Strategic Planning

Description of Strategic Planning. Explanation.

Definition Strategic Planning. Description.

Strategic Planning consists of the process of systematically developing and implementing activities and plans to reach the goals, purpose and objectives of the organization within the strategic context (environment).

SP is a continuous process of making present entrepreneurial (risk-taking) decisions systematically and with the greatest knowledge of their futurity; systematically organizing the efforts needed to carry out these decisions. It may or may not also include measuring the results of these decisions against the expectations through organized systematic feedback.

SP is the application of thought, analysis, imagination and judgment. It is a responsibility rather than a technique. It is the analytic thinking and commitment of resources to action. It deals with the futurity of present decisions.

Strategic Planning versus Strategy

SP is more or less a synonym for Strategy, but the term "planning" has a deliberate meaning attached to it, while "Strategy" can accommodate both the emergent, flexible, dynamic vision to strategy formation as well as the traditional deliberate, intended, military, planned form. In other words, SP is one of the Ten Schools of Thought (The Planning School) as described by Mintzberg. However, In everyday parlance, SP is considered and used as a synonym of strategy.

Strategic Planning Forum (25)

Congruence Model Summary
"A business must have a strategy, the strategy must necessarily have parts. A strategy has five elements, providing answers to five questions:
- ARENAS: where will we be active? The most fundamental choices strategists make are those of where or in what arenas the business will be active. In articulating arenas, it is important to be as specific as possible about the product categories, market segments, geographic areas and core technologies as well as the value-adding stages (e.g. product design, manufacturing, selling, servicing, distribution) the business intends to take on. In choosing arenas, the strategist needs to indicate not only where the business will be active, but also how much emphasis will be placed on each.
- VEHICLES: How will we get there? Specifically, the means for attaining the needed presence in a particular product category, market segment, geographic area, or value-creation stage should be the result of deliberate strategic choice. If we have decided to expand our product range, are we going to accomplish that by relying on organic, internal product development or are there other vehicles – such as joint ventures or acquisitions that offer a better means for achieving our broadened scope? If we are committed to international expansion, what should be our primary modes or vehicles – Greenfield start-ups, local acquisitions, licensing or joint ventures? The means by which arenas are entered matters greatly. Therefore, selection of vehicles should not be an afterthought or viewed as a mere implementation detail. A decision to enter new product categories is rife with uncertainty.
- DIFFERENTIATORS: How will we win in the marketplace? how it will get customers to come its way. In a competitive world, winning is the result of differentiators and such edges don’t just happen. Rather, they require executives to make upfront, conscious choices about which weapons will be assembled, honed, and deployed to beat competitors in the fight for customers, revenues and profits. Achieving a compelling marketplace advantage does not necessarily mean that the company has to be at the extreme on one differentiating dimension; rather sometimes having the best combination of differentiators confers a tremendous marketplace advantage. Regardless of the intended differentiators – image, customization, price, product styling, after-sale services or others – the critical issue for strategists is to make upfront, deliberate choices. Without that, two unfortunate outcomes loom. One is that, if top management doesn't attempt to create unique differentiation, none will occur. Again, differentiators don’t just materialize; they are very hard to achieve. And firms without them lose.
The other negative outcome is that, without upfront, careful choices about differentiators, top management may seek to offer customers across-the-board superiority, trying simultaneously to outdistance competitors on too broad an array of differentiators – lower price, better service, superior styling and so on. Such attempts are doomed, however, because of their inherent inconsistencies and extraordinary resource demands. In selecting differentiators, strategists should give explicit preference to those few forms of superiority that are mutually reinforcing (e.g. image and product styling) consistent with the firm’s resources and capabilities and of course, highly valued in the arenas the company has targeted.
- STAGING: What will be our speed and sequence of moves? the speed and sequence of major moves to take in order to heighten the likelihood of success. Most strategies do not call for equal, balanced initiatives on all fronts at all times. Instead, usually some initiatives must come first, followed only then by others and then still others. Of course, in business strategy there is no universally superior sequence. Rather the strategist’s judgment is required. Decisions about staging can be driven by a number of factors. One, of course, is resources. Funding and staffing every envisioned initiative, at the needed levels, is generally not possible at the outset of a new strategic campaign. Urgency is a second factor affecting staging; some elements of a strategy may face brief windows of opportunity, requiring that they be pursued first and aggressively. A third factor is the achievement of credibility attaining certain thresholds – in specific arenas, differentiators or vehicles – can be critically valuable for attracting resources and stakeholders that are needed for other parts of the strategy. A fourth factor is the pursuit of early wins. It may be far wiser to successfully tackle a part of the strategy that is relatively doable before attempting more challenging or unfamiliar initiatives. These are only some of the factors that might go in to decisions about the speed and sequence of strategic initiatives. However, since the concept of staging has gone largely unexplored in the strategy literature, it is often given far too little attention by strategists themselves.
- ECONOMIC LOGIC: At the heart of a business strategy must be a clear idea of how profits will be generated – not just some profits, but profits above the firm’s cost capital. It is not enough to vaguely count on having revenues that are above costs. Unless there’s a compelling basis for it. The most successful strategies have a central economic logic that serves as the fulcrum for profit creation. In some cases, the economic key may be to obtain premium prices by offering customers a difficult-to-match product. For instance, the New York times is able to charge readers a very high price (and strike highly favorable licensing arrangements with on-line information distributors) because of its exceptional journalistic quality.
The congruence model

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Reference: Donald C. Hambrick and James W. Frerickson."

Strategic Planning must be Dynamic
"No doubt strategic planning is dynamic.
Strategic planning should monitor internal and external contexts on a regular basis and continue to change. A robust mechanism must exist in the organization to link people, strategy and operations. There are tools available for this kind of planning. However, the process should be able to put right people in the right place, get their commitment to the strategy, cascade down the plan into their day to day operations.
Top management needs to put their hands on some of the critical processes and review the strategy on a regular basis, in addition to setting up high level targets. A consulting firm may help in the process, but it is the company employees who should own the whole process."

Why do Most Strategic Plans Fail?
"According to what some people say, 8 of each 10 efforts fail in strategic planning.
I think strategic planning is not just a simple model that we should apply in any case. We should consider that each context has own problems. Strategic planning efforts that are not in accordance with the context are doomed to fail.
Moreover, we should not set the total goals before implementing the process. We should learn from the process and change the goals and objectives along the way."

Markets > Vision > Strategy + Execution
"First, vision drives strategy and customers and markets drives vision. Know the customer well. Also, "vision" is "functional" - about the entire company or any part of it like it or sales etc.
Second, develop principles by which you want to design strategies - such as "customer focus", "empowerment", or "communicate to everyone."
Third, strategy and execution are inseparable. Design them both together. Strategies won't work without an aligned execution fabric.
Fourth, strategy - and its execution - is change! Hopefully, it's innovative change. And it's proactive not reactive. And each company subgroup can have a sub-strategy that helps make the overall strategy work - which means the overall strategy might be tweaked. Bottom line: vision and strategy are iterative.
Fifth, strategy is subject to change - technology, people, money, etc. Create a "peripheral vision" capability up and down the company. Vision and overall strategy should be adjusted accordingly. More iteration!"

Strategic Planning and Power
"Someone said a year ago that 8 of each 10 efforts fail in strategic planning. That´s true. Despite of new models and more sophisticated software, each time it´s more clear that the strategos have a clear role in getting objectives done in time and form. Strategos means, over other attributes, the power to negotiate, open spaces, get support and persuade those with the authority and decision to support his ideas, initiatives and innovations.
In short, it seems that in this age, intelligent power means the capacity to overcome difficulties, professional jealousy, shortages of money and close minds that only see their own interests.
I have a large investigation on power and high performance, if you want to know about it, please contact me, I'll be glad to share the results."

Overseeing Strategy and Strategic Oversight
"Companies find themselves in a fix in times of transformational change, when incremental changes in strategy fails to meet incremental changes in the environment. The only way to mitigate this problem is through strategic oversight.
The need for effective operation of internal controls and budgeting need not be overemphasized.
There is also need for a strategy committee to be set up at the board level to ensure adequate monitoring of strategy. This committee has to meet at regular intervals to evaluate/review how much the company has gone in achieving its strategy, ask questions where necessary and make recommendations to management. A CIMA strategic scorecard can also be of help.
This scorecard is a pragmatic and flexible tool designed to help boards to fulfil their responsibilities to contribute to and oversee strategy effectively. The CIMA card is a 2x2 matrix with 4 quadrants:
1. Strategic Position
2. Strategic Options
3. Strategic Implementation
4. Strategic Risks"

Strategy Means Directional Initiatives to Protect And/or Improve your Current Position
"Today's leaders must be able to impose rapid changes within their organization in order to compete against worldwide competition, manoeuvre within the politic arenas and to face the current financial turmoil.
Sadly, strategy is often done on a yearly basis if at all, no real means of follow-up done on a regular basis, upper management is not made fully accountable for delivering, no real accountability, poor consequences associated with not meeting the objectives and most of the organizations aren't equipped to support rapid change.
More and more we urgently need to become real-time managers and to make the necessary decisions to ensure that the overall strategy is met and to react to changes when it happen.
Management has the obligation to elaborate strategies for sustainment and growth but also to pro-actively forecast potential declines and to develop plan to prevent and/or turn around such situations."

Strategic Planning in an Opportunity for Involvement
"SP is a great opportunity for the organization to live the strategy, using such exercises of what strategy means to everybody, and then write all the thoughts on the white board, trying to consolidate them in groups: planning, implementation, monitoring and controlling, development, refining…
At the end of the day a strategic statement will be produced by the team where everybody owns the passion to achieve what was produced.
This also could be used as milestones for the strategic plan, while the breakdown of these milestones could be used as baseline for the plan where everybody should be committed."

Strategic Plans Must be Used and Executed!
"I know an organization were top management hired a consultant to design strategic plans for all departments. As such, SMART (specific, measurable, achievable, realistic, time bound) plans were drafted.
But whenever the time elapsed the strategic plan should be implemented, records would be adjusted by adding more years within which to implement the plan.
At the end, little was achieved.
Strategic planning is a tool for achieving organizational goals. CEOs need to make use of the tool and ensure execution of the strategy for the better."

Strategic Planning is about Elimination
"Strategy is about knowing what to sacrifice. It is through a process of elimination that we arrive at the right path. Often, we confuse tactics for strategy.
Strategy, very briefly, requires the following:
1. We should focus on how to deliver the stated goals / objectives
2. We should work at 2 levels - market & mind / heart
3. We should have cross-functional alignment. It is not uncommon for teams to develop plans in isolation... A surefire recipe for disaster
4. We should have time lines and measurability
5. We should - most importantly base it on fundamentals: how to create greater value in the stakeholders' life.
In all of the above, what's important is to know what to give up."

Continuous Planning and Control
"Strategic planning is seen by many as a process that is performed every now and then. But beyond the formal process, the CEO needs to be thinking strategically all the time.
Line and functional managers need to control that the daily operations and culture are in sync with the strategy.
At the end of the day, the value-adding activities are performed by down the line employees that need to understand where the company is headed. "

Why Strategic Planning is Essential
"Unused planning is a wast of time. However, I have found strategic planning to be essential and vital to the success of any endeavor or undertaking. While it may be possible to reach a desired destination without planning, the waste and cost incurred is tremendously greater. Strategic planning reduces waste and increases efficiency, effectiveness. It saves both time and money."

Classical Strategic Planning Process
"Classical strategic planning was a deliberate process in which top executives periodically would formulate the firm's strategy, then communicate it down the organization for implementation. The following is a flowchart model of this process:
A. Mission
B. Objectives
C. Situation analysis
D. Strategy formulation
E. Implementation
F. Control
This process is most applicable to strategic management at the business unit level of the organization. For large corporations, strategy at the corporate level is more concerned with managing a portfolio of businesses."

S T R A T E G Y Acronym
"The word STRATEGY if you view it as an acronym is in itself is the answer. It can mean:
S = status at present
T = think
R = relook
A = act
T = target setting
E = evaluate
G = go ahead
Y = yet to be re considered."

3 Main Activities of Strategic Planning
"Simply put, strategic planning determines where an organization is going over the next year or more and how it's going to get there. Typically, the process is organization-wide, or focused on a major function such as a division, department or other major function.
We can distinguish 3 main activities within strategic planning:
1. Strategic analysis,
2. Setting strategic direction,
3. Action planning."

Shorten the Time Window of Strategic Plans
"Setting goals is extremely important within the strategic framework. However, understanding that the business environment changes more and faster than before, it is advisable to formulate short term annual strategies.
Due to rapid changes in technology, products have to undergo complete transformation. Also competitive products will change overnight.
Shortened product life cycles necessitate each strategy to be be evaluated the next year to bring forth yet another innovative strategy.
"

Is Strategic Planning Passé?
"Is strategic planning in the traditional sense passé? It may very well be given the rapidly changing environment organizations face especially in technology including social media and the collapsing financial world.
Maybe one should be planning for only 1 year, assessing and revising the corporation's strategies. The rigid structure of strategic planning may need a new model."

How Leaders See Strategy Reviews
"Leaders often want to review their strategy annually by looking at vision, mission, values and identify projects to implement their strategy, or building scorecards and strategic maps (theoretical level).
But I get the idea that they do not want to know the truth about competitors, what people really think inside and outside the company and what is actually happening in the US/Europe business world (double dip).
What causes this resistance and how do you overcome this? Are they in a comfort zone or do they lack confidence?"

Strategic Planning Models in Airline Industry
"We know every airline has a strategic plan.
Why do some achieve their goals but some don't? What are the causes of their failure?
Is there any suitable strategic planning model for the airline industry?"

Strategic Thinking versus Operational Thinking?
"What is the difference between strategic and operational thinking? Which one has the greater impact on the success of the enterprise and why?"

New Strategic Planning Models
"Please if one of you can mention and summarize any new model(s) about strategic planning, please reply.
Or maybe you can recommend a good book that reviews new models of strategic planning. Thanks for identifying them to me!"

From Traditional to Innovative Strategic Planning
"It is high time we shift from the traditional strategic management to innovative strategic management. We need to rethink our thinking on strategies. The 21st century going forward requires innovative approaches to both business and social issues.
Can I have your input / contributions in this area of innovative strategic management."

Objectives of Organisation
"Any long term planning should clearly relate to the organisation's stated (internal) objectives and values. Changes of the external environment, that is political, economical, social, technology, environment and legal may require modifications, but not changes."

Goals - Part of the Plan?
"In practice in the strategic planning process I include not only "REACH the goals, purpose and objectives", but also SETTING goals, building a tree of objectives, identification of their priorities.
Because the construction of the plan may require changes in goals."

Factors in Strategic Decision Making
"What are the factors affecting strategic decision making?"

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