What is Strategic Planning?

A broad answer to the question, what is strategic planning that corporate strategic planning is systematic attempt to decide how best to anticipate and respond the challenge change. is of

What is strategic planning? It is not just planning for parts of the organization In a sense corporate strategic planning is just like any other type of long range planning. A production manager for example will have a long range plan that shows how their factory will have enhanced capability to produce new products in say the next decade. This will be based on the managers knowledge of trends in manufacturing systems. Similarly a marketing director will be planning the firms product range for some years ahead, knowing about product life cycles, trends in consumer tastes and the competitive dynamics of the market place. So when we are asked what is strategic planning, we can say there is nothing mysterious about it except that it is concerned with plans one step up the hierarchy, that is, not plans for parts or functions of the enterprise but plans for the organization as a corporate whole plans for the forest, not plans for the individual trees. What is strategic planning? It is planning focused on only a few really big decisions At the corporate level there are only a very few questions that need concern the executives responsible for corporate strategic planning in any organization. The long term destiny of any enterprise depends on only two, three, four or at most a handful of absolutely huge decisions. Get these wrong, and no amount of brilliant marketing, research or other expert efforts will turn the organization into a champion performer. Get them right and watch your organization thrive! Corporate strategic planning is mainly concerned with identifying the usually less than handful of really elephant sized issues that require major decisions to be taken. Most of these really big strategic issues and decisions do not require elaborate and detailed calculations. They are usually more matters of qualitative judgment than of numerical accuracy. What is strategic planning? It is simplebut that does not mean it is easy! With all due respect to the highly paid strategy consultants, with their sophisticated statistical analyses, elaborate computer models, many faceted scorecards and multivolume reports, I dont believe you need to be an Einstein to do strategic planning. Corporate strategic plans should be simple, not complex; but they are also difficult, not easy to produce. Part of the difficulty is that the future is uncertain;

part is that many of these decisions are judgements, sometimes moral ones. Not only is this the wrong field for geniuses, but it is a rather barren area for computers and advanced management techniques too. It is, however, just the area of decision-making where experienced senior line managers are in their element. There is no doubt in my mind who the best strategic planners are for any organization whether company or non-profit organization; they are its own top executives. What is strategic planning? A process that produces a strategic plan! A blinding flash of the obvious! But what is a strategic plan. A corporate strategic plan is a plan consisting of a very few simple but far reaching statements about the long term future of the enterprise as a whole. Let me give an example. Imagine a company manufacturing agricultural chemicals. It is extremely successful in this business It has growing cash reserves. Its market share is projected to exceed 25 per cent in the coming year. However, let us imagine, the political climate is hostile to companies perceived to have too much market power, defined as companies whose market share is more than 25 per cent. Several large companies in several industries have recently been rudely shaken by regulatory agency enquiries, with attendant adverse publicity affecting share prices. This company therefore decides to use its strongly positive cash flow to acquire companies in the fields of fertilisers, pharmaceuticals and foodstuffs. This is its corporate strategic plan. It can be restated in four exceedingly brief sentences as below; and once it is committed to action, and once these various companies have been acquired, its destiny will be shaped for many years. It will be extremely difficult to turn back once it has set out on this radical new course. Consider these brief sentences: 1. 2. 3. 4. Our company may soon exceed 25 per cent market share. This means we may come under government curbs on market power. Therefore, we will defend by using our strong cash flows to diversify. We will move into fertilisers, foodstuffs, and pharmaceuticals.

Now it may be objected that this set of statements of corporate strategy is really far too brief. Surely, it may be argued, there should be further levels of decisions statements 5 and 6, or more. And that these should be expanded into a very large mass of detailed descriptions concerning all manner of aspects of all these new business areas. Perhaps there should be, but I believe that, before this company gets down to these details, it should spend a great deal more time thinking about the statements it has already made, especially statements 3 and 4. Indeed, in terms of the answer we are giving to the question what is a strategic planning these statements do qualify as the corporate strategic plan for this organization. They are of the right order; addressing truly elephant sized issues

that may affect the organization for many years to come. All further detail that may be needed is at least an order of magnitude less important. A corporate strategic plan can be that simple. Remember however, that does not mean that the process to produce these seemingly simple statements is easy. And it does not mean that these simple statements are valid. A corporate strategic plan they may be, but whether they are suitable is a different question. Despite a superficial plausibility, I believe these statements are not valid. Statement 3 does not follow from 1 and 2, for example. The mere fact that the company may face some hostility from government agencies and the media does not mean that it must diversify. It could consider a number of alternatives, including not diversifying and meeting the problem head on. Even if diversification is indicated, why choose just these three areas? Why not two or four? Why those three? Why not farm drainage systems or veterinary products? Also, why adopt the structure of a diversified national company? Why not become a world farm chemical company by purchasing international competitors in the field that it understands? Why not go into farming? What is strategic planning? It requires clear thinking, discussing difficult issues, and taking hard decisions. The point that I am making here is absolutely fundamental to understanding of our approach to answering the question what is strategic planning? I believe that most organizations, whether businesses or non-profit organizations take these big decisions without adequate thought and discussion. These decisions are so big that the executives simply do not know how to tackle decisions of that magnitude, so they slide over or round these big ones and tackle the details. Most executives are completely at home with detail. They perceive operational activities and the associated troubleshooting or problem solving as their real job. Time taken for planning discussions is seen as a distraction from their real job. The details of their daily operational reality can be measured, planned and controlled; it is much harder to come to grips with broad concepts like diversification, internationalization, or industry restructuring. This is why so many corporate planning systems start off with deciding the mission of the company. What is strategic planning? It is not writing the mission statement! Conventional wisdom about strategic planning is that you start by writing a mission statement. These approaches do not say how to decide it; an enterprise just writes it and then does its strategic planning. So, is mission an input to the

corporate planning process? Emphatically not! I believe this to be completely misguided; the big decision receives far less discussion than the details. No. Let us have a strategic planning process where the mission is an output. What is strategic planning? It is about the big picture decisions Corporate strategic planning decisions, then, are decisions that affect the whole structure of the company many years or decades into the future huge decisions taken in conditions of extreme uncertainty about the future. It is the size of these decisions, the fact that there are so few of them and the enormous errors in the forecasts on which they always have to be based that characterize corporate planning decisions. How should decisions of this sort be taken? Most of simplystartegic-planning.com will be devoted to answering this question. All that I need to say here is that these decisions are taken by examining the companys strategic situation in its totality. Since this is a lengthy exercise, it is tackled systematically. The planners work systematically through a checklist of factors affecting the company strategically, and at the end of this long difficult process a set of answers to the strategic questions comes out. These are then subjected to a number of tests or evaluations; and if they pass, they are adopted and put into action and carefully monitored, of course. What is strategic planning? Strategic planning is a systematic, formally documented process for deciding the handful of key decisions that an organisation, viewed as a corporate whole, must get right in order to thrive over the next few years. The process results in the production of a corporate strategic plan. What is strategic planning? Strategic planning is a process that produces a strategic plan! Yes and not only a plan, it should also produce other less obvious and more important things like confidence in, commitment to, and communication of the plan throughout the organization. Return to Definition

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