With strategic planning as the cornerstone of our list of services, we often get asked if there’s really value in spending time (and the associated funds) on this activity. Clearly, we believe in the concept otherwise we wouldn’t offer it; but in some circles, strat planning has had a bad rap.
So here’s an analysis that presents the facts. You can decide for yourself whether strategic planning will pay off for your business.
Background Basics
Apart from the obvious roots in military operations, the origins of strat planning concept for business lie in finance. Back in the 1950s, budget planning required a long-term view of business objectives to support financial projections.
Over the next 30 years, Porter’s “5 forces” and the development of the SWOT analysis gave a scientific slant that reached beyond the financial aspect to encompass business processes, market development and allocation of resources.
In the 21st century, best practices have evolved that include using research findings to guide decision-making and leveraging past experience for future learnings and to achieve business goals.
Pinpointing the Purpose
The point (and purpose) of strategic planning is to align the vision of the business with the operational objectives and action plans for achieving them. It’s easy for a business owner to determine he (or she) wants to be successful, and not always quite so easy to identify just what “success” looks like or how to achieve it. By clarifying what you want to create and determining how you’re going to do so, you end up with a roadmap for getting there.
Pros and Cons
Real strategic planning doesn’t take place overnight or without extensive research and evaluation of the facts and issues. And as such, there are pros and cons to doing it.
Benefits
By tackling the process correctly and putting a good strategy in place, you can:
- Develop a long-term vision of the company’s goals that is available to share with all your stakeholders
- Build a planned competitive advantage in your marketplace.
- Use the strategy as a guideline for hiring new team members, because you know what the plans are for the future
- Inform your financial planning so you’re able to make provision for various milestones in the strategy
- Maximize your cash flow, allocation of resources and your investment strategies.
Disadvantages
As difficult as it is to imagine, there are also some disadvantages to strategic planning:
- It requires commitment from everyone to implement it successfully, and fostering and monitoring the commitment can be a full-time job in itself
- It’s not easy to change track mid-strategy if you discover the direction is wrong or you’ve overlooked a critical factor. Given that hindsight is always the perfect sight, you might only discover later if your plans are based on erroneous information or conclusions.
- You’re at the mercy of the unknown. Once you’ve invested heavily in a long-term strategy unanticipated events can throw you off completely, leaving you scrambling to save the pieces.
Getting it Right
The most important aspect of strategic planning is, therefore, to get it right the first time. While there are seldom guarantees for anything in business, your chances of doing so improve drastically if:
a) Your planning is based on accurate, reliable information
b) Investment is phased in, so you don’t put all your eggs into one basket right away
c) You plan for regular reviews and allow room for flexibility if unexpected events threaten to jeopardize the success of your strategy.
Strategic planning isn’t something to rush into. It’s a process that requires extensive research and a solid understanding of the factors affecting your company and industry. Putting it together and executing it successfully takes patience, commitment, and resources. It’s not for the faint-hearted, but it works for the brave.
