Saturday, May 27, 2017

The Significance of Strategic Planning in IT Companies

The strategy is basically a plan of action designed to achieve the goal successfully and strategic planning is the process of defining this strategy. A famous quote by Henry Mintzberg “Strategy is not a consequence of planning, but the opposite: its starting point” truly explains that strategy should be decided at beginning of planning phase. Strategy planning is a formal process for facts based, open minded discussion about customers, competitors, technology, regulations, worst case scenarios among key decision makers. These key decision makers must have the sound understanding of the business. They could be a CEO, business-unit executives, head of corporate HRs.

Almost all IT firms believe in spending a major portion of their time and effort in developing the strategy as it helps in focusing on long-term trends, opportunities, challenges, and decisions. It helps in building the foundations and preparing firms for the uncertainties ahead. The annual meeting is kept by key decision makers of the industry, generally, a group of 5-10 people, who come prepared with their points on basis of strategy documents shared beforehand. The detailed discussion about the potential opportunities, risk, a mitigation plan is done in the meeting. Genuine assessment on the strong and weak points of business is considered, its economic implications and further detailed testing of the assumptions is done to be assured about the decisions. Good strategy prepares the organization for future challenges and helps them in taking sensible decisions. It is a case of need rather than committing mistakes which may lead to a big loss.

The strategic planning process in a company must proceed in a systematic way.
1) The company should establish a mission or long-term goal.
2) Then they should plan their steps to achieve their goal.
3) Further goal analysis is done.
4) Strength and weakness assessment in done.
5) Further evaluation of strategic options is done and finally selecting the best strategic plan for it.
6) Then decide the actions that team must take to implement the strategy and test their plans to find the issue with their strategy.

We all know about Amazon, an American e-commerce and electronic company, is one of the best strategic players in the IT market. Unlike other big companies like Apple, Facebook, etc. Amazon did not grow by inventing some new product or new service, rather it came to power systematically. It takes strategic moves just like in a chess game, it plans multiple moves ahead. Its competitors take occasional strategic steps due to some impulse, competitive anxiety, they don’t have any long-term plan and hence, their counter moves end in the short span of time. [1] Amazon with its planned strategic move has become the world best e-commerce website.

Thus, strategic planning is one of the most important tasks in any IT company. It helps in making sensible decisions in event of confusion and doubts.

References:

[1]: https://www.forbes.com/sites/venkateshrao/2011/12/14/the-amazon-playbook/#1f043e353bcb


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