Strategic planning
From Exampleproblems
Strategic planning suggests ways (strategies) to identify and to move toward desired future states. It consists of the process of developing and implementing plans to reach goals and objectives. Insofar as we label a piece of planning "strategic" we expect it to operate on the grand scale and to take in "the big picture" (in contradistinction to "tactical" planning, which by definition has to focus more on the tactics of individual detailed activities). The grandiose ambitions, sense of power/influence and substantial egos associated with planners have helped to make the terms "strategic plan", "strategic planning" and "strategic planner" more common than their tactical equivalents, at least outside the military. Strategic planning takes place primarily in military situations (see military strategy), in business activities and in government. Within business, strategic planning may provide overall direction (called strategic management) to a company or give specific direction in such areas as: * financial strategies* human resource/organizational development strategies* information technology deployments* marketing strategies Within government, strategic planning provides guidance for organizational management similar to that for business, but also provides guidance for the evolution or modification of public policy and laws. Areas of such public policy include:* Funding of infrastructure and rate-setting (streets, water-supplies, sewers, and parks)* Functional plans such as for land use, transportation, and water resources* Growth management and/or comprehensive planning But strategic planning can occur in a wide variety of activities from election campaigns to athletic competitions, as well as in strategic games such as chess. This article looks at strategic planning in a generic way so its content can apply to any of the above areasAn effective strategy will:* have the capability to obtain the desired objective* fit well both with the external environment and with an organization's resources and core competencies - it should appear feasible and appropriate* have the capability of providing an organization with a sustainable competitive advantage - ideally through uniqueness and sustainability* prove dynamic, flexible, and able to adapt to changing situations* suffice on its own - specifically providing value or favorable outcomes without the need for cross-subsidization
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Methodologies
Most strategic planning methodologies depend on a three-step process (sometimes called the STP process):* Situation - evaluate the current situation and how it came about* Target - define goals and/or objectives (sometimes called ideal state)* Path - map a possible route to the goals/objectives An alternative approach, although equally effective is called Draw-See-Think
- Draw - what is the ideal image or the desired end state?
- See - what is today's situation? What is the gap from ideal and why?
- Think - what specific actions must be taken to close the gap between today's situation and the ideal state?* Plan - what resources are required to execute the activities?
In general terms, strategic planning can proceed incrementally or revolutionarily.
- Strategy as logical incremental steps** formal approach** 4 steps:*** analysis, including environmental scanning, internal resource assessment, external assessment, intelligence-gathering: an assessment of the current situation
- SWOT (Strengths, Weaknesses, Opportunities, Threats) - isolating those aspects of the environment that seem particularly important
- strategy-development, including determining vision, mission, objectives, and strategem-generation*** strategic plan, including strategy specification and resource allocation
- GTSM (Goals, Targets, Strategies, Measures) - the setting of goals, targets, and measurable objectives*** implementation, monitoring, adjustment, and control* Strategy as revolution** identify the unquestioned beliefs in an industry/sector/organization and challenge them - look for opportunities to re-write the rules of the environment
- look for major discontinuities in technology, lifestyle, habits, and geopolitics, and embrace such changes wholeheartedly - do not waste time making small incremental adjustments - stand by to create a completely new business model at any time** more a mind-set than a formal technique** not rule or ritual-oriented, not reductionist, not reactive, not autocratic
Theorists frequently make the distinction between strategy and tactics. Strategy involves planning how to get where one wants to go. Tactics can potentially comprise the implementation of such over-arching plans. They deal with specific actions by particular people or by particular groups. Some theorists see it as a mistake to separate strategy and tactics. Constantinos Markides describes strategy formation and implementation (tactics) as an on-going, never-ending, integrated process requiring continuous re-assessment and reformation. He sees strategic planning as both planned and emergent - dynamic and interactive. J. Moncrieff also stresses strategy dynamics - he recognizes strategy as partially deliberate and partially unplanned. The unplanned element comes from two sources: # emergent strategies - resulting from the emergence of opportunities and threats in the environment# strategies in action - ad hoc actions by many people from all parts of an organization Strategic plans typically look 5 or more years into the future. They differ in this respect from tactical plans (sometimes referred to as functional plans), which look 2 to 4 years into the future; and from operational plans [such as budgets] which have an annual scope. Henry Mintzberg could not identify one process that he would call "strategic planning". Instead he concluded that five types of strategies exist:# Strategy as plan# Strategy as ploy# Strategy as pattern# Strategy as position# Strategy as perspective
Goals, objectives and targets
Differences between a current situation and a future aspirational state can appear as a deficiency or as a gap. Objectives and goals serve to eliminate this gap. Some writers distinguish between goals (inexactly formulated aims that lack specificity) and objectives (aims formulated exactly and quantitatively as to time-frames and magnitude of effect). For example, a gambler might have the ambiguous goal: "I want to get lucky tonight". Converting this into an objective, it might become: "I want to make $100 at the blackjack table by 8 o'clock tonight." Not all authors make this distinction, preferring to use the two terms interchangeably.
In the financial arena, or when talking statistically, one often refers to goals as "targets".
People typically have several goals at the same time. "Goal congruency" refers to how well the goals combine with each other. Does goal A appear compatible with goal B? Do they fit together to form a unified strategy? "Goal hierarchy" consists of the nesting of one or more goals within other goal(s).
One approach recommends having short-term goals, medium-term goals, and long-term goals. In this model, one can expect to attain short-term goals fairly easily: they stand just slightly above one's reach. At the other extreme, long-term goals appear very difficult, almost impossible to attain. (Strategic management jargon sometimes refers to "Big Hairy Audacious Goals" (BHAGs) in this context.) Using one goal as a stepping-stone to the next involves goal sequencing. A person or group starts by attaining the easy short-term goals, then steps up to the medium-term, then to the long-term goals. Goal sequencing can create a "goal stairway".In an organizational setting, the organization may co-ordinate goals so that they do not conflict with each other. The goals of one part of the organization should mesh compatibly with those of other parts of the organization.
Individuals within organizations will typically have personal goals. Although individuals often have goals that oppose organizational goals (such as having as high a salary as possible), if personal goals diverge too incompatibly from organizational goals they may result in limited progress towards the mere organizational goals.
Mission statements and vision statements
Organizations sometimes summarize goals and objectives into a mission statement and / or a vision statement:
- A Definition of Vision in a dictionary: 'An Image of the future we seek to create'. </BR> A vision statement describes in graphic terms where the goal-setters want to see themselves in the future. It may describe how they see events unfolding over 10 or 20 years if everything goes exactly as hoped.
- A definition of Mission in a dictionary : purpose, reason for being.
Many people mistake vision statement for mission statement. Both are fundamentally different. Mission statement defines the purpose or broader goal for being in the existence or in the business. It serves as a guide in times of uncertainty, vagueness. It is like guiding light. It has no time frame. The mission can remain 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.
For example, "We help transport goods and people efficiently and cost effectively without damaging environment" is a mission statement. Ford's brief but powerful slogan, "Quality is Job 1" could count as a mission statement. While "We will be one amoung top three transporters of goods and people in North America by 2010" is a vision statement. You can vividly see an image of the organization in year 2010 as one among top 3. It is very concrete and unambigious goal.
To make mission statement effective it needs to be aligned with the prevailing culture in that organization. Mission and Values go hand in hand. Lofty mission statement means nothing if it is not in congruent with the values practiced by the organization. Good example is Enron.
A mission statement can resemble a vision statement in few companies, but that can be grave mistake. It can confuse the people. While mission statement helps inculcate values in employees, the vision statement has direct bearing on the bottomline and success of the organization. The vision statement can galvanize the people to achieve defined objectives even if they are stretch objectives provided the vision is SMART (Specific, Measurable, Achievable, Rational and Time Bound).
Mahatma Gandhi had a simple vision of getting rid of British in India and establish vibrant democracy in India. He had specific image of post British India in his mind and he talked of that image at every opportunity and to every one who was willing to listen.
The effect of such a powerful vision and articulation of this powerful vision in a simple to understand language was dramatic on history of India. He and his followers defeated British without using any weapons or any violance. Their mission statement was not to use any violence and to love even the enemy. The 'Satyagraha' was not targetted towards the British people but to unjust, unlawful British imperial rule on India. They could come up with different strategies to achieve their vision while remaining loyal to their mission statement. So the mission and vision both served as a guide.
Nelson Mandela used the same tactics in South Africa later.
These two examples should be enough to demonstrate the profound impact a powerful vision can have on entire mass of humanity or even on entire generation. The powerful vision statements are very important for any organization to succeed in today's world.
Features of an effective vision statement may include:
- clarity and lack of ambiguity;
- paint a vivid and clear picture, not ambigious;
- describing a bright future (hope);
- memorable and engaging expression;
- realistic aspirations, achievable;
- alignment with organizational values and culture, Rational;
- time bound if it talks of achieving any goal or objective.
In order to become really effective, an organizational vision statement must (the theory states) become assimilated into the organization's culture. Leaders have the responsibility of communicating the vision regularly, creating narratives that illustrate the vision, acting as role-models by embodying the vision, creating short-term objectives compatible with the vision, and encouraging others to craft their own personal vision compatible with the organization's overall vision.
Why strategic plans fail
In general, strategic plans can fail for two types of reasons: inappropriate strategy and poor implementation.
Inappropriate strategies may arise due to:
- inaccurate intelligence gathering;
- failure to understand the true nature of the problem;
- strategies incapable of obtaining the desired objective;
- poor fit between the external environment and organizational resources* infeasibility.
Poor implementation of a strategy can happen due to:
- over-estimation of resources and abilities;
- failure to co-ordinate;
- ineffective attempts to gain the support of others or resistance;
- under-estimation of time, personnel, or financial requirements;
- failure to follow the plan.
