Most of the companies spend lot of time in strategic planning and yet achieve poor results. Several employees and managers within the company have an opinion that strategic planning is a mere formality producing any useful results. The real problem is that companies lack a fundamental approach on how to conduct strategy planning. The goal is not just to formulate a strategy but to ensure that every participant comes out of the meeting more informed than he or she is before the meeting.
Including too many participants in the process makes it difficult to have a proper dialogue between all the participants. Hence participants should be limited to CEO and the business unit head. Other participants can be added only if there is a necessity and if they can add value to the process.
Since Strategic planning is an annual process and unlike a review meeting, it cannot be finished in a few hours. Typical strategic planning activity for a business units lasts a day and CEOs since they are the most important of all the participants of the strategic planning, should set aside at least 10 -30 days per year for strategic planning. It is helpful to conduct these plantings at the business unit as the employees would feet comfortable and confident in a work place they are used to and the CEO’s presence underscores the importance to the meeting.
Imagine an aerospace company like Boeing conducting its strategic planning. The passenger jet which the company is planning to launch would have a life cycle of 5 years and these jets would remain in the industry for the next 20 -30 years. Hence it is very important for the company to ensure that it focuses on the long-term goals and how to achieve them, rather than focusing at short term returns that maximize profit. It is also important to ensure that strategy and financial planning are not intermixed in a single meeting. This could have negative consequences. For example, lack of sufficient budget may encourage the participants to compromise on the quality standards and cut costs. Instead of this, the financial planning should be conducted separately and funds should be allocated based on priority of the tasks. In case of shortage of funds, tasks can be postponed to next fiscal. This ensures that the strategy is not compromised due to fiscal constraints but the execution might get delayed.
The process should not be a tug of war between the business unit and the corporate. It should be an honest review of the company’s weakness, existing opportunities and how to benefit from them. Also, tough decisions and difference of opinions should be addressed instead of postponing them, which could eventually weaken the strategy. A proper guide line given to the business units as to what is expected out of the planning simplifies it and ensures proper perpetration beforehand from both the parties. It also makes the review easier as the underlying theme of all the business units would be the same even if the specifics vary. It is also essential that the execution of the strategy is properly followed by ensuring that the long-term objectives are met through short time budgets, financial targets etc. Failing to do so would render the strategic planning as a mere formality, without adding any benefit to the company.
Strategic planning helps in preparing the employees of an organization to achieving the long-term objectives. Proper strategic planning gives a company strategic advantage when quick decisions are to be made in real time and to reject any unnecessary changes.