In today’s dynamic business landscape, many companies, regardless of size, find themselves reactive rather than proactive in the face of unexpected shifts and daily operations. This reactive stance, often termed crisis management, diverts significant resources toward remedying unanticipated challenges. Consequently, pursuing strategic growth opportunities and business development takes a back seat. Strategic planning offers a proactive remedy to crisis management—an avenue for devising a well-charted course, delineating objectives, and methodically achieving them. A meticulously crafted strategic plan empowers decision-makers, orchestrates resource allocation, and steers organisations toward their envisioned future.
According to the pcl. ‘s 2021 strategic preparedness report, 69% of business leaders conduct strategy reviews at least once every two years, while only 9.31% would conduct a study at the end of a five-year strategic period or never. 40% of businesses adopt top-down strategic formulation processes in determining priorities. 64% of companies are satisfied with their strategic planning process. However, 36% are either dissatisfied or indifferent to their current strategic development process, while 30% of companies don’t believe that their strategy was an effective business roadmap.
Why Strategic Planning is Important
Without a clear strategic plan, an organisation will likely have unsold and unmoved products in a warehouse all day with intelligent people sitting at the workshop doing nothing. This is applicable across all industries and sectors (services, agriculture, manufacturing, etc.)
Strategic planning is important because it requires an organisation to assess its strategic objectives and compare them to available resources. As an organisation constantly reviews its business and customers, its strategic plan evolves to match its goals and business capabilities. It involves pushing decision-makers to practice strategic thinking. It reduces wasteful spending, especially when upper-level managers are willing to forgo pet projects for operations with more excellent use prospects and customer appeal.
Strategic Planning is essential and seen as a catalyst for growth because:
- It gives organisations a clear direction and support focusing on overall business goals.
- It enables organisations to allocate resources efficiently.
- It provides a framework for making consistent and well-informed decisions.
- It is also essential for organisations to reach their maximum growth potential.
Without Strategic Planning, an organisation will likely mismanage resources, make conflicting decisions, or fail to grow its business to its greatest potential.
Steps in strategic planning
While it’s true that each company is unique and needs to build its procedures, some strategic planning process steps are advantageous to all businesses.
1. Analysis of the current state of an organisation:
The first step is to determine the current state of a business by understanding the internal and external audits and the internal and external environment of the organisation. Here, an organisation should analyse the overall marketplace, the industry’s competitive environment, and the organisation’s core competencies. In summary, an organisation should conduct a SWOT analysis to assess all the variables influencing the firm. The SWOT analysis assesses your business’s Opportunities, Threats, Weaknesses, and Strengths.
2. Defining the future state of an organisation:
After analysing the overall current state of an organisation, including the internal and external factors, strategic planners define their organisation’s possible achievements or future state. They develop a vision (future concepts) and mission statement (about its products, customers, markets, etc.) by focusing on the organisation’s main priorities. At this stage, strategic planners also highlight the organisation’s overall business purpose and give a proper direction by stating its expected core values, future place, and probable functions.
3. Determining the goals and objectives of an organisation:
Strategic leaders then proceed to identify common goals and objectives of their business, which are usually determined from the mission and vision statement. This helps an organisation to understand what it needs to accomplish to address its priorities.
4. Implementation:
The next process entails the execution of the overall planning and determining accountability, which is allocating the responsibility to the right person for specific functions. Leaders communicate the plan to the organisation in this stage by sharing relevant documentation, and the actual work begins. This entails the development of a concrete plan by mapping out processes. Use key performance indicator (KPI) dashboards to communicate team responsibilities clearly, thereby gaining desired results when executed.
5. Evaluation:
In the last stage, the leadership team reviews the plan’s performance and ensures it leads to a desirable outcome. Evaluation is scheduled in advance and done at regular intervals of time. This is done iteratively so that strategic leaders can examine and assess if the project is moving in the right direction and if their planning has been credible.
Benefits of Strategic Planning
Strategic planning can provide a range of benefits to organisations, including:
- Focus – A well-crafted strategic plan creates a clear focus for the organisation, ensuring everyone is working towards the same goals and objectives.
- Alignment – Strategic planning helps align resources, efforts, and activities with the organisation’s mission and values, ensuring everyone works together towards a common purpose.
- Agility – A strategic plan can help organisations become more agile and responsive to external environmental changes by providing a framework for decision-making and resource allocation.
- Innovation – Strategic planning encourages organisations to think creatively and seek new growth and development opportunities.
- Accountability – A strategic plan provides a basis for measuring progress and holding individuals and teams accountable for achieving their goals and objectives.
Below are some companies that benefited from strategic planning:
Amazon: Amazon has solidified its position in online retail by developing a strategic plan focusing on innovation and customer service.
Apple: Apple has maintained its position as a leader in the tech industry by developing a strategic plan focusing on product differentiation.
Coca-Cola: Coca-Cola has stayed ahead of the curve by developing a strategic plan focusing on brand recognition and marketing.
Ford: Ford has maintained its position as a leader in the automotive industry by developing a strategic plan that focuses on innovation and customer service.
Google: Google has maintained its position as a leader in the tech industry by developing a strategic plan that focuses on innovation and product differentiation.
As businesses navigate an ever-changing landscape, strategic planning remains a critical driver of growth and resilience.
In conclusion, strategic planning is the cornerstone of effective organisational management in today’s dynamic business landscape. It enables companies to break free from reactive crisis management and instead chart a deliberate and purposeful course toward their desired future. As the statistics from the pcl.’s 2021 Strategic Preparedness Report reveal, there is progress and room for improvement in how businesses approach strategic planning.
By embracing strategic planning, organisations gain the tools to allocate resources efficiently, make informed decisions, and align their efforts with overarching goals. The success stories of companies like Amazon, Apple, Coca-Cola, Ford, and Google underscore the transformative power of strategic planning.
While the process may be time-consuming, its potential to yield better-than-desired results cannot be overstated. As businesses navigate an ever-changing landscape, strategic planning remains a critical driver of growth and resilience.
At pcl., our speciality in strategic planning and implementation cuts across the globe as we have helped many international and indigenous companies create a strategic plan and accomplish more in a year than they ever thought possible.
Written by:
Chidubem Ugo
Analyst
