By Shannon Sage
Clearing Up Confusion About the Strategic Planning Process

Many people are confused by the terms strategy, strategic plan, and strategic planning process. For the moment, forget what you’ve heard about this subject. Strategic planning makes a huge difference to your organization both tangibly and intangibly. Below are some explanations that should clear up all the confusion.

What is strategy?

Strategy means consciously choosing to be clear about your company’s direction in relation to what’s happening in the dynamic environment. With this knowledge, you’re in a much better position to respond proactively to the changing environment.

The fine points of strategy are as follows:

  • Establishes unique value proposition compared to your competitors
  • Executed through operations that provide different and tailored value to customers
  • Identifies clear tradeoffs and clarifies what not to do
  • Focuses on activities that fit together and reinforce each other
  • Drives continual improvement within the organization and moves it toward its vision

Knowing what strategy is can also be explained by looking at what strategy is not. Dr. Michael Porter, the leading strategy guru and professor at Harvard, had this to say at the 2006 World Business Forum in Chicago. Strategy is not:

  • Best practice improvement
  • Execution
  • Aspirations
  • A vision
  • Learning
  • Agility
  • Flexibility
  • Innovation
  • The Internet (or any technology)
  • Downsizing
  • Restructuring
  • Mergers/Consolidation
  • Alliances/Partnering
  • Outsourcing

Surprising strategic-planning stats

Consider the following statistics from the Balanced Scorecard Collaborative:

  • 95 percent of a typical workforce doesn’t understand its organization’s strategy
  • 90 percent of organizations fail to execute their strategies successfully
  • 86 percent of executive teams spend less than one hour per month discussing strategy
  • 60 percent of organizations don’t link strategy to budgeting

So what’s the upshot of these surprising revelations? Strategic planning matters to the life of your business.

What is a strategic plan?

Simply put, a strategic plan is the formalized roadmap that describes how your company executes the chosen strategy. A plan spells out where an organization is going over the next year or more and how it’s going to get there. Typically, the plan is organization-wide or focused on a major function such as a division or a department. A strategic plan is a management tool that serves the purpose of helping an organization do a better job, because a plan focuses the energy, resources, and time of everyone in the organization in the same direction.

So, you may be thinking, “Hey I’ve got this great book on business plans, so I’ll just use that to form my strategic plan.” But be aware that strategic plans and business plans aren’t the same concepts.

A strategic plan:

  • Is for established businesses and business owners who are serious about growth
  • Helps build your competitive advantage
  • Communicates your strategy to staff
  • Prioritizes your financial needs
  • Provides focus and direction to move from plan to action

A business plan, on the other hand:

  • Is for new businesses, projects, or entrepreneurs who are serious about starting up a business
  • Helps define the purpose of your business
  • Helps plan human resources and operational needs
  • Is critical if you’re seeking funding
  • Assesses business opportunities
  • Provides structure to ideas

With these tips you can now get started on the right foot with your strategic plan. Stay tuned for more tips and tricks from the planning experts here at OnStrategy.