Strategic planning is the process of defining an organization’s direction and making decisions on allocating its resources to pursue this direction. It involves setting goals, analyzing the competitive environment, and identifying external and internal factors that are favorable or unfavorable to achieving the goals. Effective strategic planning requires strong leadership, clear communication, and a commitment to continuous improvement. It helps organizations align their resources and efforts towards a common vision, and can lead to increased efficiency, competitiveness, and success. The following are techniques that are commonly used to plan a strategy.
Benchmarking is the comparison of your metrics with a competitor or industry average. For example, a firm may consider how much its spending on innovation or technology relative to its industry.
In many cases, strategy formation is closely tied to an annual or quarterly budget planning process.
Validating the assumptions that underlie your strategy with business analysis techniques such as voice of the customer or statistical analysis.
A business case is a formal proposal for a strategy that includes analysis of benefits, costs and risks.
A business model is the framework that an organization uses to capture value. In most cases, a strategy adds products, services and capabilities to an existing business model. Occasionally a strategy may also seek to transform a business model or enter new industries.
A business plan is a proposal for a major new initiative such as entering a new market or transforming a technology platform. Business plans are most typically targeted at investors in new businesses but can be developed internally where due diligence is required.
Describing your organization as a set of capabilities and identifying gaps that represent a competitive weakness or new capabilities that represent a potential advantage.
The practice of gathering information about competitors, markets, products, industry trends and customers. Competitive intelligence is a fundamental input for strategy planning.
Developing preliminary estimates for strategic plans using a high level estimation methodology such as reference class forecasting.
Analysis of financial metrics such as return on investment and payback period.
Strategy planning often requires forecasts such as predictions of market demand.
A goal is a desired outcome. Strategy is primarily driven by goals in the context of the opportunities and threats that exist in the market. It is common to define goals as a starting point of strategy planning.
Goal setting is a means of strategy implementation that sets goals for your organization, departments, teams and individual contributors.
A collection of accounting techniques that support management decision making and optimization.
An analysis of market conditions such as size, growth rates, demographics, influencers and trends. Important to industries such as technology and fashion that experience a high rate of market driven change.
Mission and Vision
Mission and vision are fundamental statements of why you exist and where you are going. Organizations with a strong sense of identity and purpose tend to develop more effective strategies.
In most cases, an organization develops far more strategies than it’s possible to execute due to constraints such as budget and time. As such, prioritization is a critical strategy planning step that decides what gets done. A strict ranking of priorities typically achieves more than a rating system.
It is common for strategy planning to involve early phases of risk management such as risk identification with estimates of impact and probability.
Scenario planning is the practice of planning tactics in advance.
Strategic drivers is a broad term for everything that influences a strategy including mission, vision, goals, values, principles, competition, regulations and markets. Listing out strategic drivers is a basic step in strategy formation.
Structured Decision Making
The use of a process for strategic decision making such as steps that allow your entire organization to provide strategy proposals with a system of prioritization and approvals.
The use of a process for strategic planning that might include information gathering, strategy formation, estimation, business cases, reviews, decision making points, budget approvals and goal setting.
An evaluation of current strengths, weaknesses, threats and opportunities.
Target Operating Model
A vision for the future capabilities of your organization.