Strategic planning

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Strategic planning is an organization's process of defining its strategy, or direction, and making decisions on allocating its resources to pursue this strategy, including its capital and people.

The outcome is normally a strategic plan which is used as guidance to define functional and divisional plans, including Technology, Marketing, etc.

Contents 1 Methodologies 2 Situational analysis 3 Goals, objectives and targets 4 Mission statements and vision statements 5 References 6 External links 6.1 Associations and Professional Societies 6.2 Resources

[edit] Methodologies

There are many approaches to strategic planning but typically a three-step process may be used:

• Situation - evaluate the current situation and how it came about.
• Target - define goals and/or objectives (sometimes called ideal state)
• Path - map a possible route to the goals/objectives

One alternative approach is called Draw-See-Think

• 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?

In other terms strategic planning can be as follows:

• Vision - Define the vision and set a mission statement with hierarchy of goals
• SWOT - According to the desired goals conduct analysis
• Formulate - Formulate actions and processes to be taken to attain these goals
• Implement - Implementation of the agreed upon processes
• Control - Monitor and get feedback from implemented processes to fully control the operation

[edit] Situational analysis

When developing strategies, analysis of the organization and its environment as it is at the moment and how it may develop in the future, is important. The analysis has to be executed at an internal level as well as an external level to identify all opportunities and threats of the new strategy.

There are several factors to assess in the external situation analysis:

1. Markets (customers)
2. Competition
3. Technology
4. Supplier markets
5. Labor markets
6. The economy
7. The regulatory environment

It is rare to find all seven of these factors having critical importance. It is also uncommon to find that the first two - markets and competition - are not of critical importance.^{[citation needed]}

Analysis of the external environment normally focuses on the customer. Management should be visionary in formulating customer strategy, and should do so by thinking about market environment shifts, how these could impact customer sets, and whether those customer sets are the ones the company wishes to serve.

Analysis of the competitive environment is also performed, many times based on the framework suggested by Michael Porter.

[edit] Goals, objectives and targets

Strategic planning is a very important business activity. It is also important in the public sector areas such as education. It is practiced widely informally and formally. Strategic planning and decision processes should end with objectives and a roadmap of ways to achieve those objectives.

The following terms have been used in Strategic Planning: desired end states, plans, policies, goals, objectives, strategies, tactics and actions. Definitions vary, overlap and fail to achieve clarity. The most common of these concepts are specific, time bound statements of intended future results and general and continuing statements of intended future results, which most models refer to as either goals or objectives (sometimes interchangeably).

One model of organizing objectives uses hierarchies. The items listed above may be organized in a hierarchy of means and ends and numbered as follows: Top Rank Objective (TRO), Second Rank Objective, Third Rank Objective, etc. From any rank, the objective in a lower rank answers to the question "How?" and the objective in a higher rank answers to the question "Why?" The exception is the Top Rank Objective (TRO): there is no answer to the "Why?" question. That is how the TRO is defined.

People typically have several goals at the same time. "Goal congruency" refers to how well the goals combine with each other. Does goal A appear compatible with goal B? Do they fit together to form a unified strategy? "Goal hierarchy" consists of the nesting of one or more goals within other goal(s).

One approach recommends having short-term goals, medium-term goals, and long-term goals. In this model, one can expect to attain short-term goals fairly easily: they stand just slightly above one's reach. At the other extreme, long-term goals appear very difficult, almost impossible to attain. Strategic management jargon sometimes refers to "Big Hairy Audacious Goals" (BHAGs) in this context.) Using one goal as a stepping-stone to the next involves goal sequencing. A person or group starts by attaining the easy short-term goals, then steps up to the medium-term, then to the long-term goals. Goal sequencing can create a "goal stairway". In an organizational setting, the organization may co-ordinate goals so that they do not conflict with each other. The goals of one part of the organization should mesh compatibly with those of other parts of the organization.

[edit] Mission statements and vision statements

Organizations sometimes summarize goals and objectives into a mission statement and/or a vision statement:

While the existence of a shared mission is extremely useful, many strategy specialists question the requirement for a written mission statement. However, there are many models of strategic planning that start with mission statements, so it is useful to examine them here.

• A Definition of Vision in a dictionary: 'An Image of the future we seek to create'.^{[citation needed]}
• A vision statement describes in graphic terms where the goal-setters want to see themselves in the future. It may describe how they see events unfolding over 10 or 20 years if everything goes exactly as hoped.
• A definition of Mission in a dictionary: purpose, reason for being; also, an inner calling to pursue an activity or perform a service.^{[citation needed]}

Many people mistake vision statement for mission statement. The Vision describes a future identity and the Mission describes why it will be achieved. A Mission statement defines the purpose or broader goal for being in existence or in the business. It serves as an ongoing guide without time frame. The mission can remain the same for decades if crafted well. Vision is more specific in terms of objective and future state. Vision is related to some form of achievement if successful.

For example, "We help transport goods and people efficiently and cost effectively without damaging environment" is a mission statement. Ford's brief but powerful slogan "Quality is Job 1" could count as a mission statement. "We will be one amongst the top three transporters of goods and people in North America by 2010" is a vision statement. It is very concrete and unambiguous goal.

A mission statement can resemble a vision statement in a few companies, but that can be a grave mistake. It can confuse people. The vision statement can galvanize the people to achieve defined objectives, even if they are stretch objectives, provided the vision is SMART (Specific, Measurable, Achievable, Relevant and Timebound). A mission statement provides a path to realize the vision in line with its values. These statements have a direct bearing on the bottomline and success of the organization.

Which comes first? The mission statement or the vision statement? That depends. If you have a new start up business, new program or plan to re engineer your current services, then the vision will guide the mission statement and the rest of the strategic plan. If you have an established business where the mission is established, then many times, the mission guides the vision statement and the rest of the strategic plan. Either way, you need to know where you are, your current resources, your current obstacles, and where you want to go - the vision for the future.^{[citation needed]}

Features of an effective vision statement may include:

• Clarity and lack of ambiguity
• Paint a vivid and clear picture, not ambiguous
• Describing a bright future (hope)
• Memorable and engaging expression
• Realistic aspirations, achievable
• Alignment with organizational values and culture, Rational
• Time bound if it talks of achieving any goal or objective

In order to become really effective, an organizational vision statement must (the theory states) become assimilated into the organization's culture. Leaders have the responsibility of communicating the vision regularly, creating narratives that illustrate the vision, acting as role-models by embodying the vision, creating short-term objectives compatible with the vision, and encouraging others to craft their own personal vision compatible with the organization's overall vision.

[edit] References

• Bradford and Duncan,, Simplified Strategic Planning,(Chandler House, 2000)
• Kono, T. (1994) "Changing a Company's Strategy and Culture", Long Range Planning, 27, 5 (October 1994), pp: 85-97
• P. Kotler, "Megamarketing", Harvard Business Review, (March--April 1986)
• J. Naisbitt, Megatrends: Ten New Directions Transforming our Lives, (Macdonald, 1982)
• T. Levitt, "Marketing myopia", Harvard Business Review, (July--August 1960)
• M. Lorenzen, "Strategic Planning for Academic Library Instructional Programming." Illinois Libraries 86, no. 2 (Summer 2006): 22-29.
• L. Fahey and V. K. Narayman, Macroenvironmental Analysis for Strategic Management&rdquo,(West Publishing, 1986)
• R. F. Lusch and V. N. Lusch, Principles of Marketing, (Kent Publishing, 1987)

[edit] External links

[edit] Associations and Professional Societies

• Association for Strategic Planning is a non-profit 501(c)(6) professional organization whose mission is to enable people and organizations to succeed through improved strategic thinking, planning, and action.

[edit] Resources

• Planning for Governmental Agencies is a resource that provides an article for public-sector planning by the National Endowment for the Arts.