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Strategic Planning

Strategic Planning refers to the entire set of processes and behaviors that an organization uses to identify, prioritize, focus, and schedule action in order for it to remain viable in the future. Most organizations do a great job of planning, but they fail when it comes to plan execution.

A poor plan effectively executed is infinitely better than a great plan collecting dust!

Overview
The need for organizations to plan for the future is as old as business itself. Organizations that fail to adapt to changes in their environment cease to exist. In his book The Practice of Management (1954), Peter Drucker noted that managers not only have to determine "what is" the business of the organization, but they have to determine "what will be" the business in the future. The term "Strategic Planning" became popular in the late 1960's and early 1970's as the method organizations used to transform themselves in order to meet the needs of the future.

Strategic planning is necessary because the environment that organizations operate in is constantly changing. There are many forces operating on the organization and most of them are outside of the organization's control. To be remain viable in the future, the organization must anticipate the force changes and act to position itself for success.

There are as many processes for analyzing the organization's dynamic situation and determining its strategic direction as there are planning management books and consultants. There is no secret recipe for organization success, but each planning process tends to sort the dynamic forces affecting the organization into four categories called Strengths, Weakness, Opportunities, and Threats (SWOT). In general, one of these categories will be the primary factor driving organization change. Market leaders tend to leverage their strengths to take advantage of emerging market opportunities. Market trailers tend to improve their weakness in order to defend against market threats. Regardless of the situation, if the organization does a good job of identifying its strategic direction, it will act to focus and drive the organization toward achieving its vision of the future.

The next planning step is to deploy the strategic direction throughout the organization. This involves breaking the strategic direction into smaller, more manageable objectives and creating detailed implementation plans. Activity owners are assigned and milestones are identified. Finally, the entire plan is documented and distributed to key people in the organization.

Unfortunately, the biggest failure of strategic planning is not identifying what the organization should do; it's executing what it said it would do. In their book, Execution by Larry Bossidy and Ram Charan, they note, "When companies fail to deliver on their promises, the most frequent explanation is that the CEO's strategy was wrong. But the strategy by itself is not often the cause. Strategies most often fail because they aren't executed well. Things that are supposed to happen don't happen."

Strategic planning is an essential element of organization management, but it will only be effective if it is actually used to transform the organization!