Approaches to Strategic Planning

by Peter R. Geyer, Managing Principal, Geyer Global Partners

When developing a strategic plan for an organization, having a basic framework to ensure that planning stays focused on key issues, it is essential to keep in mind that the appropriate development approach will necessarily vary according to a number of factors:

• Size of the organization

• Age of the organization

• Management structure of the organization

• Management style of the organization

• Ownership structure of the organization

• Target market(s) of the organization

• Sector in which the organization operates

• Profit imperatives of the organization 

Consideration of these various factors will affect how a strategic plan is developed, how that plan is implemented, the targets of that plan, and the time span allowed to achieve those targets.  With all of this in mind, I tend to be in favor of beginning the strategic planning process by looking at it in a “linear” or a “goals-oriented” framework.  The idea is to determine what the overarching strategic goal or mission of an organization will be, and then to determine through market research, internal deliberations, and consultation with other stakeholders, the best tactics to use to achieve that goal or mission.  As I define it, this is a three-step process:

Step 1:  Define the Problem

Defining the problem provides a strategic planner with the foundation that they need to develop a coherent and appropriate plan.  

1. Define the Organization – An organization needs to understand who it is, what it does, and how it does it, from top to bottom.  I would do this by spending time at an organization’s facilities, by looking at its processes, and by interviewing its executives, managers, and workers.   
2. Define the Products or Services – In the short term, whether you are selling a product or a service, it is essential to understand what it can do, what benefits it brings to the consumer, what costs it entails, whether there are competing products or services already in the market, what existing and potential uses there are.  In the longer term, an organization that is thinking strategically rather than merely tactically should be looking beyond specific products or services, and instead be considering what core competencies, skills, or assets can be leveraged in the development of future products or services. 
3. Define the Target – An organization may have developed the most revolutionary and useful product or service since the discovery of fire, but if nobody buys or uses this product or service, its existence is irrelevant.  Who is the target consumer?  What are the available or most effective sales and distribution mechanisms?  Are you going alone, or are you seeking partners to help you get to market? 
4. Define Success – Without explicitly defining your metrics for success, it is extremely easy for an organization wrapped up in the day-to-day struggle of simple survival to lose its way.  Many organizations define success via a “Mission Statement.”  Although this is not always necessary, it is helpful to have an explicitly stated metric for success in order to help everybody in the organization maintain focus – whether it is maximizing shareholder or stakeholder value, providing superior products at a reasonable price, or stretching the boundaries of technological development.  The definition of success can also be less broad, and more target oriented.  Perhaps it is to go public within two years.  Perhaps it is to achieve €10 million in annual revenue within five years.   Whether overtly stated or not, the definition of success provides an organization with a guiding star that should impact every decision that it makes.

Step 2:  Analyze the Options

Once an organization has defined the problem and set strategic targets, it then must decide upon the most appropriate tactics to achieve those strategic targets.  A very simple model for deciding on tactics is to conduct a SWOT (“Strengths, Weaknesses, Opportunities, Threats”) analysis.  This type of analysis, as well as many others that can be either simpler or more complex, helps an organization to better see where there are tactical opportunities and where there are potential tactical impediments.

1. What are the organization’s strengths?  In other words, what does an organization’s products or services bring to the marketplace that no other organization’s does?  An organization must identify where it adds unique or enhanced value to the marketplace, or where it has the core competencies to add unique or enhanced value. 
2. What are the organization’s weaknesses?  Just because the marketplace is already crowded does not mean an organization should not enter into it, as long as the organization stands out through its expertise, its quality, or its service.  By understanding where an organization is weak, it can focus on mitigating or eliminating those weaknesses. 
3. What opportunities exist in the marketplace?  An organization may have an excellent product or service, but will anybody actually buy it?  And if so, for what purpose will they use it?  Who are its potential customers?  Who are its potential partners?  The answers to these questions will drive the success or failure of an organization’s efforts to achieve its strategic goals.  It is in the area of discovering potential opportunities that in-depth research is absolutely essential to determine where an organization’s products or services will have the most potential impact.  Sometimes organizations will discover that there is no longer (or perhaps never was) a demand for existing products and services, which would indicate that they should refocus their resources in new areas.  Sometimes there will be opportunities that an organization never even realized exist in marketing its products and services in new ways or to new customers. 
4. What threats exist in the marketplace?  Are there any sea change technologies that would render an organization’s product or service obsolete?  Any regulatory changes that would take away existing or potential markets?  Any particularly strong or threatening competitors or preexisting natural monopolies?  Potential threats can come in all shapes and sizes, and without careful analysis, some threats can be difficult to detect.  Even extremely popular products or services can quickly fall prey to the unforeseen effects of market or regulatory changes.

Step 3:  Reporting the Results

Reporting the results is one of the most important steps of the strategic planning process, but one that is perhaps the most overlooked.  No matter how well considered and argued, a plan that is ignored, or that nobody ever reads, is useless.  For a strategic plan to be effective, it must be communicated and regularly reinforced among management and staff at all levels of the organization.  Tactics may be a trade secret known only to a few people in management, but strategy should never be.

1. Reporting to Management – Regardless of the organization – whether it is hierarchical, flat, or something in between – reporting to management is essential.  Without full buy-in from management, a strategic plan is simply not worth the effort and resources expended on its production.  But management buy-in must go further than simply reading the plan and offering verbal support.  A well-conceived strategic plan must tangibly affect more than simply how an organization conducts its business.  It must also tangibly affect how an organization thinks about how it approaches its business.  No matter how structurally flat an organization is, whether explicitly or implicitly, staff inevitably take their social cues from their managers.  If a manager believes in the value of the organization’s strategic plan, and if that manager uses that strategic plan constantly and consistently as a signpost to guide them, staff will typically be naturally inclined to do the same. 
2. Reporting to Staff – While I have already indicated that staff will naturally be inclined to follow a manager’s adherence to an organization’s strategic plan, that inclination can only go so far if the staff do not actually know or understand what that strategic plan prescribes.  A strategic plan that is effectively communicated and constantly reinforced with staff is a source of immense strength to an organization.  It ensures that an entire organization from top to bottom is pursing the same goal, rather than working at cross-purposes against itself among competing departments or competing managers.  Both managers and employees can have their performance measured against tangible and clearly enunciated strategic goals, which ensures greater focus on achieving them.  Finally, when staff see opportunities that align with an organization’s strategic goals, they have the ability to make the entire organization stronger and more entrepreneurial.    
3. Follow-Up Questions – Many analyses raise as many new questions as they answer, and the development of any strategic plan should be an iterative process.  From time to time, strategic imperatives for an organization will change, and its strategic plan should be adaptable enough to adapt to these new imperatives.  

Concluding Thoughts

As indicated at the beginning, there are many different approaches to strategic planning.  Some managers will argue that strategic plans are too restrictive, that they are too inflexible, or that the fast pace of modern business renders strategic planning obsolete. 

Those who see strategic plans as being too restrictive or inflexible are probably misusing or misunderstanding the process.  A strategic plan should be a living document, not simply something that was considered once and then locked inside a protective case where it will remain untouched forever after.  If a goals-oriented strategic planning model does not fit an organization’s needs, alternatives such as scenario planning (where strategy is devised for competing scenarios), alignment planning (where strategy is devised to coordinate mission and resources), or issues-based planning (where strategy is devised to address immediately pressing issues) can be helpful alternatives.  But inherent in all of these planning alternatives is the understanding that the more dynamic and fast-paced the environment, the more often strategic plans need to be reconsidered and adapted to changing circumstances.

This brings us to those who argue that strategic planning is an obsolete concept.  While it is true that business moves at a pace undreamed of when many strategic planning models were originally devised, it can be forcefully argued that this faster pace recommends more than ever that a well-considered and flexible strategic plan be in place.  Without the focus afforded by universally accepted strategic goals, entropy that ultimately leads to chaos naturally ensues.   As Sun Tzu famously wrote in The Art of War two and a half millennia ago, “Strategy without tactics is the slowest route to victory. Tactics without strategy is the noise before defeat.”  This remains just as true today.

For more information about Geyer Global Partners, please visit www.geyerglobal.de.