Strategic planning is the means by which business formulate long-term strategies to best achieve their goals. The actual process will differ from firm to firm, but the basic idea is the same.
Business Is Like Warfare
Business can be cutthroat and has often been compared to warfare. The basics of strategic planning show the metaphorical similarities between the two disciplines. Strategy in both cases is the creation of long-term goals and an overall direction. During World War II, the Allied powers had an overall goal of forcing the Axis powers into surrender. In business, a strategic goal might be to break into a certain market and achieve a certain share of that market.
Strategic planning is the formulation of specific methods of achieving the overall strategic goals. This might include the creation of a new department to study the new market and come up with the best way to gain a foothold in that market. In the WWII example, this included the destruction of the enemy’s infrastructure, thus limiting their ability to supply their armies and replace their destroyed equipment.
Operational and Tactical Planning
On the operational level, businesses create the projects that will allow them to achieve their strategic goals. This level is much more specific than strategic planning, in that it sets up the projects and makes available the resources necessary to run those projects.
In warfare terms, an operational level project in WWII was Operation Overlord—the D-Day landings and the liberation of Western Europe. Success depended upon giving the troops their specific assignments and allocating them with sufficient and appropriate supplies to carry out their tasks.
The last level, tactical, involves the decisions made by the people assigned to operational projects. This consists of those workers, often in teams, coming up with the best ways to implement their operational assignments. This is the minutiae that is so vital to the success of any enterprise.
The decisions of commanders in battle, like when to advance or retreat, or on which flank to push the attack, are the tactical decisions that determine the outcome of a battle. Tactical success leads to operational success, which leads to success at the strategic planning level. This, in turn, allows the achievement of strategic goals. The system begins from the top down, but its success or failure is determined from the bottom up.
Self-Reflect Strategically
In order to formulate an overall strategy, firms must first examine themselves. This is often done by analyzing the business’ SWOT (strengths, weaknesses, opportunities, and threats). By ascertaining the overall health of the organization, planners can begin to create the strategy that will get them where they want to be.
This is often an increase in profits. However, it could be increasing market share, or building to a position where the business can be most profitably sold to a larger firm. At this level, normally only the board and the C-Suite are involved.
Establish Strategic Initiatives
After deciding on a strategy, it is time for the strategic planning to begin. Here is where the decisions are made as to what initiatives the firm wants to create to achieve its strategic aims. A company should have a mission statement that encapsulates exactly what it wants to achieve. This should be communicated clearly to everyone in decision-making positions to ensure that everyone understands what they are working toward.
Strategic planning next consists of creating projects that will achieve the company’s goals. It is important to set priorities and allocate overall resources at this time. Vital decisions will be made during this step, so it must be done carefully and always in keeping with the company’s overall strategy.
Focusing on the most important tasks creates efficiency and streamlines the operation. Again, these priorities need to be communicated down the line. That way everyone knows where they need to put most of their energy. The more care taken during the project creation stage, the more likely the chances for success. Specific targets for achievement need to be set so that proper evaluation of progress can be tracked.
Monitor and Adjust as Necessary
Strategic planning doesn’t end when the projects are up and running. Continuous monitoring of each project is necessary to see where additional resources might be needed. Strategic planners now must decide which projects are working and which aren’t. Additionally, they must be flexible enough to change course when targets are not being met.
Planners cannot get too attached to any one project that they ignore failure at the expense of the company’s bottom line. They may need to revisit some earlier options that were discarded during the initial planning stage, or it attempt the creation of new projects that might better meet the company’s goals.
Strategic planning is vital to any successful firm. It serves to keep the company focused on its overall strategic goals and provides the means to evaluate the success or failure of the projects designed to achieve those goals. It also gives everyone in the company the understanding of why they are doing what they are doing and keeps everyone engaged in their work.