Do you truly understand your organization’s strategy, and are you investing enough time in its development? If you’re like many leaders, the answer might be “not enough.” Research indicates that a significant portion of leaders dedicate minimal time to strategic discussions, which can hinder an organization’s ability to achieve its goals.
Before your organization can reap the benefits of a well-defined business strategy, thorough planning is essential to ensure it remains adaptable and implementable.
Let’s delve into what strategic planning entails and explore its potential benefits for your organization.
What Is Strategic Planning?
Strategic planning is a continuous organizational process that leverages available knowledge to define and document a business’s intended direction. This process prioritizes efforts, efficiently allocates resources, aligns stakeholders and employees with organizational goals, and ensures these goals are supported by data and sound reasoning.
It’s crucial to emphasize that strategic planning is an ongoing process, not a one-off event. Harvard Business School Professor Clayton Christensen, in the online course Disruptive Strategy, highlighted a study of HBS graduates who founded businesses, revealing that 93 percent of those with successful strategies adapted and deviated from their initial strategic plans.
“Most people think of strategy as an event, but that’s not the way the world works,” Christensen states. “When we run into unanticipated opportunities and threats, we have to respond. Sometimes we respond successfully; sometimes we don’t. But most strategies develop through this process. More often than not, the strategy that leads to success emerges through a process that’s at work 24/7 in almost every industry.”
Strategic planning demands time, effort, and constant reassessment. When given appropriate attention, it can steer your business in the right direction.
Benefits of Strategic Planning
1. Establishes a Unified, Future-Oriented Vision
Strategy impacts every employee and provides a practical roadmap for achieving company objectives.
A key advantage of strategic planning is that it cultivates a unified, forward-looking vision that aligns your company and its stakeholders. By ensuring everyone understands your company’s objectives, the rationale behind them, and how they can contribute, you foster a heightened sense of responsibility throughout your organization.
This can lead to cascading positive effects. For example, if a manager lacks clarity regarding your organization’s strategy or the reasoning behind it, they might make team-level decisions that undermine its effectiveness. With a shared vision, everyone in your organization can act with a broader strategy in mind.
2. Highlights Biases and Flaws in Reasoning
The decisions you make are inherently influenced by biases. Participating in the strategic planning process compels you to examine and justify each decision, supporting it with data, projections, or case studies, thereby mitigating your cognitive biases.
Examples of cognitive biases include:
- The recency effect: Favoring the most recently presented option because it’s fresh in your mind.
- Occam’s razor bias: Assuming the most obvious decision is the best one.
- Inertia bias: Choosing options that allow you to maintain familiar thinking, feeling, and acting patterns.
Confirmation bias can be particularly difficult to detect. It’s the tendency to selectively focus on information that supports a specific viewpoint while ignoring contradictory evidence.
If you’re developing a strategic plan and have a preferred strategy, involve others with diverse perspectives to help identify information that either validates or refutes the idea.
Addressing biases in strategic decision-making requires commitment from your entire team and can significantly strengthen your organization’s strategy.
3. Monitors Progress Toward Strategic Goals
A strategic plan allows you to track progress toward achieving goals. When each department and team understands the company’s overall strategy, their progress directly influences its success, creating a top-down approach to tracking key performance indicators (KPIs).
By planning your company’s strategy and defining its goals, KPIs can be established at the organizational level and cascaded down to business units, departments, teams, and individuals. This ensures alignment across all levels of your organization and allows everyone to contribute positively to the business’s KPIs and performance.
It’s crucial to remember that even a comprehensive and structured strategy needs to be agile. As Christensen emphasizes in Disruptive Strategy, a business’s strategy must evolve with the challenges and opportunities it faces. Be prepared to adjust your KPIs as goals change and communicate the reasons for change to your organization.
Enhancing Your Strategic Planning Capabilities
Strategic planning improves your organization’s vision, execution, and progress toward goals. If you want to develop your strategic planning skills, online courses can provide the knowledge and techniques needed to lead your team and organization.
Strategy courses vary from primers on key concepts (like Economics for Managers) to in-depth explorations of strategy frameworks (like Disruptive Strategy), to coursework focused on strategizing for specific organizational goals (like Sustainable Business Strategy).
Mastering the creation of an effective and compelling strategic plan not only invests in your career but also provides lasting value to your organization.
