Simply put, strategic planning determines where an organisation is going over the next year or more and how it’s going to get there. Typically, the process is organisation-wide, or focused on a major function such as a division, department or other major function. (The descriptions on this page assume that strategic planning is focused on the organisation.)
Strategic planning is an organisation’s process of defining its strategy, or direction, and making decisions on allocating its resources to pursue this strategy, including its capital and people. Various business analysis techniques can be used in strategic planning, including SWOT analysis (Strengths, Weaknesses, Opportunities, and Threats ) and PEST analysis (Political, Economic, Social, and Technological analysis) or STEER analysis involving Socio-cultural, Technological, Economic, Ecological, and Regulatory factors and EPISTEL (Environment, Political, Informatics, Social, Technological, Economic and Legal).
Strategic planning is the formal consideration of an organisation’s future course. All strategic planning deals with at least one of three key questions:
“What do we do?”
“For whom do we do it?”
“How do we excel?”
In business strategic planning, the third question is better phrased “How can we beat or avoid competition?”
In many organisations, this is viewed as a process for determining where an organisation is going over the next year or more -typically 3 to 5 years, although some extend their vision to 20 years. In order to determine where it is going, the organisation needs to know exactly where it stands, then determine where it wants to go and how it will get there. The resulting document is called the “strategic plan”. It is also true that strategic planning may be a tool for effectively plotting the direction of a company; however, strategic planning itself cannot foretell exactly how the market will evolve and what issues will surface in
the coming days in order to plan your organisational strategy. Therefore, strategic innovation and tinkering with the ‘strategic plan’ have to be a cornerstone strategy for an organisation to survive the turbulent business climate.
Planning typically includes several major activities or steps in the process. Different people often have different names for these major activities. They might even conduct them in a different order. Strategic planning often includes use of several key terms. Different people might use apply different definitions for these terms, as well.
One interpretation of the major activities in strategic planning activities is that it includes:
Planners carefully come to conclusions about what the organisation must do as a result of the major issues and opportunities facing the organisation. These conclusions include what overall accomplishments (or strategic goals) the organisation should achieve, and the overall methods (or strategies) to achieve the accomplishments. Goals should be designed and worded as much as possible to be specific, measurable, acceptable to those working to achieve the goals, realistic, timely, extending the capabilities of those working to achieve the goals, and rewarding to them, as well. (An acronym for these criteria is “SMARTER”.)
At some point in the strategic planning process (sometimes in the activity of setting the strategic direction), planners usually identify or update what might be called the strategic “philosophy”. This includes identifying or updating the organisation’s mission, vision and/or values statements. Mission statements are brief written descriptions of the purpose of the organisation. Mission statements vary in nature from very brief to quite comprehensive, and including having a specific purpose statement that is part of the overall mission statement. Many people consider the values statement and vision statement to be part of the mission statement. New businesses (for-profit or nonprofit) often work with a state agency to formally register their new business, for example, as a corporation, association, etc. This registration usually includes declaring a mission statement in their charter (or constitution, articles of incorporation, etc.).
It seems that vision and values statements are increasingly used. Vision statements are usually a compelling description of how the organisation will or should operate at some point in the future and of how customers or clients are benefitting from the organisation’s products and services. Values statements list the overall priorities in how the organisation will operate. Some people focus the values statement on moral values. Moral values are values that suggest overall priorities in how people ought to act in the world, for example, integrity, honesty, respect, etc. Other people include operational values which suggest overall priorities for the organisation, for example, to expand market share, increase efficiency, etc. (Some people would claim that these operational values are really strategic goals. Don’t get hung up on wording for now.)