Introduction
Do you feel like you’re spinning your wheels or directionless in your business and leadership? It might be a sign that you’re lacking strategic planning. In this article, we’ll explore in depth what strategic planning is, how it works, a specific example, and some common pitfalls to avoid.
Strategic planning is crucial for businesses that want to stay ahead of the competition. By conducting a thorough analysis of the organization’s current situation and setting clear goals and objectives, strategic planning can help leaders make informed decisions about how to allocate resources. This can lead to more efficient and effective use of resources, which can give the organization a competitive edge.
Strategic planning is the process of aligning corporate goals with the resources and capabilities necessary to achieve those goals. Effective strategic planning can create a positive impact on a company’s ability to innovate, compete, and be successful.
Regularly reviewing and updating the organization’s strategic plan can also help leaders stay ahead of changes in the market and adapt to new challenges and opportunities. This can help the organization remain agile and responsive, and maintain its competitive edge.
Understanding strategic planning: what is strategic planning?
Strategic planning can feel like “business-ese,” one of those words that’s constantly thrown around but no one really knows what it means. It’s really not all that complex when you get down to it.
The goal of strategic planning is to develop a clear and unified vision of the future, and identify the steps and resources necessary to get there.
Strategic plans usually begin with an overview of the organization’s current situation and objectives, followed by an analysis of internal strengths and weaknesses, and external opportunities and threats.
From there, the plan outlines specific strategies to be implemented and goals to be achieved.
Any true strategic plan must also include an evaluation process to track progress and evaluate results. After all, as the saying goes, if you aim at nothing, you’ll hit nothing.
Indeed, you should be doing annual re-evaluations of your vision and goals to make sure you are aligned with your strategy. At times, you may need to re-frame your vision and goals.
What are the elements of a strategic plan?
A strategic plan consists of several key elements, including:
• Mission statement: A concise statement of the organization’s purpose and direction.
For example, a mission statement for a software company could be, “We will build software that unlocks the potential of small businesses by offering cloud-based solutions that are easy to use, dependable, and affordable.”
• Goals and objectives: Detailed targets that help define the mission statement in concrete terms.
For that same software company, these goals and objectives might be something like:
- Launch a new software product within 6 months.
- Achieve 30% market share within two years.
- Increase customer satisfaction to 80% by year five.
• Strategies: Specific actions to be taken to achieve the goals and objectives.
Again, taking our same software company and the goals above, the strategies might be:
- Hire a top-notch software development team to design and build the new product. Begin by recruiting at top-ranking universities for recent graduates in computer science. Offer lucrative compensation to draw in top talent.
- Recruit new team leaders for the sales and marketing teams who will create and implement a new sales and marketing plan. Create a commissions-based sales incentive for top performers.
- Launch a customer satisfaction survey to measure and improve customer satisfaction. Create an expectation for managers to personally follow-up with every customer that expresses dissatisfaction, ensuring that everything possible is done to turn around that customer’s opinion of our product and company.
• Tactics: Specific steps to be taken to implement the strategies.
For that first strategy, some tactics might be:
- Meet with the career advisors of top-ranking computer science universities to build relationships and discuss our need for new talent.
- Create job postings for the open positions and post them to the school’s job boards and other job sites.
- Hold informational interviews with potential candidates.
- Reach out to potential candidates on LinkedIn and other social media sites.
- Reach out to former interns who have expressed interest in returning to our company.
• Resource allocation: A plan for how to use the resources available to accomplish the plan.
For these strategies, resource allocation might include:
- Allocate money to hire a full-time recruiting team.
- Allow the marketing team to create a budget for their plans.
- Hire a customer service manager to oversee the customer satisfaction survey.
- Assign personnel to handle customer follow-up calls and emails.
What are the specific steps in the strategic planning process?
The strategic planning process typically involves the following steps:
- Conduct an environmental scan: Review the organization’s internal and external surroundings. What are your organization’s strengths, weaknesses, opportunities, and threats?
- Develop a vision and mission statement: Establish a set of goals, objectives and values for the organization.
- Set goals and objectives: Align the vision and mission with specific goals and objectives.
- Identify strategies: Develop specific strategies to reach the desired goals and objectives.
- Develop action plans: Create specific tactics for implementing strategies.
- Monitor progress: Track progress and measure results to ensure that the strategies are meeting the desired objectives.
- Review and revise: Evaluate the strategic plan and revise it as needed to stay competitive.
Strategic planning case study: Ford Motor Company
A case study example of strategic planning in action is the successful turnaround of the Ford Motor Company.
In the early 2000s, Ford was facing a number of challenges, including declining market share, quality issues, and increasing competition.
Some of the specific challenges they faced were
- An aging product portfolio
- A slow decision-making process
- An inefficient use of resources
- A reputation for poor customer service
To address these issues, the company developed a comprehensive strategic plan. This included a focus on streamlining operations, improving product quality, and launching new vehicles.
In addition, the company invested in technology (especially in the areas of research and development) to stay ahead of the competition.
Some of the specific examples of changes made by Ford included:
- Introducing the One Ford system, which streamlined product development and delivery.
- Closing unprofitable factories and opening new factories in more cost-effective locations.
- Investing in new technologies, such as electric vehicles and self-driving cars.
- Refocusing its marketing efforts on its Ford brand rather than its other brands.
- Restructuring its dealer network to create a more efficient sales and service experience.
These efforts helped Ford return to profitability and regain market share. Today, Ford is one of the world’s leading automakers, employing over 185,000 people and producing over 4 million vehicles per year.
While not a perfect company, Ford continues to show some strong strategic leadership, even in the face of strong headwinds and stiff competition.
What is the role of leaders in the strategic planning process?
Leadership plays an essential role in the strategic planning process. Leaders should provide direction and guidance, as well as inspire engagement among team members.
Leaders ultimately must be accountable for the plan’s success and ensure that the resources necessary to achieve the goals are available.
For example, one executive known for his focus on strategic planning is Steve Jobs, former CEO of Apple. As the head of Apple, he was responsible for developing and executing a vision for the company. Through his leadership, he was able to turn Apple into one of the world’s most innovative and successful organizations.
His approach to leadership focused on setting a clear vision and objectives, surrounding himself with talented people to execute the plan, and having a willingness to take calculated risks.
His leadership was essential to Apple’s success, and it is no surprise that he is often cited in leadership books. He was not a perfect leader — in fact some of his tactics are quite controversial — but he is certainly a respected one.
When a company faces a roadblock in executing a strategic plan, the leadership is always ultimately responsible for evaluating the problem and finding a solution.
The leader should assess the situation, consult with their team, and take action to address the problem. Depending on the situation, the leader may need to quickly pivot and develop an entirely new strategy, or adjust their existing strategies to better meet the objectives.
Leaders set the tone of the organization. Strong strategic leaders motivate and inspire their team to work together to find solutions and move forward,. while weaker leaders will lead teams that crumble under the inevitable pressure of competition.
This is part of the reason why many leaders today pursue leadership coaching to help support them as they lead.
What are some common challenges in implementing strategic planning?
Challenges in executing strategic plans are inevitable. Some common ones include:
Poorly defined goals and objectives: The plan should be clearly communicated and understood by all stakeholders so everyone knows what’s expected.
One example of this challenge is having vague or overly ambitious goals without sufficient resources or follow-through. Vague goals might be something like, “Increase customer satisfaction.”
How is that measured? How will it be improved? By when? Poorly defined goals can never be achieved and lean to forever spinning your wheels.
Lack of executive leadership: Without active, motivated (and motivating!) executive leadership, strategic plans can fall apart before they’re even implemented. The executive team needs to be engaged and clearly committed to the strategic plan in order for it to succeed.
You can’t drop an impressive goal and then just walk away thinking your team will magically make it happen. You have to walk alongside them throughout the process.
On the flip side, you can’t expect your team to implement a massive new strategic focus without executive buy-in.
Inability to prioritize: Prioritizing tasks within the plan is essential to success.
Without a clear picture of what’s most important, teams can become overwhelmed and spread themselves too thin, spreading resources or attention too thinly across multiple initiatives. This guarantees that all of the initiatives will be done poorly, if at all.
Plans that are too rigid: Strategic plans must be regularly adjusted in order to stay relevant, but at the same time toomuch change can make it difficult to stay on track. This can be a fine line to walk as an organization.
Organizations must strike a balance between maintaining a focus on goals and objectives, and adapting to changing circumstances.
Lack of resources: Strategic plans require resources, such as personnel, money, and time, to be successful. Having too few resources can significantly hamper the implementation process.
When designing plans, you have to be realistic about the resources you have available and develop plans that are achievable within those parameters. Otherwise, both you and your teams will be frustrated.
Lack of commitment: Without the commitment of the key stakeholders, strategic plans are unlikely to be effective. Buy-in from members of leadership and key stakeholders within the relevant teams across the organization is essential for successful implementation.
Resistance to change: People often resist change. Why? Change can be intimidating, exhausting, and uncomfortable.
People are creatures of habit and often do not want to step outside of their comfort zone. It takes a lot of time, effort, and resources to implement a strategic plan, which can make even the most dedicated employees resistant.
Leadership must have the ability to help people understand the need for change, and inspire them to willingly work through it.
No clear measure of success: The plan should include a way to measure success. Without it, it will be difficult for leaders to determine if the plan is achieving its goals.
How will you know when you have arrived? Successful strategic plans must have an end goal in mind that can be measured in order to track progress.
This end-goal might include common metrics like market share, customer satisfaction, or compliance. A specific example might be, “Increase market share by 10% in the next quarter” or “Improve customer satisfaction ratings in after-sale surveys by 5% in the next year.”
Leaders must develop key performance indicators that help track progress and provide visibility into the plan’s efficacy.
Lack of clarity over roles and responsibilities: Responsibilities should be set out clearly so everyone knows their part in the process. This is one of the keys to working well across teams in an organization and is no less applicable to strategic planning, even from the top-down.
Conclusion
Strategic planning can be a complex process with many different challenges. But, with strong leadership, clear objectives, and commitment, an effective plan can be developed and implemented.
Leaders must be able to evaluate the challenges, assess the needs of the organization, and develop an actionable plan. All stakeholders must be engaged in the process, and the team must be held accountable via clear goals and metrics.
Ultimately, strong leadership is essential to successful strategic planning. If you desire to grow as a leader and want someone to walk alongside you in that process, helping you turn your dreams and goals into action, book a free initial consultation with one of our coaches at Leadership Coaching Network. We’re here for you!