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August 3, 2021

Business

7 Essential Steps in Strategic Planning

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What is Strategic Planning?

Think of strategic planning as a company’s roadmap for success. It lays out a plan for moving forward, sets milestones to reach along the way, and tracks the progress of those milestones. When done effectively, strategic planning can give your company a sense of direction, reveal ways to improve performance, and rally everyone around a common goal.

As a future leader, learning how to develop a strategic plan can provide lasting value to your organization—and it’s one of the important skills you’ll learn in a business degree program.

What are the Steps of Strategic Planning?

Creating a strategic plan is a multi-step process in which one step builds off the other. Here are seven steps to consider:

1. Establish Your Strategic Position

Positioning is a fundamental step of the strategic planning process. Its purpose is to clearly define what sets your organization—and the product or services it offers—apart from the competition.

Strategic positioning is a team effort that typically involves stakeholders of the organization’s finance, marketing, and sales departments. It requires decision making about priorities, what value your products and services offer customers, and how they'll be made and marketed by your company.

Laying out a strategic position involves two things:

  • Determining the kind of value your product will offer to your consumers
  • Deciding how that value will be created differently from your competition

These decisions help lay the foundation for how your organization will operate and inform the strategic choices that will be made in your planning process.

2. Identify Objectives

Strategic planning is all about establishing a roadmap for success, and objectives are the mileposts that determine whether your organization is on the right path. Objectives are clear, measurable goals that are communicated in terms of quantities and timelines. This can be part of a mission statement, a vision statement, or a business plan.

There are multiple ways to set and measure goals. One popular way is using key performance indicators, also known as KPIs. KPIs are measurable values that set a standard for success and track a company’s effectiveness in achieving its objectives.

An effective KPI should follow the SMART goal-setting framework, which means it needs to be:

  • Specific: An effective KPI should be detailed, simple, and clear. For example, “Improve sales” is too broad.
  • Measurable: KPIs need to be measured quantifiably, whether that’s in dollar amounts, percentages, or raw numbers.
  • Achievable: Ensure your KPI is actually attainable and that your organization has the resources to support it.
  • Relevant: Make sure your KPI aligns with a larger business objective.
  • Time-bound: Good goals have a timeline that’s both ambitious yet realistic.

In addition to being SMART, objectives in a business plan should also:

  • Line up with your company’s overall vision. Any objectives you create should be cross-checked with your mission, vision, and values to confirm they’re all aligned.
  • Consider potential risks. Companies are often exposed to a variety of risks related to the development and implementation of their business strategy. When creating new objectives, it’s important to ensure your company is being as safe as possible and taking into account the likelihood of a financial, physical, or technological problem.

3. Analyze the Industry, Competitor, and Customer Trends

To create the most effective strategic plan for your organization, you need to fully understand the landscape you’re working in. This is known as an industry analysis. A thorough analysis plan helps you take a deep dive into your industry, consumers, competition, and potential trends within your niche. You can analyze your competitive advantage, business model, strategic objectives, and long-term goals. This can empower everyone, from employees to board members, to know the best steps to take in every area of the company. 

The data gained from industry analysis can help identify how your organization measures up against its competition. It can also point out potential threats to your organization, as well as opportunities. Armed with this information, you’ll be better equipped to plan for the future of your business.

But how do you conduct an industry analysis?

There are two common methods to consider:

  • A SWOT Analysis: SWOT stands for Strengths, Weaknesses, Opportunities, and Threats. This method helps you identify your company’s internal weaknesses and strengths and the external forces—like market trends—that could impact your business.
  • A PEST Analysis: An alternative to SWOT is a PEST analysis. This method pinpoints organizational threats and opportunities through the lens of Political, Economic, Social and Technological factors.

Industry analysis isn’t meant to be a one-and-done activity. It’s important to look into the competitive landscape on a regular basis so that your organization can continue to grow, improve, and find new ways to disrupt the market.

business planning

4. Create a Strategic Planning Team

Strategic planning can’t be done in a silo. Involving the right people in your organization will give you extra sets of eyes and expertise, ensuring that important details don’t slip through the cracks.

So, who should make up a strategic planning team?

Every team will look different based on your organization, but for starters, you can tap into managers from your finance, marketing, or HR departments. A team that has diverse ideas and perspectives will only strengthen yours. In fact, according to an article by Fierce Inc., “Without diversity of thought, innovation is thwarted, initiatives may stall, and you alone cannot save your organization. You need to approach issues with a number of perspectives to be able to see the whole truth.”

With a diverse group of people on your planning team, you’ll know people from all sides of your organization are working together to push things forward.

5. Create an Actionable Plan

Now that you’ve established your strategic position, objectives, industry analysis, and a team to support it, it’s time to create a plan of action. An action plan is a series of steps that outline how your company will use its strategies to meet its goals.

This plan should clearly outline:

  • What action needs to happen
  • Who will carry it out
  • When it will be executed
  • What resources are needed to make it happen

There are many moving parts to this process, which is why utilizing a visual tool—such as a strategy map, can be beneficial. This map can help your team see the entire strategic planning method laid out in one simple visual.

6. Communicate Your Plan

The quickest way to sabotage your organization’s strategy is failing to communicate it. Research shows that, on average, 95% of a company’s employees don’t understand its strategy. To ensure your plan is successful, everyone in your organization needs to be aware of the how and why of your goals and what they can do to help reach them. This creates a united vision with everyone working together.

Because everyone absorbs information differently, it’s important to communicate your strategic plan in several different ways. For instance, if you only send out an e-newsletter, there’s a good chance some employees might not open it or even read the entire email. Instead, use a multi-channel approach such as:

  • A company-wide meeting
  • An announcement in your company newsletter or blog
  • A video from leadership breaking down the new strategy
  • A detailed handout passed out among employees or posted on a bulletin board

You should continue to communicate your strategy routinely (whether that’s every month or quarter) and keep your people in the know when there are changes or updates to the plan.

7. Assess and Revise the Plan Regularly

Once your strategy is launched, you’ll need to know how it’s working. After all, good planning is just part of the process. The other part is consistently checking in on how your organization is progressing toward its goals. A quarterly or monthly review with your strategy team is a good way to check in on your efforts. As you're reviewing your progress, see what worked and what didn’t. Also, look at whether you hit your numbers and deadlines. It’s common for a strategic plan to need some updates along the way, whether that’s revising the timeline, resources, or people working on the plan.

Remember, the strategic planning process is meant to be a constant work in progress. With a committed and communicative leadership team, your organization has a better chance of seeing its vision come to life.

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