Note: This paper summarizes conventional strategic
planning using the use of scenarios, in essence, assuming
the future is either predictable or just like the status
quo. For issues and concerns with this process, and ways of
using contextually-specific strategic planning, see
Nailing Strategy to Your Business Tree (Chaudron, 2008)
What is a strategic plan?
Strategic planning has acquired a variety of
definitions and implementations since it was first
introduced into the business world. However, by addressing
the common themes and underlying objectives of a strategic
planning process, an organization can propel itself into the
realm of success. So, first let’s begin by utilizing one
definition of a strategic plan and subsequently, apply it
more broadly to understand its components.
Well, a strategic plan is essentially a plan or
guide created by a business or organization to map out how
it will reach goals, and set a foundation so the entire
company knows what will happen and what is expected of them.
Essentially, it provides a "recipe" or of how to achieve a
stated vision, for the chosen target market, and how a
company serves customers consistently, effectively and
profitably every single time.
This guide or plan can also serve as a systematic,
management tool for problem solving, market planning,
product development and preparing business plans. [3][8] The
goal is to integrate all aspects of the business's
activities in a mutually supportive system. Therefore, every
different department whether it is sales, marketing, the
executive team or human resources, will be functioning
according to this plan and working within this system. This
allows for decisions and goals of each department to be
proactive and streamlined with the main objectives of the
organization.
In many instances, organizations will call upon
skilled outside consultants or facilitators to assist with
the process of developing a strategic plan. An independent
facilitator managing the strategic planning process can
assure everyone's participation and draw out all opinions.
Research has
revealed that up to 70 percent of business strategies fail
to get fully implemented [8]. The strategy planning process
in many organizations is sometimes a dreaded event and is
met with much reluctance from employees and/or executive
teams. In addition, many times, the final result of process
does not turn out positive and the business strategy fails
to get implemented or is implemented in a form, which is
quite different from the original intent [8]. Thus, the role
of consultants and facilitators has become much more vital
to organizations that want to create this type of plan to
help align the strategy with the processes and objectives
within the company.
Major Components of a Comprehensive
Strategic Plan
As previously mentioned,
strategic plans have been molded and altered in order to
meet the needs of individual organizations. As a result,
there are a variety of definitions that have risen to the
surface. Many of the definitions have included different
components of a strategic plan.
Those components can include:
1. Vision
2. Mission Statement
3. Statement of Corporate Values
4. Corporate Strengths & Corporate
Weaknesses
5. Long-Term Goals and Short-Term
Objectives. [9]
1. The vision of the company should contain a clear picture
of what the organization will look like and how it will
operate at a fixed point in time, either three or five years
in the future. Within the vision, there exists a definition
of its business, markets to be served, major competitors,
products, corporate structure and operations. This vision
also provides a clear target that the company is to be
shooting for and attempting to hit. Without this critical
piece organizations are unable to focus their efforts in a
specific direction, thereby resulting unacceptable results.
The vision should resonate with all members of
the organization and help them feel proud, excited, and part
of something much bigger than themselves. A vision should
stretch the organization’s capabilities and image of itself.
It gives shape and direction to the organization’s future.
Visions range in length from a couple of words to several
pages. I recommend shorter vision statements because people
will tend to remember their shorter organizational vision
[7].
2. The mission
statement is a concise statement that answers four questions
about what business the company is in, markets served, and
how the company provides value to the marketplace. It is the
Statement used most often in response to the question, “What
does your Company do? [9]”
3. The
statement of values represents a precise statement of the
company’s beliefs, or guiding principles. These values can
include issues like integrity, product quality, customer
relations, employee performance and accountability and
financial management. Value statements are grounded in
values and define how people want to behave with each other
in the organization. They are statements about how the
organization will value customers, suppliers, and the
internal community [9].
Value statements describe actions which are the living
enactment of the fundamental values held by most individuals
within the organization. The values of each of the individuals in your workplace, along
with their experience, upbringing, and so on, meld together
to form your corporate culture. The values of your senior
leaders are especially important in the development of your
culture. These leaders have a lot of power in your
organization to set the course and environment and they have
selected the staff for your workplace [9].
4. The
strengths and weaknesses of an organization should also be
included in a strategic plan. One way of determining such
strengths and weaknesses is to conduct a SWOT (Strengths,
Weaknesses, Opportunities, and Threats). Once this step is
completed, an organization is able to leverage strengths and
develop any weak areas within the company. [7]
5. Short-term
objectives and long-term goals should be the final component
of a strategic plan. Organizations must delineate exactly
what they are working towards, both in near future and many
years down the road. This helps to set the focus upon
measurable outcomes as well as convince those in the
organization that there is a purpose for this strategic
plan.
Goals or objectives should be SMART:
specific, measurable, achievable, realistic and time-based.
Once you have enabled strategy accomplishment through
setting SMART
goals, you will want to develop action plans to
accomplish each goal. Make action plans as detailed as you
need them to be and integrate the individual steps into your
planning system. While the origin of SMART goals and
objectives has still not been determined, but they are still
widely used within organizations and consulting firms to
this day.
The cause-and-effect relationships between objectives can be
represented as a map with arrows indicating the
relationship, or as a tree, where the hierarchy represents
the relationship. Often the map is used to summarize the
relationships visually, and a matrix is used to add detail.
An example of this can be seen in Figure 1 [4].
Taken from Malan & Bredemeyer (2003)and originally adapted
from Kaplan & Norton (2001)
Strategy Scorecard
The Balanced Scorecard has become a commonly
used tool for demonstrating business strategy. Essentially,
a balanced scorecard links strategic objectives and measures
that allow the business to ascertain whether it is on course
to achieve its objectives. Some authors assert that balanced
scorecards allow an organization to advance its thinking and
not get stuck relying solely upon traditional indicators
like profit to determine whether or not it is meeting its
goals [2]. Furthermore, scorecards give organizations a way
of seeing signals of their unmet goals or deterrence from
their objectives. [6] An example of a balanced scorecard can
be seen in Figure 2 [4].
[1]
Kaplan, R. & Norton, D.
(2001). The Strategy-focused Organization: How Balanced
Scorecard Companies thrive in the new business environment.,
Harvard Business School Press: Massachusetts.
5] Mctague, M. (2008, October). The Seven Deadly Sins of
Strategic Planning. Equities, 57(7), 21-21. Retrieved
October 29, 2008, from Business Source Complete database.
[6] Narrett, Z. (2008, August). Keeping Score. American
Gas, 90(7), 22-25. Retrieved October 29, 2008, from Business
Source Complete database.
[7] Palmatier, G. (2008). Strategic planning: An executive's
aid for strategic thinking, development and
deployment.Outsourced Logistics, 1(5), 30-33.
