A business thrives when its leaders can define its vision, execute its strategy, and measure its performance. Strategic planning is key to this process. According to intelligence services company IntelliBridge, however, only 10 percent of organizations successfully implement and execute strategic planning, and 50 percent of leadership teams dedicate little to no time to it.
So, what does strategic planning entail, and who’s responsible for it? The short answer is that it requires involving everyone within an organization, regardless of their career level or experience.
Below, you’ll learn what strategic planning is, how it impacts an organization at every level, and how to successfully create a strategic vision.
Access your free e-book today.
DOWNLOAD NOWWhat Is Strategic Planning?
Strategic planning is the ongoing, long-term organizational process that defines a company's goals by using available knowledge to document its intended direction. It’s leveraged to prioritize efforts, allocate resources, align stakeholders and employees on goals, and ensure that data collected supports those goals.
Strategic plans help guide projects’ execution and the daily actions that lead to an organization’s overall success.
According to the online course Business Strategy, taught by Harvard Business School Professor Felix Oberholzer-Gee, strategic plans require four key perspectives: financial, customer, internal, and learning and growth. These perspectives should ask and define the following questions:
- How do our customers view us?
- Where should the company excel?
- Where can we continue to improve and create value for our customers?
- How do our shareholders view us?
In Business Strategy, Oberholzer-Gee says these questions prompt organizations to focus on creating value for customers, employees, and suppliers.
Who Should Be Involved in Strategic Planning?
Leaders and board members execute strategic planning by tying it to their organization’s vision. Managers, individual contributors, and stakeholders also play pivotal roles in decision-making as businesses strive to increase employee engagement.
This process is referred to as “Hoshin Kanri,” a strategic deployment method that helps ensure strategic goals drive success throughout an entire organization. According to Business Strategy, “Hoshin” loosely translates to “purpose” or “direction,” and “Kanri” to “management” or “control.”
“The company’s goal should be to drive widespread employee engagement, so management communicates strategic objectives throughout the organization,” Oberholzer-Gee says in Business Strategy. “By setting short-term goals within a longer-term framework, Hoshin Kanri allows companies to tackle bigger challenges in achievable ways.”
Stakeholders can influence decision-making around operations, sales, and investments, while managers can provide direction and guidance to their direct reports. Individual contributors work toward company goals daily and can offer perspective, insight, and analysis related to ongoing projects.
Here’s a more comprehensive overview of how different roles are involved in an organization’s business strategy.
Senior Leadership & Management
When it comes to strategic planning, senior leaders and managers—such as the CEO, executive team, and board of directors—set the early stages in motion by determining their organization’s vision and the guiding principles behind its mission, ethos, and operational goals. Once those are defined, they set strategic priorities and measure success using key performance indicators (KPIs).
It’s recommended that leadership teams review their company’s vision and its guiding principles annually and update them every five years. They should also assess and shift smaller goals and KPIs yearly, depending on strategic priorities and performance.
Employees
Employees at all levels play critical roles in strategic planning and execution. For instance, department leaders and managers may not be as involved in defining the company’s vision, but they establish goals and KPIs that support it. They must also communicate business strategies and track their success to ensure their team members are aligned.
Individual contributors are essential in strategic planning, too. They help their organization achieve its goals by executing critical day-to-day operations. They’re often tasked with creating action plans that, with guidance from their managers, are rooted in company milestones that directly support strategic planning goals.
Individual contributors are uniquely positioned to offer feedback and data on which daily, monthly, and quarterly tactics are effective. As a result, managers should ask for their feedback and perspective to inform future strategies and ensure they feel valued and empowered.
Related: 7 Ways to Empower Your Employees
Stakeholders
Stakeholders have a vested interest in strategic planning. They can be internal (such as customers, employees, board members, and contractors) or external (such as stock owners, suppliers, vendors, and even governments or local communities).
To determine which stakeholders should be part of strategic planning, leaders must consider who has the greatest “investment” in the company’s success, along with the most influence and interest. For example, a CEO has a high degree of interest and influence, while a department manager may have a high degree of interest but a low level of influence.
Keeping open lines of communication with highly influential and interested stakeholders during the strategic planning process is essential. Since a business strategy must address stakeholders’ needs, company leaders should understand their goals and select the right metrics and KPIs to capture past organizational achievements and predict future performance. Keep this in mind when considering short- and long-term wins for stakeholders.
Strategic Planning Is an Organizational Effort
A company's success often hinges on its leaders, employees, and stakeholders understanding and effectively implementing a strategic plan. Using a strategy that leverages all positions within an organization can create an environment of continuous improvement and customer value.
Are you interested in learning more about strategic planning? Explore our online course Business Strategy and download our free e-book on strategy formulation.
