How exactly does it help an organization? Effective strategic management can bring many benefits to any business — here are just four examples. No business can hope to succeed by not having a plan and simply hoping to stumble across success.
A strategic plan works like a roadmap, clearly defining the best route for your organization to take in the years ahead. Whether it covers one, three or five years into the future, a strategic plan can help guide your organization to meet the challenges that lie in wait. Strategic Planning. Amanda Ferenczy. Share 0. Tweet 0. Mission What do we want to achieve? Vision How are we going to get there?
Plan Perhaps the most obvious reason to engage in corporate strategic planning is that it provides direction and focus by way of a written document. Four Drivers of Strategy Execution. Strategic Plan Template. Strategic planning provides a road map to help your business get from where you are now to where you want to be. Milestones are expressed in specific terms, as quantifiable objectives that measure whether you're proceeding as planned and, if not, how far you've gone off path.
Long-term strategic objectives help you think in terms of big picture goals and overarching visions. The farther in the future you're planning, the more difficult it is to set specific goals. You may project an intention to open five stores in the next ten years without knowing what the real estate market or demand for your product will look like that far into the future.
This objective can still be useful because it provides a general time frame, a schedule and a plan for ongoing growth, and it will still be relevant, even if you only open four stores in five years.
Probably Not: Board members ask for a thorough description of the risks involved in a strategy before approving it. How can a company escape those traps? This involves ensuring that the strategy-making process conforms to three basic rules.
Focus your energy on the key choices that influence revenue decision makers—that is, customers. Two choices determine success: the where-to-play decision which specific customers to target and the how-to-win decision how to create a compelling value proposition for those customers.
Characterizing the key choices as where to play and how to win keeps the discussion grounded and makes it more likely that managers will engage with the strategic challenges the firm faces rather than retreat to their planning comfort zone. As noted, managers unconsciously feel that strategy should achieve the accuracy and predictive power of cost planning—in other words, it should be nearly perfect. But given that strategy is primarily about revenue rather than cost, perfection is an impossible standard.
Managers must internalize that fact if they are not to be intimidated by the strategy-making process. For that to happen, boards and regulators need to reinforce rather than undermine the notion that strategy involves a bet.
Every time a board asks managers if they are sure about their strategy or regulators make them certify the thoroughness of their strategy decision-making processes, it weakens actual strategy making. The only sure way to improve the hit rate of your strategic choices is to test the logic of your thinking: For your choices to make sense, what do you need to believe about customers, about the evolution of your industry, about competition, about your capabilities?
It is critical to write down the answers to those questions, because the human mind naturally rewrites history and will declare the world to have unfolded largely as was planned rather than recall how strategic bets were actually made and why. If the logic is recorded and then compared to real events, managers will be able to see quickly when and how the strategy is not producing the desired outcome and will be able to make necessary adjustments—just as Henry Mintzberg envisioned.
As managers apply these rules, their fear of making strategic choices will diminish. I have argued that planning, cost management, and focusing on capabilities are dangerous traps for the strategy maker. Yet those activities are essential; no company can neglect them.
Human nature being what it is, though, planning and the other activities will always dominate strategy rather than serve it—unless a conscious effort is made to prevent that. You have 1 free article s left this month. You are reading your last free article for this month. Subscribe for unlimited access. Create an account to read 2 more. Strategic planning. The Big Lie of Strategic Planning. Reprint: RF Strategy making forces executives to confront a future they can only guess at. Planning arguably makes for more thorough budgets, but it must not be confused with strategy.
Cost-based thinking. Self-referential strategy frameworks. Martin and Sally Osberg Lafley, Roger Martin, Jan W. Your company can too.
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