The Importance of Strategic Planning for Business
Strategic planning is a process that many businesses undervalue to their detriment. One of the key problems that businesses have in handling organisational strategy is only considering it at the start of their operations and ignoring it thereafter.
According to research carried out by the Harvard Business Review, as much as half of executive leadership teams do not spend any time discussing strategy. It was also found that 95% of company employees did not understand what the organisational strategy was. These figures may help in understanding why as much as 90% of businesses fail to meet their strategic goals.
It also indicates a need for strategy to be considered an ongoing process in the business that management should continually review and adjust as new information emerges and the environment in which the business operates fluctuates.
What is strategic planning?
Strategic planning is a continuous process of utilising available information to track a business’s progress in achieving set goals. It involves multiple tasks including prioritising work, organising for effective allocation of resources, and ensuring the understanding and buy-in of employees and stakeholders in the organisation’s goals and vision. It is also vital that when strategizing, the goals set are based on the most current and pertinent data that will lead to sound judgement and planning.
To help increase the likelihood of a business achieving its strategic goals, there is also a need to ensure that this planning is made into an ongoing process, not a one-off event. Many of the most successful businesses are those that keep on top of their strategic planning, making changes to it as needed, even if it results in a serious deviation from the business’s original strategic plans.
The business environment is one which continually changes. New challenges and opportunities continually pop up, requiring businesses that want to keep thriving to be flexible in their responses. Even if not every response proves successful, being agile and evolving strategy places such businesses in a better position to survive and succeed. This continuous process requires adequate input of time and effort.
Here are the key benefits businesses can derive from ensuring strategic planning.
Why businesses need strategic planning
- Provide a vision that stakeholders can focus on and work towards
The most successful businesses are those that ensure that stakeholders, especially employees, have a good understanding of what the business is trying to accomplish and how their actions contribute to bringing the organisation one step closer.
To achieve buy-in from stakeholders, there is a need to share certain information with them and ensure their understanding. This includes not just the vision for the business, but also why this goal was chosen, what strategies that will help in achieving it, and how their contributions will help in realising those goals. This will aid in developing a collective feeling of responsibility across the organisation.
Management needs to make an effort to ensure this understanding is clear throughout the organisation. If there is a breakdown in communication or misunderstanding at some level in the chain of command, it could cause conflict and poor decision making in certain sections of the business. There is a strong need to ensure a united mindset so that everyone can effectively work towards the same goals at their individual task level while keeping the broader strategy in mind.
- Better decision making
Strategic planning requires that you review each decision you make, ensuring that it is suitably backed by data, research, case studies and so on. This effort to justify and gauge the worth of decisions made helps to reduce cognitive biases.
There are different kinds of biases, including the recency effect that makes us more inclined to focus on the most recently put forward information because it is the clearest in our memory or minds while neglecting older information. Confirmation bias is also problematic as it causes us to fixate on a specific viewpoint, driven by a desire to only want to focus on information that supports said viewpoint and ignoring inconsistencies due to pre-existing beliefs.
Holding discussions with other stakeholders and consultants is vital to strategic planning as it can help nullify many biases. This can provide opportunities for other viewpoints to be presented and debated that can lead to better judgement as to whether or not the chosen approach should be carried on with, amended, or eliminated.
This makes strategic planning, not just an ongoing effort but also a team effort where contributions of others can help to strengthen plans through improved discussion. This participation can further nurture buy-in and commitment from team members.
- Track performance
When you have a strategic plan in place, it becomes easier to track the performance of individual team members and view the overall progress that is being made towards the organisation’s goals. Multiple tools can support these efforts, including the use of project management software that provides a clear view of the various tasks being carried out for different projects in real-time.
This use of technology allows management to connect with teams, monitor budgets and chart the progress of tasks from even remote locations. It also allows for easy adjustments to be made when needed, whether it is to schedules or resources to better accommodate planning changes. The software you use should be as agile and responsive as your take on strategic planning.
With strategic planning comes the determination of key performance indicators (KPIs) that can be monitored to ensure the business is on track to successfully achieve its goals. KPIs can be broken down into different levels, allowing, departments, teams, and individuals to know what they should be striving for. Overall, these indicators should point towards the same goals and make clear how the success of the business hinges on everyone from the individual to the collective effort.