A strategic plan is a crucial procedure to ensure the success of an organization. It aligns leaders with a shared plan and guides business decisions. But most strategic plans offer no real value due to common pitfalls.
According to Harvard Business School, 90% of strategic plans never fully launch. Also, most organizations don’t routinely develop strategies. Data shows that 85% of executives spend less than an hour per month discussing a plan, and 50% do not at all.
When a strategic plan helps organizations use their resources most effectively and achieve long-term success, how do we get there?
What Is a Strategic Plan and How Does It Work for the Business?
A strategic plan is a document that describes an organization’s overall goals and objectives and the methods and measures to achieve them.
It generally consists of a mission statement, situational analysis, and specific strategies and tactics to achieve the company’s objectives. The plan is generally designed to guide the company’s actions over a period of 1-5 years.
The creation and implementation of a strategic plan within a company have several advantages; here are the benefits of strategic planning:
- It helps clarify the company’s overall mission, vision and objectives.
- It provides a framework for decision-making that is consistent with the corporate goals.
- It identifies areas where the company can establish priorities more effectively.
- It shows where the business should invest and reduce its resources.
- It can help a company anticipate and react to changes in the market, the economy and other factors impacting its performance.
Mistakes to Avoid When Setting up a Strategic Plan
In creating a strategic plan, leaders should review and avoid fundamental mistakes that make strategies fail.
1. Fail to understand what the problems are.
Without a clear understanding of the problems, resources may not match the solutions. Organizations may experience resource pressures, competing priorities, or changes in external factors that may affect the plan.
We can fully analyze the internal and external environment, review and update the plan regularly with new information, and demonstrate flexibility in response to changing circumstances.
2. Fail to understand organizational capabilities.
A lack of capabilities in a company’s planning strategy may be due to a lack of communication or information sharing within the company.
To better understand strategic planning capabilities, conduct an internal audit, review, or gather employee feedback. We may also seek advice and guidance from industry experts or consultants who provide useful information and assist in identifying areas for improvement.
3. Fail to understand the cultural dimension.
Any new strategy typically exists within the framework of the previously established plans. Therefore, its conception must consider the cultural factor or experience impacting its success or failure. Executives need to assess the pattern within the company’s culture in the planning and implementation process.
How to Create a Successful Strategic Plan
As we are aware of the concerns, let’s take a look at the steps to help us build successful strategic planning:
1. Evaluate our industry, competitors and market patterns.
Our businesses must do an evaluation as it enables us to understand the current state of our industry and identify opportunities and threats. It also helps us identify and understand our competitors and stay abreast of the latest trends and changes in the marketplace, enabling us to stay ahead of the competition.
2. Identify opportunities using SWOT analysis.
An internal business review will establish the strategy in parallel with an external market assessment we conducted in the previous phase.
SWOT analysis is a tool to identify internal and external factors which may affect a company. It will shine a light on our organization’s strengths, weaknesses, opportunities and threats. We can develop offensive and defensive strategies as we get that information.
3. Integrate the business mission and vision.
Reviewing and integrating the organization’s mission and vision into people’s hearts is critical at the early stages of strategic planning. People will do their best when they achieve meaningful goals. So our job is to inspire people through a strategic plan that aligns with the company’s purpose.
4. Identify business priorities and objectives.
After conducting external and internal evaluations and embedding a compelling vision, it is essential to focus on specific goals and priorities to achieve that vision. Here is a critical part where leaders engage in deep analysis to define actions to move the organization forward.
5. Establish Key Performance Indicators (KPIs) and Key Initiatives.
KPIs are measurable values that show how an organization achieves its primary goals. They provide a clear, measurable way to track progress toward the goals. For example, a KPI for a sales department can be the number of newly acquired clients.
On the other hand, key initiatives are the company’s actions to achieve its objectives. It also covers the company’s actions in achieving KPIs. For example, to meet the sales business objective, a key initiative could be to launch a targeted marketing campaign to attract new customers.
6. Identify staffing, budget and funding needs.
The key components of strategic planning are:
We need to assess the number, types and qualifications of employees to meet targets. It covers the number of full-time and part-time staff, contractors or consultants who may be required.
Budgeting includes identifying the costs of materials, equipment, rent, utilities and other expenses, as well as personnel and marketing costs. The budget must also account for any unforeseen expenses that may occur.
To implement the strategy, a company must look at funding. It includes identifying allocation sources, such as loans, equity investments or subsidies. The company must also consider the financing terms and conditions as they may affect cash flow and profitability.
7. Follow up on quarterly success metrics.
Progress monitoring is required to ensure the plan is implemented or to identify the required course correction. A quarterly review of activities includes a status report on the implementation of the strategy using KPIs. To gather quarterly progress reports, utilize scorecards or dashboards.
Just because a plan has been formulated does not imply that it guarantees the company’s future success. A successful strategic plan needs excellent analysis, comprehensive support, and the action to track.