What Is Strategic Planning Really?

Why Does Your Company Need a Strategic Plan?

Strategic planning, as a structured and systematic process, is successful when it is leader-led and overcomes the five reasons 70% of all strategies fail.  The strategic planning process is where leaders of an organization establish the vision of the organization’s future and then develop and implement the actions necessary to achieve that future.  This article expands on the strategic planning concepts addressed in Think Big, Take Small Steps and is designed to help you achieve success in your strategic planning process.

For many business people, strategic planning is a very foreign language.  When I discussed the importance of strategic planning late last month, several people were probably giving the post a “deer in the headlights” look.  The problem lies in the common definition of what strategic planning is.  This lack of common definition causes everyone to form an opinion about what strategic planning is and then why they think they do not need it for their business.

Today I will distill the term strategic planning and demonstrate why it is so important to business success.

Understanding Planning

The Latin word for “Plan” is “Cogito.”  Cogito is defined as to think, ruminate, ponder, consider, and plan.  Plan; however, can be an action verb meaning to decide on and arrange in advance, or a noun meaning a detailed proposal for doing or achieving something.  Confusion starts with whether you use the word “plan” as a verb or noun.  No wonder everyone is confused.

An actual plan is any diagram (like a schematic) or list of steps with timing and resources, used to achieve an objective.  The common understanding of “plan” is as a set of intended actions, through which one expects to achieve a goal.  Plans can be formal or informal.

The most popular ways to describe plans are by their frame of reference or purpose, breadth, time frame, and specificity; however, these planning classifications are not independent of one another.  For instance, there is a close relationship between the short- and long-term categories and the strategic and operational categories.

Planning is setting performance expectations and goals for groups and individuals to channel their efforts toward achieving objectives.  It also includes the measures used to determine whether expectations and goals are being met.  Planning, in essence means to develop a plan and keep it going.

Where a lot of the additional confusion arises is in the specific types of plans that are out there.  Many times I have worked with different groups of people who say they are doing “strategic planning,” when in fact, they are not.  There are many different types of strategic plans — all this tends to get very confusing so let me break these plans (and thus planning — the act of developing the plan) into easy to understand categories:

Plans fall into two different categories:  Level and Type.  First, I will define the two categories, and then I will provide some examples to help you understand the application.

Level.  The level of planning is broken into Strategic, Operational, and Tactical.  The best way to explain these three levels is to look at it from the reverse — tactical first.  Tactical is your day-to-day, project-level activities.  Tactical plans are short in duration (weeks to months) and usually implemented at the lowest level (not always developed there though).  Operational plans are normally at the program level — there usually are several tactical plans that make up one operational plan and a few operational plans in a strategic plan.  Operational plans are somewhat broader and longer lasting than tactical plans (months to years).  Strategic plans are at the highest level.  There normally is only one of each type (see below) in an organization.  They are very long term (many years) and should drive all other (operational and tactical) plans (see figure below).

Type.  There are many types of plans and as noted, there can be different levels of each type of plan.  Generally the different types of plans follow somewhat functional lines.  Some examples of plan types are business, financial, communication, marketing, information technology, etc..  This is the area that really confuses people, especially when you have the same level plan in an organization (e.g., A company has a strategic plan, strategic communications plan, and an information technology strategic plan).

As you can see, between the different definitions, the different levels, and the different types, the whole subject of strategic planning (or any planning for that matter) can get very difficult to follow.

Let me give you a few examples of situations and the plans that would accompany them:

• Your supervisor tells you that the organization is trying to account for all the computerized assets they own and he directs you to conduct a major inventory and determine how to keep track of all the computer hardware and software for the 50 personnel in the section — you would develop a Tactical Information Technology Plan.
• Your office has a new product line that has been out for a few months and is not selling well.  In line with their communications strategies, they want you to develop and implement a marketing program for the new product — you build an Operational Communications and Marketing Plan.
• As the new CEO of a small business, you were hired to improve the company.  You see they lack direction and have a host of problems.  You sit down and work with the organization to build and implement a Strategic Business Plan.

As you can see from the above examples, each of the plans developed are slightly different in their operational level and function; however, they are all just plans — a list of steps with timing and resources used to achieve an objective.  The important thing is to understand the hierarchy of organizational plans and the differences between them.

A real world example of planning at its finest would be United States (US) National Strategy.  The US develops an overarching National Strategy Document that outlines the country’s focus as a sovereign nation — this encompasses diplomatic, information, military, and economic realms and is at the strategic level.  Both operations in Iraq and Afghanistan were major operational plans of activities that focused mainly on military, but also encompassed diplomatic, information, and economic activities.  At the tactical level, specific actions were occurring over time to achieve these operational plans.

The Organization’s Strategic Plan Trumps All

“If you don’t know where you are going, any road will get you there.” ~ Lewis Caroll

Lewis Caroll’s quote from “Alice’s Adventures in Wonderland” is commonly referred to in many books and statements regarding planning.  This quote; however, is especially important to every organization’s Strategic Plan.  This is the granddaddy and mother rabbit of them all!  If your organization does not have a published and well understood strategic plan, then somewhere in your organization someone is wondering why they are doing what they do.

Every plan that exists in your organization and every action in your organization should harken back to the Strategic Plan.  If you are doing something that is not listed as an important strategy for the organization that either the strategy is wrong, or what you are doing is wrong.  Something needs to be fixed.

If you do not have a strategic plan or you do but it if it does not influence anyone or anything, then something is wrong.

The first question I ask as a consultant is, “Why are you doing this?”  The correct answer should link back to the organization’s strategic plan.  (e.g., “We build these widgets because it allows our customers meet their needs, which is our purpose outlined in our mission.”)

Overcoming the Reasons Not to Strategically Plan

Recently I read a couple articles on Yahoo Voices on why firms should skip strategic planning (Morningside) or why strategic planning is a waste of time (VanAmee).  That prompted me to do a little more research into the subject and identify the reasons some think strategic planning should not be done (Reynolds).  That finally drove me to write this blog.

In a future article, I plan to discuss when a company really needs a strategic plan and when they do not.  Sometimes, a company is in so much trouble that they need a crisis action plan and they can focus on strategic planning when they get through the crisis.  This section; however, relates to why companies feel they don’t need a strategic plan at all:

1.  Overcoming the bad taste in their mouth.  Face it, not only have I seen, but I helped create many strategic plans that do nothing but collect dust on a shelf — what I refer to as “shelfware.”  I have worked with many organizations that have been bit by the “planning bug” too many times and they are downright sick of it.  You hear them say things like, “This is just another management fad,” or “We’ve tried that before and it didn’t work.”  Let me tell you — the reasons you tried it before is because you needed it then and you need it now.  The problem is the way you developed the plan was flawed and it was no good, or you failed to implement it — chances are, both of those reasons are correct.  Get yourself a professional and invest some time and money in solidifying your company’s future.  That means dedicating resources to planning year-round, not just once.

2.  The belief that strategic planning is a waste of time and money.  This excuse always kills me.  I talk about this in my previous blog on the importance of strategic planning.  Planning is about preparing yourself for the future…about thinking ahead.  If any organization thinks that it can operate by the seat of its pants and stay in business, this would be why 7 out of 10 small businesses fail.  It costs an organization a minimum of 25% more money to react to an unplanned situation than to plan for and be ready when the event happens.  In rework alone dealing with a crisis, the cost can destroy a company.

3.  It is not the right time or we are alright.  Every organization should have a strategic plan, they should review their progress regularly against that plan, and they should update that plan annually.  If you are alright now, then now is the best time.  The speed of change in the world today is so intense that any organization that sits back on its laurels and thinks it is doing ok is about to be out of business.  The proverb, “There’s no time like the present,” seems to fit right here.

4.  Fear of change that comes from strategic transformation.  Strategic planning means changing your organization.  You determine where you are, develop a vision of where you want to go, and lay out a plan to get there — transformation.  The official term for fear of change is Metathesiophobia.  This fear can severely reduce one’s will to continue in life; sometimes one may feel like they have no control in life and may want to end it.  Those with this fear constantly look back on the past and wish it would come back, but know it will not; they are willing to do anything to go back and tend to fill themselves with false hope or lose faith in life.  If you do not think this is real, read “Who Moved My Cheese.”

5.  We are just too busy to plan right now.  Excuse me, but there is a reason for that.  You are too busy right now because you have not and are not planning, thus you are running around like a chicken with your head cut off.  Good strategic planning will help you overcome the “we’re too busy to do anything productive” syndrome.

6.  Developing a plan is too much work.  Strategic planning, just like proper education and training, quality improvement, etc., will always be “work” for a company.  Too much, would be because of an over-emphasis on the planning process.  Having someone conduct an organizational assessment and taking a day or so once a quarter to emphasize the direction of the organization is nothing to the results you will gain.  All too often, planning becomes a “get around to it” type of thing, when it should be the most important thing leadership does — they set the vision and evaluate the organization’s progress achieving it.  Along the way, they adjust their effort and resources to continue to move closer to success.

7.  People are rewarded for the wrong thing.  Have you ever worked in an organization where people were rewarded for crisis management and those who planned and prepped were not?  This type of attitude breeds a culture of “fire fighters” not planners.  This will encourage an organization full of people who cannot look past six months on a schedule and are always fighting to get deadlines met.  Soon customers will start leaving, budgets will dry up, and the company will fold.

8.  We are fine; we do not need a plan.  This is especially true of small or overconfident businesses.  Many small businesses think strategic plans are only for large companies and they do not need one yet.  Talk to some of your mentors who have big businesses now and see how they started — they planned.  Business will grow if you have the right mix of things like product, demand, and placement.  But have you thought about how you will grow?  Some companies think they are doing just fine without that “holy plan;” however, the environment has a way of changing and if it is not evaluated and monitored, it will catch you when you least expect it.  Big or small, effective or not, everyone needs a strategic plan and continuous strategic planning.

9.  We built a plan and it is fine.  Congratulations!  Having a strategic plan is a great first step.  The importance of it has been recognized; however, how good is it?  How often do you look at it?  Does anyone even use it?  Strategic plans can be pretty and used as a marketing device, but must be living and constantly reviewed and updated.  Every organization will start with a very basic plan and if it is constantly reviewed in a professional manner, they will improve and refine it over time.  Just because you have one, does not mean you are done.

10.  No one can plan for the future.  Unless you have a psychic or soothsayer on your staff, then you are right, no one can predict the future and plan for it.  What good organizations do; however, is identify the potential threats and opportunities they face with their best guess and take steps to put measures in place to prevent the future from negatively impacting them.  Examining potential actions against your current strategy and determining if they fit, sometimes prevents a company from making unwise and risky decisions.  It is the whole, “Look before you leap,” philosophy.  If we all had crystal balls, then everyone would be rich and their businesses would run perfectly — since no one has a crystal ball, the next best thing is a strategic plan.

Plans come in all shapes and sizes.  Your organization probably already has a few or more that people have created (formally or informally).  The most important plan for every organization; however, is a Strategic Business Plan — normally just called the strategic plan.  Do not be fooled by other strategic-level plans — there is only one strategic plan and it trumps all others.  There is no solid reason why any organization should not have a good strategic plan and implement regular strategic planning activities.  Some reasons might sound convincing at first, but in the end, having a strategic plan is key to organizational prosperity.