5 Reasons Why A Strategic Plan is Necessary
While there are corporate leaders who have mastered the strategic planning process, the vast majority struggle to develop and execute an actionable Strategic Plan. In a survey conducted by Bridges Business Consultancy, 48% of all organizations fail to meet at least half of their strategic goals. Let’s first clear up the common error of confusing strategic and annual planning. Strategic planning is best described as big picture goals and formal plans for the future. Goals should number no more than 3 – 5 per year, to make them achievable. Annual planning, on the other hand, details the specific steps individual business departments will take to achieve the goals outlined in the Strategic Plan. Let’s take a look at five reasons why a Strategic Plan is necessary.
Provides Direction
Compare strategic planning with a ship that leaves port with no navigational tools. It has no idea what direction to head, or where it is supposed to end up. This is similar to an organization without a Strategic Plan. Strategic planning ensures that all the business components are moving in the same direction, and that company resources are allocated properly to each component. Without this direction, your business departments will tend to focus on their pet projects without concern for the bigger picture. Financial and human resources are allocated without reason.
Encourages Fact-Based Discussions
Developing a Strategic Plan will diffuse potentially touchy subjects or “society-driven” topics that are often challenging for managers to navigate. The Strategic Plan provides each department with specific guidance on where leadership wants to go. The Strategic Plan is not the work of one individual. It takes an entire team of leadership, managers and even subject matter experts to pull all the pieces together.
Creates a Framework for Allocating Resources
The Strategic Plan is also the basis for allocating both human and financial resources. It is a measuring stick that helps determine departmental budgets. The Strategic Plan is critical for understanding how much money needs to be allocated to achieve a particular goal. It also guides the organization’s managers and leadership in allocating human resources. Moving talent to an area where their skills are more aligned will play a direct role in helping the company overall.
Provides Context for Evaluating Employee Performance
When the organization develops specific goals and objectives as part of the Strategic Plan, one benefit is the ability to cascade those corporate level goals down to specific, individual level performance metrics linked to the goals. Coupling individual performance metrics to organizational goals gives employees a sense of ownership in the success of the organization. The employee understands their work is making a difference.
Fosters a Culture of Informed Decision Making
Besides ensuring everyone throughout the organization is working toward the same goal/s, developing and executing a Strategic Plan also impacts the organization’s culture by setting a standard by which decisions are made. Most goals and objectives require the input of different departments throughout the organization. Leadership solicits input from employees, which demonstrates that leadership recognizes the need for information and the value of individual knowledge and expertise.
Strategy is the process of making choices about your business,including what you are delivering as well as what you do not intend to deliver. Strategy is the framework for making decisions about how goals will be accomplished to deliver value and competitive edge. If you are struggling to develop an actionable Strategic Plan and would like a fresh perspective, feel free to contact Caja Holdings LLC. We’re available to help you sort through the muddle and discuss potential solutions.