Managers always look at the Strategic Planning process being a frustrating and time-consuming task. During my annual strategic plan review, I always ask myself, Where and How to start, What topics to include? Should I use a readymade template, or should I customize with an innovative tool ? How to end up with a strategic plan that Stands up from my colleague’s plans, or even from my Competitors? Is there any Best Practices in strategic planning?
In this article, I will try to define Strategy and Strategic Planning and share with the readers some of the Best Practices that a manager can use while working on his/her Strategic Plan.
Strategic planning is the process by which a company determines its Mission & Goals, its Vision, its core Values, and by which it analyses its current situation. It determines the next year objectives from launching a new product or service, opening a new market, going into merger or acquisition, opening a new retail store or defining what market share to win.
Michael Porter mentioned that the strategy could be viewed as building defenses against the competition forces or finding a position in the industry where these forces are weak (HBR, 1996).
Michael Watkins in one of his articles (HBR, 2007) stated that strategy is about how people throughout the organization should make decisions and allocate resources in order to accomplish key objectives.
A question that we may ask: Do we really need a strategic plan and Why? Planning a strategy is an important vehicle for setting priorities, making investment decisions, and laying out growth plans. Bruce Handerson in his article “The Origin of strategy” (HBR, 1989) stated, “Every company should look into the necessity to have a simple, clear, succinct strategy statement that can be used as a guide for decision making. Handerson referred to *Gause’s principle of competitive exclusion: “no two species can coexist that make their living in identical way.” This principle when applied to the business world, means that everybody is competing on the same resources. As a result, every company needs strategic planning to develop its competitive advantage and position itself accordingly in the marketplace. *(G.F. Gause was a professor at Moscow University and was known as the father of mathematical Biology)
Having a strategic plan does not guarantee that it will be achieved, and the Objectives will be reached and there are many reasons why a strategic plan is not achieved.
We heard many times about unrealized strategies with many claims that implementation has failed. A strategy may fail if there was a gap between formulation and execution. Therefore, it is advised to have some implementers on board, called by Henry Mintzberg as “Craftsmen”.
Some companies may have the perfect strategic plans but some of them do not take into consideration for the skills, knowledge and capabilities needed to execute.
A common pitfall in strategic planning when executives spend too much time on competition analysis and forget customers’ analysis. Who are they? What are they buying? Their needs ? etc….
Managers have a tendency to focus on what to do and disregard what not to do. Spending time and resources on projects that may not be achieved, or on projects that do not fit into the organization’s strategic objectives.
After introducing the Strategic planning and some common pitfalls we can face, I will discuss below some of the best practices recommended by experts in strategic planning.
Best practice 1: Use a simple 15 words strategy statement
A strategic plan should start with a simple strategy statement. Strategic planners should narrow their focus (Kenny, G., 2019) which will increase their chances to success and will limit the burning out of the company’s resources. As per Roger Martin in his HBR article “The big lie of strategic planning”, the statement should focus on simple ideas “what do you want to offer to your target customer and what you will not offer. What is your value proposition, what do you have to offer, and others will not or cannot offer”?
Best practice 2: Look into the future of your industry
Go into your market analysis using the different analytical tools available, BCG matrix, SWOT analysis, PEST, Porter’s 5 Forces. When planning strategically, it would be good to put the clock forward for five or ten years and ask what changes could occur to business/industry you are in? What changes you have to do? Know the market opportunities and plan accordingly.
Best practice 3: Focus on your Stakeholders
In strategic planning you should identify your stakeholders needs (employees, customers, suppliers), what they want from you and what you want from them, criteria on which they have decided to do business with your organization.
Best Practice 4: Set your Objectives
Goals are the big picture, whereas objectives are more specific and easier to measure than goals. Your objective is the goal you are trying to achieve. Objectives should be SMART (Specific, Measurable, Achievable, Results-oriented and Timebound). Better to have one or two objectives per plan.
Best practice 5: Identify your Incompetencies and your Capabilities
Know your Incompetencies and find out if they can be turned into competencies or strengths. Know your capabilities as they lie at the heart of your organization’s ability to achieve results. An example of a Core Competency is having an innovative Technology, a strong Brand name, or the discovery of a new drug.
Best practice 6: Test your assumptions
Insist on experiments to test the assumptions you’ve mentioned in your plan, assumptions like increase sales, increase profitability, achieve growth. List your key activities for each assumption and check if it is achievable within the specific time.
Best practice 7: Review your strategy statements frequently
It happened that we never come back to our strategic plan during the year and we never compare the next year’s plan with the one from the previous year which could be that we are missing major key learnings and it happens that we could repeat the same mistakes every year. A strategic statement and Objectives review should be done on quarterly basis and to quote from Martin, R. (HBR, 2014), Neither your competitors, nor your customers will wait for your annual strategy cycle to attack or to Change their preferences respectively.
Best practice 8: Spread your strategic reviews throughout the year
A final recommendation would be by Mankins, C., & Steele, R., (HBR, 2006), “Effective strategy planners spread strategic reviews throughout the year focusing on one issue at a time.
In conclusion, Strategic planning is a dynamic process and a set of activities whereby the company defines its roadmap, where to go, where to play, what to do and what not to do within a specific period. It is a process by which the company reviews its capabilities, its resources and identify its competencies and its unique value proposition.
Strategic planning help managers in their decision-making process and in setting up priorities. Managers should look into their stakeholders and find their needs. They should monitor their competitor’s activities and build their defenses.
At the end, Managers think that one of the main goals of strategic planning is to increase productivity, but according to Nick Tasler (2014, HBR), productivity is about getting things done whereas strategic thinking is about getting the right things done well.