Almost every organization performs some sort of long-range planning. The question is whether or not it is effective. Long-range planning in today's business world typically means strategic planning. This concept has been around for a long time and has been a part of the American management scene for well over thirty years.

The biggest problem with most unsuccessful strategic planning programs is that generally they are not well conceived and are poorly organized. The are little more than flavors of the month that come around on an annual basis.

What is Strategic Planning?

Strategic planning is an organization's process of defining its strategy, or direction, and making decisions on allocating its resources to pursue this strategy, including its capital and people. Various business analysis techniques can be used in strategic planning; one of the most useful is the SWOT analysis (Strengths, Weaknesses, Opportunities, and Threats). The outcome is generally a written strategic plan which is used as guidance to define operational or tactical plans.

Strategic Planning is the formal consideration of the organization's future course. All strategic planning deals with one or more of three key questions:

• "What do we do?"
• "For whom do we do it?"
• "How can we beat or avoid competition?"

In many organizations, this is viewed as a process for determining where an organization is going over the next year or more -typically 3 to 5 years, although some extend their vision to 20 years.

In order to determine where it is going, the organization needs to know exactly where it stands, then determines where it wants to go and how it will get there. The resulting document is called the "strategic plan".

What Strategic Planning Is Not

While it is true that strategic planning is a tool for effectively plotting the direction of a company; strategic planning is not forecasting. That is it is not an instrument for forecasting. It will not tell exactly how the market will evolve and what issues will surface in the coming days so that you can plan your organizational strategy.

Strategic planning does not only deal with future decisions, it actually involves making decisions today that will affect your organization and its future. Another thing that strategic planning is not; it is not an eliminator of risk. It merely helps the management team assess risk and plot a sound course for the organization.

A Clear and Concise Vision is Critical

The starting point of strategic planning is the organization's vision. It defines where the organization wants to be in the future. It reflects the optimistic view of the organization's future. Coupled with the vision is the mission of the organization. The mission defines where the organization is going now, basically describing the purpose, why this organization exists, in other words it should define the obligations of the organization. Also related to the vision is the set of values the organization lives by. Values reflect the organization's culture and priorities, in other words, it describes how the organization works to fulfill its obligations to its stakeholders.

Defining The Current Situation With Strategic Analysis

When developing strategies, analysis of the current state of the organization and its environment as well as how it may develop in the future, is important. The analysis must be conducted internal as well as an external focus in order to identify all opportunities and threats of the new strategy.

There are several factors to assess in the situation analysis:

• Markets (customers)
• Competition
• Technology
• Supplier markets
• Labor markets
• The economy
• The regulatory environment

Finding that all seven of these factors have critical importance is rare. It is also unusual to find that the first two - markets and competition - do not rate critical importance.

Strategic Analysis typically includes conducting some sort of scan, or review, of the organization's environment (for example, of the political, social, economic and technical environment). Planners carefully consider various driving forces in the environment, for example, increasing competition, changing demographics, etc. Planners also look at the various strengths, weaknesses, opportunities and threats (an acronym for this activity is SWOT) regarding the organization.

(Some people take this wide look around after they've identified or updated their mission statement, vision statement, values statement, etc.  Other people conduct the analysis before reviewing the statements.)

In the past, organizations generally referred to "long-range planning". In more recent times, the use the phrase "strategic planning" has been more popular. This is meant to capture the strategic (comprehensive, thoughtful, well-placed) nature of this type of planning.)

Setting Strategic Direction

Managers determine the implications of major issues and derive conclusions about what the organization must do to establish a sustainable competitive advantage. These conclusions include the overall accomplishments (strategic goals) that the organization should achieve, and the overall methods (or strategies) to achieve those accomplishments. These conclusions or goals should be SMART. That is they should be designed and worded as much as possible to be:

• Specific
• Measurable
• Acceptable to those working to achieve the goals Realistic
• Timely

At some point in the strategic planning process (sometimes in the activity of setting the strategic direction), planners usually identify or update what might be called the strategic "philosophy". This includes identifying or updating the organization's mission, vision and/or values statements.

Action Planning Is The Final Step

Action planning is carefully laying out how the strategic goals will be accomplished. Action planning often includes specifying objectives, or specific results, with each strategic goal. Therefore, reaching a strategic goal typically involves accomplishing a set of objectives along the way -- in that sense, an objective is still a goal, but on a smaller scale.

In most cases, each objective is associated with a particular tactic, which is one of the methods needed to reach a stated objective. Implementing a strategy typically involves implementing a set of tactics as you progress -- in that sense, a tactic can be considered a small scale strategy.

Action planning also includes accountability, or the agreement on responsibilities and timelines for each objective between the affected parties. It should also describe methods to be used to monitor and evaluate the plan.  This describes how the organization will know who has done what and by when.

It's not uncommon to develop an annual plan (also known as an operational plan), which includes the strategic goals, strategies, objectives, responsibilities and timelines that should be done in the coming year. Often, organizations will develop plans for each major function, division department, etc., and call these work plans.

Typically, budgets are included in both the strategic and operational plans. Budgets specify the money needed for the resources that are necessary to implement the annual plan. Budgets also depict how the money will be spent, for example, for human resources, equipment, materials, etc.

Conclusion

Strategic planning determines where an organization is going over the next several years or more and how it's going to get there. Typically, the process is organization-wide, or focused on a major function such as a division, department or other major function.

Strategic planning is dynamic; it is a living organism that is subject to change over time. Therefore, strategic innovation and making mid course corrections the 'strategic plan' have to be a cornerstone strategy for an organization to survive the turbulent business climate.

Don't be concerned about finding the "perfect way" to conduct strategic planning. For every one hundred experts on the topic you will find one hundred and fifty interpretations of the activities in strategic planning. If you stick to the fundamentals described above and apply your own style, you will meet with a great deal of success. Learn as you go and make adjustments as you try different approaches.

Brice Alvord has over thirty years experience as an internal and external performance improvement consultant. He holds a BA in Sociology/Psychology from Central Washington University and an MBA degree from City University of Seattle. He is the author of over two dozen books on continuous improvement and training.

For more information, visit our website at: http://www.aleragroup.com

Article Source: http://EzineArticles.com/?expert=Brice_Alvord http://EzineArticles.com/?Defining-Your-Organizations-Future&id=929852