Strategic planning is a way to identify and move toward desired future states. It is the process of developing and implementing plans to reach goals and objectives. Strategic planning is applied primarily in military affairs (where it is called military strategy), and in business activities. Within business it is used to provide overall direction to a company (called strategic management), in financial strategies, in human resource/organizational development strategies, in information technology deployments, and to create marketing strategies, to name just a few applications. But it can also be used in a wide variety of activities from election campaigns to athletic competitions and strategic games such as chess. This article looks at strategic planning in a generic way so its content can be applied to any of these areas.
A good strategy will be:
- capable of obtaining the desired objective
- a good fit between the external environment and an organizations resources and core competency - It must be feasible and appropriate
- capable of providing the organization with a sustainable competitive advantage - It should be unique and sustainable
- dynamic, flexible, and able to adapt to changing situations
- sufficient on its own - ie.: valuable without cross-subsidization
Most strategic planning methodologies are based on a three step process (sometimes called the STP process):
- Situation - Where are we right now? How did we get here?
- Target - Where do we want to be? What is our objective?
- Path - How can we get there?
In general terms, there are two ways of doing strategic planning:
- Strategy as logical incremental steps
- formal approach
- 4 steps:
- analysis including environmental scanning, internal resource assessment, external assessment, intellegence gathering, an assessment of the current situation
- SWOT (Strengths, Weaknesses, Opportunities, Threats) - isolate those aspects of the environment that are particularly important
- strategy development including determining vision, mission, objectives, and strategum generation
- strategic plan including strategy specification and resource allocation
- GTSM (Goals, Targets, Strategies, Measures) - the setting of goals, targets, and measurable objectives
- implementation, monitoring, adjustment, and control
- Strategy as revolution
- identify the unquestioned beliefs in your industry and challenge them - Look for opportunities to re-write the rules of the industry
- look for major discontinuities in technology, lifestyle, habits, and geopolitics, and embrace the change wholeheartedly - Do not waste time making small incremental adjustments - Be prepared to create a completely new business model at any time
- more a mind-set than a formal technique
- not rule or ritual oriented, not reductionist, not reactive, not autocratic
A distinction is frequently made between strategy and tactics. Strategy is planning how to get where you want to go. Tactics is the immplementation of these plans. It deals with specific actions by particular people. Some theorists claim that it is a mistake to separate strategy and tactics. Constantinos Markides describes strategy formation and implementation (tactics) as an on-going, never-ending, integrated process requiring continuous reassessment and reformation. Strategic planning is both planned and emergent, dynamic, and interactive. J. Moncrieff also stresses strategy dynamics. He recognized that strategy is partially deliberate and partially unplanned. The unplanned element comes from two sources : “emergent strategies” (result from the emergence of opportunities and threats in the environment) and “Strategies in action” (ad hoc actions by many people from all parts of the organization).
Henry Mintzberg could not identify one process that could be called strategic planning. Instead he concludes that there are five types of strategies. They are:
- Strategy as plan
- Strategy as ploy
- Strategy as pattern
- Strategy as position
- Strategy as perspective
Goals and objectives
Any differences between your current situation and the future aspirational state can be though of as a deficiency or gap. Objectives and goals are how we eliminate this gap. Some writers distinguish between goals (that are inexactly formulated and lack specificity) and objectives (which are exactly and quantitatively formulated as to time frame and magnitude of effect). For example, a goal might be ambiguously stated as "I want to get lucky tonight". Converting this into an objective, it becomes "I want to make $100 at the BlackJack table by 8 oclock tonight. Not all authors make this distinction, preferring to use the two terms interchangeably. When goals are used in the financial arena, they are often called targets.
People typically have several goals at the same time. Goal conguency refers to how well the goals combine with each other. Is one goal incompatible with another? Do they fit together to form a unifed strategy. Goal hierarchy is the nesting of one goal into another. It is best to have short-term goals, medium term goals, and long-term goals. The short-term goals are fairly easy to attain, just slightly above your reach. At the other extreme, lon-term goals are very difficult, almost impossible. Goal sequencing refers to using one goal as a stepping-stone to the next. You start by attaining the easy short-term goals, them step up to the medium, then long-term goals. Goal sequencing can create a "goal stairway".
In an organizational setting, goals must be coordinated so that they do not conflict. The goals of one part of the organization must be compatible with other parts of the organization. Individuals within organizations will typically have personal goals. These must also be compatible with the overall goals of the organization.
Mission statements and vision statements
Goals and objectives are often summarized into a mission statement or vision statement. A vision statement describes in graphic terms where you want to be in the future. It describes how you see events unfolding in 10 or 20 years if everything goes exactly as you hope. A mission statement is similar except it is more immediate. It details what you will do today to attain your goal, purpose, or mission. Ford's brief but powerful slogan, "Quality is Job 1" is a mission statement. However most mission statements are more detailed often describing what will be done, by whom, for whom, and why. For example: "Our mission is to meet or exceed the demands of business computer users by offering a level of service that surpasses anything available in the Tritown area while providing our employees with a stimulating environment in which to grow and providing our shareholders with a return that is above the industry average."
Vision statements tend to be more graphic and abstract than mission statements (that tend to be more concrete and proscriptive). A vision statement "paints a picture" of ideal future outcomes. Whereas the mission statement provides immediate guidance, a vision statement inspires. An athelete might have a vision of walking up the steps to a podium where she accepts a gold metal. Her vision statement would describe this event. In the 1980s, Bill Gates had a simple vision: "To see a computer on every desk, a computer that he produced." Variations of this vision have inspired and guided him throughout his career (anti-monopoly law suit not withstanding). An effective vision statement is:
- clear and unambiguous
- paints a vivid picture
- describes the future
- is memorable and engaging
- involves aspirations that are realistic
- is aligned with the organizations values and culture
- is driven by customer needs (if it is for a business organization)
To be really effective, a vision statement must be assimilated into the organizations culture. It is the leader's responsibility to communicate the vision regularly, create naratives that illustrate the vision, act as a role-model by embodying the vision, create short-term objectives that are compatible with the vision, and encourage others to craft their own personal vision compatible with the organization's overall vision.
Why strategic plans fail
In general, strategic plans can fail for two types of reasons: inappropriate strategy, and poor implementation. Strategy can be inappropriate due to: inaccurate intellegence gathering, failure to understand the true nature of the problem, the strategy is incapable of obtaining the desired objective, the strategy is a poor fit between the external environment and an organizations' resources, or it is not feasible. A strategy can be implemented poorly due to: over-estimation of resources and abilities, failure to coordinate, ineffective attempt to gain the support of others, under-estimation of time, personnel, or financial requirements, and failure to follow the plan.
Finding related topics
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