Strategic Planning: Steps to Achieve Your Business Goals

What is strategic planning?

Strategic planning is the process by which an organization establishes and revises its core long-term goals and creates a plan to achieve those goals. Strategic planning involves multiple review periods and continuous revisions to establish that the business is on the right strategic track. 

Who is involved?

Strategic planning is typically conducted by senior management, as well as dedicated strategists and sometimes other members of the organization. The direction of your organization’s strategic mission must be determined and approved by the people running the company, as it is the mission from which all of your organization’s tasks flow. 

Dedicated internal strategic planners can be useful for mid-sized to large companies.

They bring specific management skills and experience and drive strategy implementation throughout organizations. However, your strategic plan should also be informed from the bottom up, with heads of smaller teams, such as product and project leaders explaining the challenges they face on the ground. These leaders often know and understand problems that can be less clear to higher-ups, who aren’t involved in the day-to-day operations of the organization. 

Some organizations also hire outside strategy consultants, like McKinsey or Boston Consulting Group, to come in and reorient the organization. Typically, you should be able to determine and run your strategic plan without outside help, but during times of stress or change consultants can be a useful guide in determining the strategy of your company. They can teach planning, mapping, management, and implementation techniques to those involved.

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Overall, strategic management should be determined by senior management and possibly some senior dedicated strategists in larger organizations. Strategic plans should be informed by teams that are closer to market issues to ensure they reflect the realities of your business. If times get especially tough, outside consultants can be brought in to help redirect your business strategy.

What is strategic management?

Strategic management is the overall control of the direction of your company based on current and planned capabilities to achieve a set of planned goals. In essence, this means that strategic planning is a part of the overall process of strategic management, which is a broader concept that includes implementation and review. For our purposes, we’ll look at strategic planning as encompassing the entire process of strategic management. Internally at your organization, you’ll also want to appoint some people to manage the strategy implementation, which is separate from the strategic planning process. 

Strategy vs. tactics

It’s important to note that during strategic planning, you should not be focussing on more specific tactics. Strategy is an all-encompassing view for your company, whereas tactics are more specific tools you can use to help grow your organization.

Strategy might look at which products you should be selling, and maybe which ones you should cut from your offering based on the competitor landscape and your own capabilities.

Tactics, on the other hand, tend to focus on things like holiday marketing plans or selling techniques. Let your departments handle the tactics; strategy meetings need to be limited in scope to the overall direction organizations have.

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The seven steps of strategic planning

1. Identify current position

The first thing an organization needs to do in the strategic planning process is identify the current positioning of the business against its competitors.

It’s important to understand what competitive advantages the business has and if those advantages are currently being fully exploited.

Sometimes organizations may be focussing on areas that are not strengths, which would require a strategic repositioning in the strategy plan. Strategy frameworks like SWOT (strengths, weaknesses, opportunities, threats), Porter’s Five Forces, and the Balanced Scorecard are useful tools to help you map where you stand now and how your organization can grow. 

SWOT is a favorite tool of many strategic planners, as it’s a relatively simple way to look at your business and covers most of your bases. The framework is a simple grid with four boxes that allows you to map all the key strategic information about your organization in one place. Strengths are typically going to be organizations’ competitive advantages, while weaknesses are places you fall short of the competition. Opportunities are areas you might be able to apply those strengths, or simply market opportunities that have developed. Threats might involve products that could replace your goods at a lower cost or with higher quality. They could also be government regulations that might hinder your company, or competitors that have developed new advantages. 

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Porter’s Five Forces is another useful model employed by strategic planners. The five forces are typically defined as internal competition, potential for new entrants, supplier negotiating power, customer negotiating power, and substitute products. Visually, the forces are often represented as centering around internal competition, which is the current landscape of competitors in a given industry. Each of the other forces feeds into that industry competition, with potential new entrants and substitute products increasing competition and reducing the industry competitors’ bargaining power. Investopedia offers a quick summary of the framework and how to apply it to create a map for your business. 

The Balanced Scorecard is another business management favorite, as it can help strategic planners quickly and concisely identify areas for growth through a visual representation. This framework can be useful, as it incorporates non-financial goals, which can be important for long-term strategic planning.

A typical balanced scorecard looks like this:

1. Identify long-term goals

If you’ve done a SWOT analysis or used the Porter’s Five Forces framework, you’ll have a good idea of what your organization does well and where the competition is toughest. This will help you map out where the future vision and objectives for your company.

Once you have established your company’s current strategic position, it’s time to figure out where you want to go from here.

If there’s a good opportunity awaiting your company in a new area, you might choose to pursue that vision. Alternatively, if you have a particular strength that makes you much stronger than your competitors, you might want to develop in that direction despite high competition and threat of new entrants. 

At this stage, balanced scorecards can come in handy, as they can help you map out more detailed, product-oriented objectives for overall organizational performance. 

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Common pitfalls in deciding on goals

Price is not a competitive advantage. It’s common for companies to think that their low prices are what distinguish themselves from the competition. However, this is not true if the only advantage you have is that you’re willing to accept a lower cost for your product, which is not a strategic advantage. All you’re doing is eating into your margins and hurting your investment capabilities. On the other hand, when organizations have a production advantage that produces goods at a lower cost, thereby allowing them to charge lower prices, that is a competitive advantage. 

2. Create a plan

Planning is a business-specific process, but will employ information from the frameworks you’ve already created. If you’ve done the first steps well, this step can be as simple as deciding which departments and managers will lead the project alongside the objectives and goals you’ve already created.

Once you’ve identified your company’s long-term goals, it’s time to build a plan to achieve your vision and objectives.

If your goal is to develop a new product based on some particular advantage your organization has or an opportunity you identified, you might put product design in charge. Or maybe you want to put a manager in charge of the whole process from product design to marketing and sales. How you do it can depend on what resources you have available and key managers in your organization.

The plan should be clearly written out, with the goals and department or person responsible marked. Full allocation of resources may have to come later, as the scope of each project identified in your strategic plan is developed. 

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 3. Implement

Once you’ve made your plan, you can begin to implement it. Senior leaders in the organization identified in your strategic planning stage will be responsible for identifying the scope and demands of each project. They’ll then be able to request resources, both financial and human, that will be needed to implement the project and achieve your organizational performance goals. 

4. Review

Unlike with more contained projects, strategic plans require continuous review.

Periodic reviews for strategic planning are typically quarterly, half-yearly, or annually.

Sometimes companies will have shorter in-year reviews, with a full strategy review conducted annually. However, it’s important to remember that you don’t need to have completed your strategic projects for a review to be useful. In fact, a review that’s conducted while a project is under development can identify new market forces that might require a shift in your strategic plan. 

Reviews should cover what progress has been made toward the goals you identified in your strategic planning meetings and any potential new market forces that might drive your strategic decision-making. 

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5. Revise

Following a review of progress made towards your goals and the new market landscape, companies should revise their strategic plans. Revisions can be small adjustments in direction, or major shifts in strategy. Don’t be afraid of cutting your losses and running. You may feel like you’ve sunk a lot of costs in a project, so it needs to be done to completion, otherwise you’ve lost your investment. However, if you see that if you keep moving along the same path you’ll lose more, it’s time to change tack. Competitive environments can change, and your company needs to be quickly adaptable to stay profitable. 

 6. Repeat

Strategy reviews need to be repeated regularly in order to be effective.

Each annual strategy review should start again with reviewing the current market landscape, which will flow through to your goals, planning, and implementation.

What period of time should a strategy plan target?

Typical strategic plans should look five years into the future for most companies. If your industry requires large amounts of long-term capital investment, like an aerospace company, you may want to look at significantly longer strategic periods.

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Some companies look to have strategic plans achievable after a set period of time, which allows you to clearly measure the success of your strategic plan. However, static plans will slowly reduce the planning period for your project, so you should have another plan in place for the next period. Alternatively, rolling five-year plans keep the long-term perspective for organizations, but can look like moving goalposts to those trying to achieve them. In this case, it’s important to have more project-specific goals, to allow leaders to work towards achievable objectives that can be celebrated upon success. 

When to pivot

The “pivot” has been popularized by tech startups in recent years as a means to redirect the strategic plan of your business, product, or service.

Pivoting can change almost everything about organizations, except the product or the capabilities.

For instance, you may find that the product you’ve been developing isn’t going to be possible to build despite your best intentions and efforts. At that point, it makes sense to look at what you have done already, and see if it can be repurposed into another product. Alternatively, you may realize you have built a highly skilled team in one particular area that allows you to create and sell a quite different product.

When you need to pivot is not always immediately clear. Yes, it can be because disaster has struck and your business is dying, but there can be more subtle reasons to pivot. For instance, you find yourself targeting a low-margin segment, when you have the capabilities to produce something with a much higher margin. Alternatively, you may be working on a project that has little scalability, and look to move to something you can expand to a larger audience with minimal additional effort. Pivots can also go the other way, from more scalable to less, if you find your customers are unhappy with a more impersonal scaled product. 

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Usually, if you conduct regular strategy reviews, your company will likely be prepared in advance for any pivots with a strategic plan. You’ll have assessed your strengths and weaknesses, and know where you can move on the market if things aren’t going right. In these cases, pivots can be thought of as a “Plan B” or better yet, a “Plan C” or “Plan D.”

Conclusion

Strategic planning is the process by which companies set out to achieve their long-term goals. It needs to be conducted at regular intervals by top executives in the company and be informed by teams on the ground. If your organization is facing a particularly unique challenge, outside consultants can be brought in for additional experience and manpower.

The seven-step process of strategic planning is a cycle that needs constant attention and repetition.

First, you must determine where your organization stands and where it wants to go. Strategic frameworks like SWOT and Porter’s Five Forces are useful for understanding your current position. From there you can create a plan and begin to implement it. The process of strategic planning is never over, and you’ll need to periodically review your success with the current strategic plan and use that experience to inform your revised plan.

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You can plan for whatever period of time you like, with rolling five-year plans common. However, be sure you focus on strategy, rather than more specific tactics. Sometimes, you may also have to cut your losses on a given project, and pivot to a new path, which is a normal part of strategic management.

Strategic planning can be applied beyond business, as it is a tool to help you achieve long-term goals based on your abilities and skills. Some people use it for personal goals as well as career and business goals. 

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