planning part of their learning and development initiatives and incorporating it in their culture, organizations can steal a march on their rivals and stay competitive for a long time to come.
Master strategic planning with Learnit’s Move from an Operational Manager to a Strategic Leader workshop.
You might also be interested in our Strategic Thinking workshops.
What is strategic planning?
The Harvard Business Review sums up strategic planning quite nicely. It says, “Strategic planning is the organizational process of using available knowledge to document a business’s intended direction. This process is used to prioritize efforts, effectively allocate resources, align shareholders and employees on the organization’s goals, and ensure those goals are backed by data and sound reasoning.”
The strategic planning process is broken into three stages:
- Formulating strategy
- Implementing strategy
- Evaluating strategy
To develop a strong and actionable strategy, strategic leaders must be keenly aware of their company’s strengths, weaknesses, opportunities, and threats, collectively called SWOT. Leaders must also take into account the environment in which they operate – specifically, the political, economic, sociological, technological, legal, and environmental (PESTLE) factors that can impact their business and influence their strategy. Political and legal factors include government policies and regulations, trade restrictions, and import-export tariffs. Taxes and duties are some of the economic factors that can impact strategy. The sociological factor covers the changing attitudes and profiles of consumers. The technological factor calls attention to fast-changing technologies that can affect the way you do business. The environmental factor is the impact your business operations have on the environment and society (your energy consumption, for example) and how an increasingly ethical consumer base views this. These are the external factors. Strategic planning also requires a deep exploration and understanding of a business’ internal environment, such as its infrastructure, manpower, technology, finances, supply chain, and other resources.
To keep pace with this dynamic business environment (which is now even more volatile, thanks to the pandemic), it is imperative that companies make strategic planning an ongoing process. As Harvard Business School professor Clayton Christensen puts it, “Most people think of strategy as an event, but that’s not the way the world works. When we run into unanticipated opportunities and threats, we have to respond. Sometimes we respond successfully; sometimes we don’t. But most strategies develop through this process. More often than not, the strategy that leads to success emerges through a process that’s at work 24/7 in almost every industry.”
Strategic planning pays
Nobody knows for sure what the future holds. Unexpected events and changing markets require companies to constantly adjust their strategies. But despite the ambiguity that strategy is synonymous with, strategic planning helps businesses in many ways:
- Makes you future-ready: Strategic planning helps create a single, focused vision for a company and unites its employees and stakeholders so that they can work symbiotically in pursuit of this vision. Strategic planning eliminates the chaos that the absence of a clear strategy can lead to with different departments making counteracting decisions. With strategic planning, a business can be future-ready. It can proactively prepare for and adapt to what lies ahead rather than just being reactive. A key component of strategic planning is goal setting. Long-term goals help companies plan for an unknown future. For example, you want to open five branches of your wellness store in the next six years but don’t really know what the market will be like then. It doesn’t matter because you can still plan a few things ahead, such as looking for additional suppliers or coming up with the money to fund your expansion plan. Then there are short-term goals that help you take small but sure steps towards your big goal. In this case, a short-term goal could be finalizing your store leases or completing the stores’ decor within a stipulated time frame. When a business has distinct goals and a meticulous plan to reach those goals, it is easier for its employees to allocate their energy and resources accordingly. Setting a good goal is the first step to success. Participate in Learnit’s Goal Setting and Planning for Success workshop and learn how to set well-thought-out goals that align with your company’s broad vision.
- Blocks bias: Decisions come with inherent bias. Corporate actions are often colored with the personal biases, experiences, and beliefs of the decision-makers. Some leaders suffer from an overconfidence bias that makes them convinced about the success of their decisions without the proof to back it up. Others gravitate towards consensus or interpret neutral information in a manner that supports their viewpoint. Strategic planning demands a more efficient form of decision-making where verdicts are backed by data, case studies, and projections. It encourages leaders to listen to differing views and reach decisions that are a result of healthy debate and discussion. The first step to combating bias in decision-making is identifying hidden biases. Learnit’s Unconscious Bias workshop has some practical approaches to identifying and disrupting hidden biases.
- Tracks progress: It’s not enough to develop strategy and implement it. The final stage of the strategic planning process is strategy evaluation. Do the results meet expectations? Does your strategy give your business a competitive advantage? Is your strategy agile enough to adapt to changes in the external environment? Does it require corrective steps? A successful strategy is usually one that has been through some finetuning and course correction. When businesses have an effective strategy evaluation plan in place, they can smoothly track their progress towards their goals.
- Improves efficiency: As mentioned in the previous points, strategic planning strengthens decision-making by eliminating chaos and bias. It leads to feasible and realistic actions backed by strong evidence. Strategic planning also aligns employees, departments, and stakeholders with the company’s vision and goals. It puts the focus on activities that are critical to realizing the organization’s long-term strategy. And it ensures resources are allocated correctly and responsibilities and accountabilities clearly defined. As a result, an effective strategic planning process vastly improves a company’s operational efficiency, productivity, and profitability.
Design thinking – Taking strategic planning to the next level
Corporations cannot hope to accomplish much without planning for it. But the previously mentioned Gartner study says 56% of executives waste their strategic planning time. Very often, strategic planning fails because companies go straight into the planning stage without spending any time on the thinking part. And thinking is vital to strategic planning – whether it is about launching new products and services, the best ways to allocate resources, or making major changes. Failure to think rationally and clearly can cause businesses to squander opportunities and delay response to threats and challenges. Experts say there’s a simple solution to saving your strategic plan from such action paralysis – design thinking.
Design thinking is an innovative problem-solving process rooted in the principles of design that can also be applied to other areas of corporate decision-making (product development, for example). According to the MIT Sloan School of Management, there are four stages in the design thinking process:
- Understand the problem by immersing yourself in it. This requires strategic leaders to speak with customers and receive feedback instead of judging the problem through their own experiences, which might not be relevant at all.
- Explore solutions. This step calls for brainstorming sessions where employees across departments can generate ideas and discuss a wide range of possible solutions. The idea is to come up with as many possibilities as possible. Leaders should refrain from being judgmental, even if a solution appears impractical at first. You never know when peeling back some of the layers of an illogical solution presents you with a feasible idea.
- Test the shortlisted solutions with the most potential. In design thinking, each prototype is tested, feedback from customers gathered, and the process repeated. Sometimes, what you think is a great solution is only just okay. But by putting it to the test again and again, you can turn it into a highly satisfactory solution.
- Implement the solution.
Come up with innovative solutions by participating in Learnit’s Design Thinking workshop.
By applying the principles of design thinking, businesses can strengthen their strategic planning process. Here’s how it works out:
- Immersion and analysis: Both skills are integral to design thinking. And they can energize a company’s strategic planning process at various stages – when it defines its mission, vision, goals, and objectives, or when it conducts an internal evaluation in the form of a SWOT analysis. Because strategic planning requires a deep understanding of external factors such as customer and pricing trends, companies must go through vast quantities of data. Correctly analyzing and interpreting this data in order to reach the right decisions requires superior analytical skills. Luckily, these skills can be learned. Learnit offers a wide range of Analytics and Data workshops that can help you develop an analytical mindset and master widely used analytics tools such as Excel and Power BI.
- Ideation and prototyping: In design thinking, idea generation is a lesson in collaboration and creativity. You listen to divergent voices without restricting them in any way. Similarly, the prototyping stage involves receiving and listening to feedback constructively. Free-flowing communication and a robust exchange of ideas and opinions are beneficial to any strategic plan, whether it is related to a new product launch, a merger with another organization, or dealing with an external threat. Learnit’s Giving and Receiving Feedback workshop can help you make the feedback you receive and give a tool of growth and success.
- Implementation: It’s not enough to have a great strategy. It’s just as important to execute it well. The implementation of a strategy requires organizational and practical skills such as staffing, budgeting, time management, and progress monitoring. To implement strategy effectively, leaders must set clear timelines and make sure they are met. They must ensure the different teams involved collaborate smoothly and that everyone is on board. It is the responsibility of the leader to decide on broad actions for the company to take but also spell out specific actions for each team or department. Throughout the implementation stage, these leaders must show the agility to respond to sudden changes and challenges. Design thinking encourages leaders to take positive actions that have positive outcomes, and not just plan activities for the sake of it. By applying this focus to their strategic plans, leaders can greatly improve the plan’s execution. Time management is integral to implementing strategy effectively. With Learnit’s Time Management workshop, you can learn to work strategically rather than just work hard.
- Customer first: Finally, design thinking places the customer/user at the heart of all decisions and it encourages strategic leaders to do the same. Sometimes, an organization might launch a new product simply because the product team came up with a clever idea and not because there is a need for it. By applying design thinking’s user-centric approach to their strategic planning process, a company can come up with products, services, and solutions that the user wants and needs – not what the company thinks the user needs. Design thinking has the power to change mindsets, which can be a challenge in any organization. Strategic plans with a design thinking approach result in feasible and satisfactory solutions, making the process well worth the company’s time, money, and effort.