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Strategic Planning

 Strategic planning is an activity that identifies the path to achieving an organization's vision. This process considers the organization's current state, long-term objectives, and the steps needed to reach those objectives.

Key Aspects of Strategic Planning

  1. Mission:
    The fundamental reason for an organization's existence. Why does it exist?
    Example: "To work in advanced research for the development of pharmaceutical and healthcare products, services, and solutions that are affordable to common individuals."

  2. Vision:
    Defines where an organization wants to go or what it aims to become. It sets a time-bound target or goal. A vision is typically a long-term objective rather than an annual or semi-annual target.
    Example: "By 2020, we want to be one of the top five drug manufacturers in the field of advanced cancer treatment."

  3. Strategy:
    The path that takes an organization from its current state to its long-term goals.

Steps in Strategic Planning

1. Define/Identify Mission and Vision

Identifying an organization's mission is the first step in strategic planning, as it serves as the foundation for shaping its future direction.

Developing a realistic vision, based on the company’s mission and strengths, is key to a successful strategic plan. A small organization should not necessarily set small goals, but it should be realistic. For example, if a company in the oil and natural gas industry wants to enter the shoe manufacturing business, it should not assume its expertise in oil and gas applies to shoemaking. Instead, it should approach the new industry as a newcomer, define its vision accordingly, and develop a strategy to become a leader from the ground up.

2. Define Objectives

Based on the vision, leaders should define quantifiable financial and strategic objectives that are measurable.
Examples of measurable objectives:

  • Sales targets
  • Earnings growth
  • Net profit
  • Market share

3. Collect Information from the Environment

Gathering data about the organization’s internal state and its position in the market, including partners and competitors, is crucial for formulating a future strategy.

  • Internal Analysis includes an assessment of the company’s products, services, strengths, and weaknesses. This data is useful for conducting a SWOT analysis.
  • External Analysis involves studying the industry landscape, competitors, partners (suppliers and customers), and similar products. Porter’s Five Forces Analysis can be used here.
  • PEST Analysis (Political, Economic, Technological, and Social factors) helps analyze the external macro-environment. Sometimes, this is also referred to as STEP Analysis.

4. Define Strategy

Strategy formulation is based on the insights gathered from internal and external analysis. The focus is on leveraging strengths to capitalize on opportunities while identifying ways to overcome weaknesses and mitigate threats.

5. Implement Strategy

Once the strategy is defined, it must be effectively implemented across the organization.

6. Evaluate the Success of the Plan

Measuring the success of a strategic plan is crucial. However, final goal achievement may take time, making it difficult to make corrections if deviations occur too late.

To ensure timely evaluation, organizations should:

  • Define success criteria
  • Set measurement parameters to determine success or failure
  • Establish evaluation intervals at key milestones

7. Make Corrections Using Feedback

After evaluation, organizations should:

  • Identify areas for improvement
  • Apply best practices to sustain success
  • Address mistakes to avoid repeating failures in the next planning cycle

Strategic Planning Tools, Techniques, and Approaches

  • SWOT Analysis (Strengths, Weaknesses, Opportunities, and Threats)
  • PEST Analysis (Political, Economic, Technological, and Social)
  • Scenario Planning
  • EPISTEL Analysis (Environment, Political, Informatic, Social, Technological, Economic, and Legal)
  • ATM Framework (Antecedent Conditions, Target Strategies, Measure Progress and Impact)

Strategic Planning Models

Organizations can choose from various models based on their culture, size, leadership approach, and internal/external environment.

1. Vision-Based Planning (e.g., Goal-Based Model)

These models focus on the organization’s vision and goals. The Goal-Based Model, for example, follows these steps:

  1. Draft a mission statement
  2. Identify and define the vision
  3. Define measurable objectives or goals
  4. Develop strategies to achieve goals
  5. Create an action plan for implementation
  6. Execute the plan
  7. Monitor, evaluate, and review progress

2. Issue-Based Planning

Organizations facing immediate challenges (e.g., missed targets, lack of resources) often adopt this approach. Steps include:

  1. Identify and prioritize key issues
  2. Define approaches to address these issues
  3. Document issue-resolution strategies (which may temporarily serve as the strategy document)
  4. Implement strategies
  5. Monitor and evaluate progress

3. Organic Planning

This is a flexible, evolving approach that does not rely on formal documentation but focuses on continuous learning and dialogue. Steps include:

  1. Use storyboarding to discuss the organization’s mission and culture
  2. Define the vision through open discussions
  3. Develop evolving strategies and processes to achieve the vision
  4. Hold frequent strategy discussions and incorporate learnings from previous cycles

4. Alignment-Based Planning

This model aligns organizational resources with its mission and vision. It is useful for organizations struggling with ineffective strategies. Key steps include:

  1. Assess and analyze the organization’s current state
  2. Identify mission, vision, and core processes
  3. Determine which processes align with the mission and which do not
  4. Address misaligned processes
  5. Develop methods and strategies to achieve alignment

5. Other Techniques

  • Real-Time Planning – Continuous assessment and strategy adaptation
  • Scenario Planning – Exploring various future possibilities and preparing strategies accordingly

Interesting Resources

Strategic Alignment PDF

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