Strategic Planning Process

Essential steps involved in strategic planning process are:

• 1.      Getting ready/determine the strategic intent
• 2.      Define organizational mission
• 3.      Assessing the situation/analyzing environment
• 4.      Developing strategies, goals and objectives/strategy formulation
• 5.      Implement plans/strategy implementation and
• 6.      Strategy evaluation/monitoring outcomes!

The strategic planning process is a brief description of the steps in the process. These steps are a recommendation, but not the recipe for creating a strategic plan. However, the steps outlined below describe the basic work that needs to be done and the typical products of the process.

1. Getting Ready/Determine the Strategic Intent:

In order to start the strategic planning process in the organization, the basic concept of strategic planning has to be understood by the organization itself, while a number of issues must be addressed in assessing readiness, the determination essentially comes down to whether an organization’s leaders are truly committed to the effort, and whether they are able to devote the necessary attention and resources.

This may also be referred as the strategic intent that would determine what an organization ultimately wants to be and do. An organization that, determined, it is indeed ready to begin strategic planning process.

2. Define Organizational Mission:

A mission statement defines the core purpose the organization-why it exists. The mission examines the “raison d’être” for the organization beyond simply increasing shareholder wealth, and reflects employees’ motivation for engaging in the company’s work. Effective missions are inspiring by nature.

A mission statement is like an introductory paragraph that lets the reader know where the writer is going. Hence a mission statement must communicate the essence of an organization to the reader. An organization’s ability to articulate its mission indicates its focus and purposefulness. A mission statement typically describes an organization in terms of its:

i. Purpose:

Why the organization exists and what it seeks to accomplish/business-the main method or activity through which the organization tries to fulfill this purpose.

ii. Values:

The principles or beliefs that guide an organization’s members as they pursue the organization’s purpose. Mission and vision should not be confused as the mission statement summarizes the what, how, and why of an organization’s work, a vision statement presents and image of what success will look like.

Within mission and vision statements in hand an organization takes an important step towards creating a shared, coherent idea of what it is strategically planning for. Many people mistake vision statement for mission statement. Mission statement defines the purpose or broader goal for being in existence or in the business. It serves as a guide in time of uncertainty, vagueness. It is like guiding light.

It has no time frame. The mission can remain the same for decades if crafted correctly. While vision is more specific in terms of objective and time frame of its achievement. Vision is related to some form of achievement if successful.

3. Assessing the Situation/Analyzing Environment:

Once an organization has committed to why it exists and what it does, it must take a clear-eyed look at its current situation. Part of strategic planning, thinking and management is an awareness of resources and an eye to the future environment, so that an organization can successfully respond to changes in the environment.

Situation assessment, therefore, means obtaining current information about the organization’s strengths, weaknesses, and performance, information that will highlight the critical issues that the organization faces and that its strategic plan must address.

These could include a variety of primary concerns, such as:

i. Competition:

It is one of the most important issues to be taken up in the strategic planning process. It is based on calculating the value proposition that essentially calculates the ratio of what the customers get from the organization and how much it costs them.

ii. Economic conditions:

Some of the important economic conditions include the factors such as inflation, unemployment, interest rates, exchange rates, sources of funding, etc.

ii. Political conditions:

The political conditions that include the legal and regulatory frame work have a profound effect on the organization.

A part from these other Key issues may be new program opportunities, changing regulations or changing needs in the client population, internal consideration of the organization, technological factors, cultural factors etc.

4. Developing Strategies, Goals and Objectives/Strategy Formulation:

Once an organization’s mission has been affirmed and its critical issues identified, it is time to figure out what to do about them, the broad approaches to be taken (strategies), and the general and specific results to be sought (the goals and objective).

This can take considerable time and flexibility, discussions at this stage frequently will require additional information or a revaluation of conclusions reached during the situation assessment.

The strategies that need to be developed have to provide of the competitive advantages for the organization.

It may be defined as the ability of the firm to win over the long term in the competitive situation; competitive advantages provide the organizations with the comparative advantage (ability to do the things differently and better than others).

Some of the competitive advantage strategies may be:

1. Cost Leadership:

Competing by striving for the lowest cost producer of a product or a service.

2. Differentiation:

Making the product different from the competitors on the dimensions that are widely accepted by the customers.

3. Niche Strategy:

A strategy focused on the small segment of the market that was previously ignored by other players.

5. Implement Plans/Strategy Implementation:

Once the strategies have been formulated the next step would be to implement these strategies in order to find out the desired outcome of these strategies. The best method to study the implementation is to critically analyze the Mckinsey’s 7S Approach, developed by Mckinsey about 20 years ago this approach can be summarized as below:

The 3ss across the top of the model are described as ‘Hard ss’:

i. Strategy:

The direction and scope of the company over the long term.

ii. Structure:

The basic organization of the company, its departments, reporting lines, areas of expertise, and responsibility (and how they inter-relate).

iii. Systems:

Formal and informal procedures that govern everyday activity, covering everything from management information systems, through to the systems at the point of contact with the customer (retail systems, call center systems, online systems, etc.)

The 4Ss across the bottom of the model are less tangible, more cultural in nature, and were termed ‘Soft Ss’ by McKinsey:

iv. Skills:

The capabilities and competencies that exist within the company. What it does best.

v. Shared Values:

The values and beliefs of the company. Ultimately they guide employees towards ‘valued’ behaviour.

vi. Staff:

The company’s people resources and how they are developed, trained, and motivated.

v. Style:

The leadership approach of top management and the company’s overall operating approach.

In combination they provide another effective framework for analysing the organization and its activities. In a marketing-led company they can be used to explore the extent to which the company is working coherently towards a distinctive and motivating place in the mind of consumer.

6. Strategy Evaluation/Monitoring Outcomes:

This is the final step in the strategic planning process that generates the required feedback about the outcomes of the strategy that was implemented. If the required end results are not obtained then this step suggests the alternative strategy to meet the end results.