Strategic Planning

Strategic Planning:

Strategic planning is an organization's process of defining its strategy, or direction, and making decisions on allocating its resources to pursue this strategy. In order to determine the direction of the organization, it is necessary to understand its current position and the possible avenues through which it can pursue a particular course of action. Generally, strategic planning deals with at least one of three key questions:

1. "What do we do?"
2. "For whom do we do it?"
3. "How do we excel?"

In many organizations, this is viewed as a process for determining where an organization is going over the next year or—more typically—3 to 5 years (long term), although some extend their vision to 20 years.

Key components

The key components of 'strategic planning' include an understanding of the firm's vision, mission, values and strategies. The vision and mission are often captured in a Vision Statement and Mission Statement.

• Vision: outlines what the organization wants to be, or how it wants the world in which it operates to be (an "idealized" view of the world). It is a long-term view and concentrates on the future. It can be emotive and is a source of inspiration. For example, a charity working with the poor might have a vision statement which reads "A World without Poverty."

• Mission: Defines the fundamental purpose of an organization or an enterprise, briefly describing why it exists and what it does to achieve its vision. For example, the charity above might have a mission statement as "providing jobs for the homeless and unemployed".

• Values: Beliefs that are shared among the stakeholders of an organization. Values drive an organization's culture and priorities and provide a framework in which decisions are made. For example, "Knowledge and skills are the keys to success" or "give a man bread and feed him for a day, but teach him to farm and feed him for life". These example values may set the priorities of self-sufficiency over shelter.

• Strategy: Strategy, narrowly defined, means "the art of the general." A combination of the ends (goals) for which the firm is striving and the means (policies) by which it is seeking to get there. A strategy is sometimes called a roadmap which is the path chosen to plow towards the end vision. The most important part of implementing the strategy is ensuring the company is going in the right direction which is towards the end vision.

Organizations sometimes summarize goals and objectives into a mission statement and/or a vision statement. Others begin with a vision and mission and use them to formulate goals and objectives.

Many people mistake the vision statement for the mission statement, and sometimes one is simply used as a longer term version of the other. However they are meant to be quite different, with the vision being a descriptive picture of future state, and the mission being an action statement for bringing about what is envisioned (ie. the vision is what will be achieved if the company is successful in achieving its mission).

For an organization’s vision and mission to be effective, they must become assimilated into the organization's culture. They should also be assessed internally and externally. The internal assessment should focus on how members inside the organization interpret their mission statement. The external assessment — which includes all of the businesses stakeholders — is valuable since it offers a different perspective. These differences between these two assessments can provide insight into their effectiveness.

Strategic planning process

There are many approaches to strategic planning but typically one of the following approaches is used:

Situation-Target-Proposal Situation - evaluate the current situation and how it came about. Target - define goals and/or objectives (sometimes called ideal state) Path / Proposal - map a possible route to the goals/objectives
See-Think-Draw See - what is today's situation? Think - define goals/objectives Draw - map a route to achieving the goals/objectives

Draw-See-Think-Plan

• Draw - what is the ideal image or the desired end state?
• See - what is today's situation? What is the gap from ideal and why?
• Think - what specific actions must be taken to close the gap between today's situation and the ideal state?
• Plan - what resources are required to execute the activities?

Tools and approaches

Among the most useful tools for strategic planning is SWOT analysis (Strengths, Weaknesses, Opportunities, and Threats). The main objective of this tool is to analyze internal strategic factors, strengths and weaknesses attributed to the organization, and external factors beyond control of the organization such as opportunities and threats.