Strategic planning can be defined as the process of determining the direction a business will take. It involves considering the company's current situation, establishing future goals, and mapping out a plan for how to get there. The idea of strategic planning can seem daunting, but it doesn't have to be. Rather than letting yourself get overwhelmed, apply this basic five-step approach to strategic planning.
Step 1: Define the Company's Strategic Position
Strategic planning is all about figuring out how to take your company from where it is now to where you want it to be in the future. Before you can do that, decisions have to be made about what that future should look like. You can't map out a plan for how to get somewhere if you don't know where you are going. So, decisions have to be made about what the company's ultimate strategic position should be. For example:
- Will your organization grow through establishing new lines of business or expanding geographically?
- Does your company seek to succeed through delivering innovative solutions not available elsewhere?
- Is your company committed to becoming the employer of choice for top talent in its industry?
Defining a strategic position can't be done randomly or based solely on instinct. It needs to be based on your company's mission, industry knowledge, customer needs, competitive analysis, and stakeholder input.
Step 2: Conduct a SWOT Analysis
Once you have an idea of where your company seeks to go, you'll need to identify key factors relevant to how you should best move forward. This typically starts with an environmental scan referred to as a SWOT analysis. This involves identifying strengths and weaknesses within your organization, as well as opportunities and threats that exist in the external environment.
- Strengths are factors within your company that will help you achieve the desired strategic position. These include things like having a strong market share, or an expert research and development team.
- Weaknesses are situations within your company that could be barriers to success. For example, if your company doesn't offer workplace flexibility or strong compensation packages, it will be difficult to attract top talent.
- Opportunities are factors in the external environment that may help your company, such as increased customer demand for what you offer, or the fact that a competitor is going out of business.
- Threats are realities in the external environment that could impede your progress, such as increased government regulation, or new competitors entering the market.
It's important for stakeholders to participate in the SWOT analysis process. Start with brainstorming sessions before ultimately writing a SWOT analysis to use as you move forward in the strategic planning process.
Step 3: Develop a Plan
Once you know where the company needs to go and have a good idea of the internal and external factors that can both help and hinder progress, you'll be ready to start making some concrete plans for the business based on its new or updated strategic position. Developing a plan involves establishing clear business goals and objectives, which should be based on what you have learned and decided so far in the strategic planning process.
- Business goals should be phrased in a way that makes it possible to measure progress toward achievement, such as with the SMART approach to goal setting.
- The overall goals should be communicated throughout the organization, so that related, strategically-aligned goals can be established for each department or function.
- Once departmental goals are established, the next step in strategic planning involves setting objectives, which involves putting concrete plans in place for achieving the goals.
Step 4: Implement the Plan
Once you have a plan in place that includes clear, measurable goals and specific business objectives, the next step is to implement that plan. This phase involves actually doing the work that will move the business toward its strategic position. It's time to identify and adopt specific tactics and put them into action. Each tactic should link to a business objective, and each objective should link to a business plan.
- For a goal of boosting employee retention, an objective might be to refine the hiring process with this in mind. Tactics could include conducting stay interviews with long-term employees, and implementing a behavioral screening assessment.
- For a goal of leading the way with innovation, an objective might be to encourage employee creativity. Tactics could be things like incentivizing ideas that are implemented and providing training on entrepreneurial thinking or creativity.
- For a goal of expanding into new countries, an objective might be to prepare employees for overseas assignments. Tactics could include foreign language training or adding cultural competency training to the employee development program.
Step 5: Monitor/Evaluate the Plan
Your work is not over once you implement the plan. Strategic planning is never really finished. The fact that a plan has been implemented doesn't necessarily mean that it's working. Sound strategic planning involves tracking business goals every step of the way. This step involves gathering data in a variety of ways, based on what your goals actually are.
- There are many ways to monitor and evaluate a strategic plan. Examples include measuring and analyzing financial results, customer satisfaction, and employee engagement.
- By continually monitoring progress, you'll be able to make informed decisions about whether the path the company is on is as it should be, or if the plan needs to be revisited and revised.
Follow the Steps to Strategic Planning Success
The five-step strategic planning process outlined above is a streamlined approach that incorporates the most important elements of strategic planning. When you follow these steps, you'll be on your way to mapping out a solid plan that can help take your business from where it is now to where you want it to be in the future.