Strategic Planning and Long-Range Planning
Although many use these terms interchangeably, strategic planning and long-range planning differ in their emphasis on the “assumed” environment. Long-range planning is generally considered to mean the development of a plan for accomplishing a goal or set of goals over a period of several years, with the assumption that current knowledge about future conditions is sufficiently reliable to ensure the plan’s reliability over the duration of its implementation. In the late fifties and early sixties, for example, the U.S. economy was relatively stable and somewhat predictable, and, therefore, long-range planning was both fashionable and useful.
On the other hand, strategic planning assumes that an organization must be responsive to a dynamic, changing environment (not the more stable environment assumed for long-range planning). Certainly a common assumption has emerged in the new economy that we are faced with in business: e-business and going global are an essential part of the strategic plan. This assumption, that the environment is indeed changeable, is often done in unpredictable ways. Strategy is about seeing the opportunities, then, stresses the importance of making decisions that will ensure the organization’s ability to successfully respond to changes in the environment. Organizations that resist change will fail to adapt, and will not survive.
Strategic Thinking and Strategic Management
Strategic planning is only useful if it supports strategic thinking and leads to strategic management – the basis for an effective organization. Strategic thinking means asking, “Are we doing the right thing?” Perhaps, more precisely, it means making that assessment using three key requirements about strategic thinking: a definite purpose in mind; an understanding of the environment, particularly of the forces that affect or impede the fulfillment of that purpose; and creativity in developing effective responses to those forces.
It follows, then, that strategic management is the application of strategic thinking to the job of leading an organization. One precise question provides a framework for understanding strategic management: continually asking the question, “Are we doing the right thing?” It requires attention to the “big picture” and the willingness to adapt to changing circumstances, and consists of the following three elements:
- formulation of the organization’s future mission in light of changing external factors such as regulation, competition, technology, and customers
- development of a competitive strategy to achieve the mission
- creation of an organizational structure which will deploy resources to successfully carry out its competitive strategy.
Strategic management is adaptive and keeps an organization relevant. In these dynamic times it is more likely to succeed than the traditional approach of “if it ain’t broke, don’t fix it.”
What Strategic Planning Is Not
Everything said above to describe what strategic planning is can also provide an understanding of what it is not. For example, it is about fundamental decisions and actions, but it does not an attempt to make future decisions. Strategic planning involves anticipating the future environment, but the decisions are made in the present. This means that over time, the organization must stay abreast of changes in order to make the best decisions it can at any given point – it must manage, as well as plan, strategically.
Strategic planning has also been described as a tool – but it is not a substitute for the exercise of judgment by leadership. Ultimately, the leaders of any enterprise need to sit back and ask, and answer, “What are the most important issues to respond to?” and “How shall we respond?” Just as the hammer does not create the house, so the data analysis and decision-making tools of strategic planning do not make the organization work – they can only support the intuition, reasoning skills, and judgment that people bring to their organization.
Finally, strategic planning, though described as disciplined, does not typically flow smoothly from one step to the next. It is a creative process, and the fresh insight arrived at today might very well alter the decision made yesterday. Inevitably the process moves forward and back, side-to-side, several times before arriving at the final set of decisions. Therefore, no one should be surprised if the process feels less like a comfortable trip on a commuter train, but rather like a ride on a roller coaster. But even roller coaster cars arrive at their destination, with a little creativity.
Values That Support Successful Strategic Planning
When you come up with an idea for your business, how do you go about assessing whether it is a good idea? How do you convince yourself (and others) that you can make money exploiting the idea? A written strategic plan is one way to evaluate an idea before you commit to pursuing it. The process of creating the plan can reveal factors that you might otherwise not consider. And that can save you big money.
The following guiding principles support the process of strategic planning. These are self-explanatory and are offered as a way to approach this work.
Successful strategic planning:
- leads to action
- builds a shared vision that is values-based
- is an inclusive, participatory process in which board and staff take on a shared ownership
- accepts accountability to the organization
- is both externally and internally focused and sensitive to the organization’s environment
- is based on quality data
- requires an openness to questioning the status quo
- is a key part of effective management.
Many business managers feel that they can keep track of everything without the need to write it down. A written plan, after all, is really just the personification of the internal planning that every business manager does anyway. However, the structure a written plan provides makes it more likely that you will consider all relevant factors and that nothing important slips through the cracks.
What justifies the additional time and energy you’ll spend creating a written plan that presents a blueprint of your business idea? For starters, how about an increased chance for success? More specifically, a plan can be:
- A reality check when you first examine the feasibility of your business idea, which forces you to consider all relevant factors
- Your business’ resume, which will be vital in dealing with lenders and outside investors, and an important tool in negotiating with vendors and attracting employees
- A timetable for operations, helping you to coordinate all the diverse activities that go into running your own business
- A modeling Tool that helps you evaluate the variable factors that affect your business, so you can better prepare to deal with situations that may arise as conditions change
- A vehicle for tracking progress of your business
- A blueprint against which you can adjust operations in order to achieve your goals
- A starting point for future planning