Strategic planning is “the process by which the guiding members of an organization envision its future and develop the necessary procedures and operations to create that future.” This envisioning process is very different from long‑range planning which is simply the extrapolation of current business trends. Envisioning involves a belief that aspects of the future can be influenced and changed by what guiding members do now.
Six critical concepts are involved in strategic planning:
- Strategy development is conscious, explicit, proactive, coherent, unifying, and an integrative pattern of decisions.
- Strategy is a definition of what business the organization really is in and its competition.
- Strategy is a response to internal strengths and weaknesses and to external opportunities and threats in order to develop a competitive advantage.
- Strategy is a means of establishing an organization’s purpose in terms of its long‑term objectives, action plans, and allocation of resources. The allocation of resources is perhaps the true acid test of the organization’s strategic plan.
- Strategy becomes a logical system for differentiating executive and managerial tasks and roles at corporate, business, and functional levels, so that structure follows function.
- Strategy is a way of defining the economic and non-economic contribution the organization will make to its stakeholders.
Strategic planning needs to answer:
- “Where are you going?” The mission and vision statements establish the direction. The values identify concepts, principles or standards by which choices are made which then lead to actions. An organization needs a clear sense of direction, clarity about the scope of operations, a set of values, and specific goals and objectives.
- “What is the environment?” The organization is forced to take a hard, objective look at itself, its external environment, its competitors, and the threats and opportunities that these pose. The organization must measure the gap between its goals or objectives and its capacity to attain those goals or objectives.
- “How do you get there?” What are the specific business models that can enable the organization to reach its goals, and how do the resources need to be allocated to make these models work?
- “What shall be done?” This involves operational/tactical planning. Both are used synonymously and relate to “how” to get the job done and setting specific, measurable objectives and milestones to be achieved by the organization in a time frame. This type of planning occurs in the context of the integration of organization-wide action plans that advance the achievement of the overall strategic plan.