Why Strategic Planning?
An effective strategic planning process can be critical to management’s setting of the direction and priorities for the business.
Why is it important for organizations to develop realistic long-range plans? Many people who have never experienced the execution of a viable planning process feel that it’s a waste of time and often results in unrealistic objectives and strategies which simply distract management from the important day-to-day work. However, it doesn’t need to be this way……an effective strategic planning process can be critical to management’s setting of the direction and priorities for the business and to help allocate precious resources to the most important initiatives. And, if done correctly, the planning process is concise and crisp – it needn’t consume managements in endless hours of meetings and analysis.
The overarching reason for long-range planning is the existence of “lead-time” required to initiate most actions to maintain competitiveness. If that were not the case, management could simply wake up each morning to see what the business conditions were, then act accordingly to maximize their organization’s sales and profits. However, we know that this is unrealistic. It takes time to identify new employee talent and bring them on board, the same is particularly true of management succession-planning. Lead-time is also required to design new products or services, to acquire new equipment or facilities, to partner with another organization to expand distribution capability, to raise sufficient capital to fuel all these new initiatives. The purpose of planning is to “anticipate” these needs in advance, so management can move expeditiously and in the most cost-effective way, to enable support of these future initiatives.
The Plan can also identify the requirement for significant changes in the organization’s business model (how it adds value to its customers and other stakeholders) or the way it executes, based on perceived changes in industry behavior and procurement patterns. For example, look at how the Internet has transformed consumer buying practices versus traditional retail purchasing.
What does an effective planning process look like?
The objective of the planning process is for management and other key stakeholders (such as one’s investors or Advisory Board) to agree on long-term goals and to develop a rational set of initiatives & priorities, along with specific actions and timing as well as identification of the resources required (capital, facilities, people), to achieve those goals. An effective planning process will involve an assessment and evaluation the future business environment (market demand, the competitive environment, how products or services will be procured, etc) which may require internal shifts in resources and direction. The planning process should also identify specific opportunities such as areas for increased sales and profits, potential roadblocks to achievement of the Plan’s goals, and detail the critical actions necessary to achieve the Plan.
Lastly, an effective planning process achieves “buy-in” by the management team who will be counted on to execute the agreed strategies, as opposed to a Plan that is “tossed over the wall” to the employees without their input on business opportunities, issues, or the do-ability of the plan.
A viable planning process is vital to an organization’s competitive sustainability and the process does not need to be a burdensome one. Some of the key outcomes from developing an effective plan include:
➢ Identify the critical business Issues that your organization will face over the coming 3-5 years.
➢ Develop the optimal Strategies for your sales, operational, organizational development and capital-raising initiatives.
➢ Prioritize your strategic initiatives and identify the people/facility/capital resources required to support your organizational objectives.
➢ Gain critical “buy-in” by the team who will be counted on to execute the Plan.
Roger O’Brien is President of O’Brien Associates LLC, a general management consulting firm based in Rochester, New York and Singer Island, Florida. He can be reached via the company website: www.ROBrienAssociates.com or by telephone: 585-737-0400