A one-page strategic plan is an essential tool for every company. It helps managers prioritize goals and plan to achieve long-term organizational aims. Strategic plans can be very beneficial in spelling out where a company will go in the future and how it will get there.
Strategic planning is an important step you must take if you want to achieve the goals that you have set for your business.
Overview of Strategic Planning
Organizational planning is of great importance in any organization as it helps align the goals and objectives of the respective department and the organization. It provides vital roles and responsibilities to be fulfilled by all the employees, based on which they plan accordingly. For instance, the IT department needs to make sure that the business software is upgraded to the advanced technologies to be more effective and efficient for performing day-to-day operations.
Importance of Strategic Planning
Strategic planning is a formal organizational management process. In this process, it is the focus of resources to analyze the company’s current situation, set priorities, and achieve and maintain an organization’s competitive advantage. Although most companies are aware of the importance of strategic planning, most companies only review the reports once a year and put them on the shelves despite the tens of dollars they spend. However, successful strategic planning can provide many benefits for your company. Here is what strategic planning will bring to your company!
It Makes The Company Proactive Instead of Reactive
A strategic plan enables companies to foresee their future and prepare accordingly. Thanks to strategic planning, companies can anticipate some adverse scenarios and take the necessary measures to prevent them. Companies can also be proactive with a strong strategic plan as problems arise rather than simply reacting to the situation. Being proactive ensures that organizations can keep up with the ever-changing trends in the market and always stay one step ahead of the competition.
It Increases Operational Efficiency
Management needs to map out its functional activities to achieve the set goals. The best way to do this is through strategic planning. This planning guides the decision-making processes to realize the set objectives and thus increases operational efficiency.
It Determines the Direction of the Company
Strategic plans help define the direction in which a company should move forward, helping to establish realistic goals in line with the associated vision and Mission. A successful strategic plan provides information about how the organization has grown and its success. This information plays a significant role in determining the direction of the company.
It Helps Increase Market Share and Profitability
Valuable insights into market trends, consumer segments, and products and services that can impact the company’s success can be gained through a tailored strategic plan. Well-directed approaches to turn all sales and marketing efforts into the best possible results will help increase profitability and market share.
It Can Make a Business More Resilient
Business is a turbulent concept. A business may experience profits for one year and losses for the next. Organizations that lack a strong foundation, focus, and foresight will have trouble riding the next wave with changing industries and world markets. According to reports, one in three companies that are leaders in their industry may disappear within the next five years. However, these rates will not be valid for companies with a strong strategic plan!
What are the steps of the strategic planning process?
The Strategy Plan basically consists of three stages. These are 1. Strategic plan preparation process 2. Strategic plan creation process 3. The strategic plan implementation process
- Strategic Plan Preparation Process
Strategic plans are not plans that can be prepared under the responsibility of a person or a department in enterprises. The strategic plan is a team and leadership job. It can emerge as a product of the joint work of different departments in cooperation under a person’s coordination to lead.
If you have a strategic plan in the middle and you renew this plan every year, you need to make an effort of 4-5 weeks for this process. If you have not prepared a strategic plan before, a period of 5-6 months would be a more realistic time for the plan preparation process.
Once the team and time are determined, you should start the process by collecting your internal and external quantitative data necessary for the plan preparation phase. For example, in the internal data, you will collect, it will be revealed that you are more successful in some subjects and less successful in others. In external data, you will obtain data on the structure of your industry, competition and market conditions, and political and technical developments. The data you collect will provide you with information on how it contributes to moving your business into the future, what obstacles it creates, and what improvements you need to make for this. You will need to discuss these issues with your team, clients, and industry experts.
Many tools and techniques have been developed to make this data meaningful and turn it into useful and guiding information. You should definitely apply some of these tools during the Strategic Plan preparation process. Some of these tools and techniques are as follows.
- Stakeholder Analysis
- SWOT Analysis
- PESTLE Analysis
- VRIO Analysis
- Blue Ocean Strategy
- PORTER’s 5 Power Analysis
- Strategic Plan Creation Process
Now you have all the necessary background information to create your strategic plan! Now it’s time to define a mission and vision for yourself. In this way, you will describe yourself with clearer and clearer expressions. For this, you will need to create your vision and mission statements.
The vision informs about the future goals of the business. “What is our purpose, where do we want to come?” answers questions such as Mission gives information about the purpose of establishing the business. “Why did we start this company? Who do we serve? What are our activities?” answers questions such as For this, you will need to review the statements of your competitors and industry with market research.
It’s time to define your goals and objectives. We will recommend you use Balanced Scorecard (BSC) for this. BSC, as a strategic management tool that reduces financial goals to other dimensions, as a result of the inadequacy of financial strategies and metrics in the early 1990s, was developed by Dr. Robert S. Kaplan and Dr. Developed by David P. Norton.
BSC is a tool to define and measure your goals in 4 main areas. These:
- Financial Objectives (What financial goals do we have that will affect our business?)
- Customer Objectives (What is essential to our customers, and how does it affect our financial position?)
- Process Objectives (What are the things we need to do internally to achieve our goals? How does this affect our financial situation?)
- Learning Objectives (What skills, culture, and capabilities are needed in our business to manage the process that will keep our customers happy and ultimately affect our financial situation?)
Within the scope of the Balanced Scorecard, it is recommended to determine an average of 10-15 goals. Examples of goals could be:
- Increase market share with existing customers (Financial)
- Be service-oriented (Customer)
- Ensure order fulfillment excellence with online process improvement (Process)
- Align incentive and reward systems to increase employee satisfaction (Learning and Growth)
After the objectives are determined within the scope of the BSC, these objectives should be measured. In this context, it is recommended to define 1 or 2 performance criteria for each purpose. In other words, a total of 15-25 performance criteria are defined. Examples include:
- Cost of goods sold (Financial)
- Customer satisfaction and retention rate (Customer)
- Percentage of product defects (Process)
- Effectiveness of incentive systems and employee participation rate (Learning and Growth)
- Strategic Plan Implementation Process
Now our strategic plan is ready. Now it’s time to turn our strategic plan into actions and the implementation process. Our next article focuses on the preparation process of strategic action plans to which actions are added. We recommend that you read our Strategy Action Plan article before proceeding with the implementation process. After the Strategic Action Plans and the actions and their projecting phase are created, these plans should be implemented.
With strategic action plans, the duties and responsibilities of each department and employee within the enterprise should be clearly defined. In addition, questions such as to what extent this plan will be shared with your external stakeholders and which stakeholders will be informed at what stages of the plan should also be clarified.
After turning your strategies into actions and projects, it’s time to hold regular strategy meetings. For this, we recommend monthly or at least three monthly meetings. In the interviews, it is necessary to discuss how much of your actions have been achieved in terms of your goals and objectives, how many of the projects have been completed, the resources allocated for this, and time and budget.
Business strategies must be determined correctly in today’s competitive and market conditions. Strategy action plans are a roadmap process that both public and private sector organizations should own. But unfortunately, many businesses either do not have this plan or cannot carry out the preparation and implementation processes correctly.