What Is Strategic Planning? - Business Management for Financial Advisers

Strategic Planning is a management tool that helps an organization focuses its energy, to ensure that members of the organization are working toward the same goals, to assess and adjust the organization's direction in response to a changing environment.

In short, strategic planning is a disciplined effort to produce fundamental decisions and actions that shape and guide what an organization is, what it does, and why it does it, with a focus on the future. (Adapted from Bryson's Strategic Planning in Public and Nonprofit Organizations)

The process is strategic because it involves preparing the best way to respond to the circumstances of the organization's environment, whether or not its circumstances are known in advance; nonprofits often must respond to dynamic and even hostile environments. Being strategic, then, means being clear about the organization's objectives, being aware of the organization's resources, and incorporating both into being consciously responsive to a dynamic environment.

The process is about planning because it involves intentionally setting goals (i.e., choosing a desired future) and developing an approach to achieving those goals. The process is disciplined in that it calls for a certain order and pattern to keep it focused and productive. The process raises a sequence of questions that helps planners examine experience, test assumptions, gather and incorporate information about the present, and anticipate the environment in which the organization will be working in the future.

Finally, the process is about fundamental decisions and actions because choices must be made in order to answer the sequence of questions mentioned above. The plan is ultimately no more, and no less, than a set of decisions about what to do, why to do it, and how to do it.

Because it is impossible to do everything that needs to be done in this world, strategic planning implies that some organizational decisions and actions are more important than others - and that much of the strategy lies in making the tough decisions about what is most important to achieving organizational success

The concept of strategy often confuses people, because the term is used in so many different ways—sometimes even by experts. Mint berg,

  • Hallstand, and Lampel frame the various conceptions of strategy as 5 P's. So strategy can be seen as a:
  • Plan—a guide for a course of action or a path from a current state to a desired future state

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  • Pattern—a consistency of behavior over time.
  • Position—the location of particular products in particular markets.
  • Perspective—the theory of the business, that is, a philosophy about interacting with customers or supplying products and services.

Ploy—a means of gaining competitive advantage through specific maneuvers designed to outwit cost ill, a well conceived and written strategic plan can be a helpful guide for programs, policies, and processes if it achieves some basic things. Note that most of these characteristics have less to do with the plans' format and more to do with its practicality and clarity. To these ends, good strategic plans share the following characteristics.

  • Accountability—responsibility is assigned for successful completion of initiatives.
  • Balance—the plans guide not only financial decision-making, but also operational and human resources issues.
  • Flexibility—a mechanism for changing and updating the plan is built into the process.
  • Manageability—in-process measures are identified to ensure processes are working as intended, critical performance issues are addressed, resources required are projected, and methods of status reporting are in place.
  • Prioritization—priorities are established whenever there are multiple interdependent action plans.
  • Realism—the question of what the organization can do versus what it would like to do is addressed rationally, though the tone is optimistic.
  • Specificity—expected results and milestones are clearly defined, along with the specific actions for implementation and the deliverables for each step.
  • Sustainability—a sufficient time period is covered to close performance gaps.

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