Does a smaller or simple company really need strategic planning?

First, it should be pointed out that smaller companies have less tolerance for misapplying their limited resources than larger companies. Therefore, if anything, they have a greater need. Second, it should be pointed out that smaller, simpler companies require smaller, simpler planning. Third, refer to the post from 9/10/06.

For more thoughts on this, go to www.cssp.com.

Do highly successful companies need to do strategic planning?

Success is strong evidence that a company has had a sound and appropriate strategy. Notice the past tense. There is absolutely no guarantee that yesterday's sound and appropriate strategy will continue to be successful in the future. Indeed, there is great danger in assuming so without adequate study. There are many examples of once successful companies that failed because they stuck with a once successful strategy that had become inappropriate. For example, consider the fall of one of the most successful companies of the early Twentieth Century, Baldwin Lima Hamilton, the great locomotive builder. This company simply did not have the capabilities required for the diesel-electric locomotive industry. Moreover, its core competencies were superfluous for this industry and might have been highly valuable elsewhere.

For more on this and other strategy questions, visit cssp.com.

What are the benefits of strategic planning?

First of all, let’s be clear that strategic planning all by itself is not what we should be talking about. Strategic planning is but one element of strategic management – which must also include strategic direction and strategic control. there must be implementation, which means direction and control. Otherwise nothing happens, and all you have is an un-implemented strategic plan.

While strategic management has a great many very real ancillary benefits we could discuss, let’s cut to the chase. The primary benefit is to optimize the organization’s future potential through the formulation and realization of a well-thought-out, sound, clear and appropriate overall course and direction for the business.

Every business already has a course and direction. Absent strategic management (strategic planning, direction and control), it is unlikely to be well-thought-out, sound, clear and appropriate. With strategic management, this is very much more likely.

For more thoughts on this, visit www.cssp.com.

I am often asked, "just exactly what is strategic planning?

There is a great deal of misunderstanding and misuse of the terms “strategy” and “strategic”. These terms derive from the military. In the military, “strategy” deals with the overall direction of the entire war effort. It lays out the top command’s vision as to the general course and direction of the war, i.e. how the war is to be won. The “Generals” determine what is to be attacked, what is to be defended, what is to be by-passed and what is to be given up without a battle.

They must consider many factors in the quest for a successful strategy, such as their own resources, capabilities, limitations, strengths and weaknesses; the resources, capabilities, limitations, strengths and weaknesses of the enemy; the terrain, the weather, the likelihood and impact of uncertain events and developments (including what the enemy might do); threats; opportunities; things that might go wrong.
The military “grand strategy”, once formulated, must then be fleshed out with detailed plans as to how the defensive and offensive objectives are to be achieved. These “tactical” plans must turn the vision of the top command into actual victory. There must be solid coordination among the various efforts. There must be a high tolerance for flexibility, because things will never go exactly as planned. This means that various “scenarios” must be considered so as to be prepared to change the “war plan” in response to a variety of possible future events and developments.

In sports, the “game plan” is the vision as to how the game is to be won. It is the exact counterpart of military strategy. Indeed, sports analogies are so vivid that the term “game plan” has become quite interchangeable with the term “strategic plan”.

“Strategy” is the leadership’s sense of vision as to the overall course and direction of any endeavor or enterprise, be it war, government, a profit-seeking business, a non-profit organization, sports, one’s personal or one’s family life. The adjective “strategic” is applied to those things relating to or dealing with this sense of vision as to the overall course and direction of the endeavor or enterprise.

The term “strategic planning” refers to a coordinated and systematic process for developing a plan for the overall course and direction of the endeavor or enterprise for the purpose of optimizing future potential. For a profit-making business this will involve questions as to “what shall we sell”, “to whom shall we sell it” and “how shall we beat or avoid competition”. It may well involve other questions, such as; ownership and capital structure. The central purpose of this process is to ensure that the course and direction is well-thought-out, sound and appropriate and to ensure that the limited resources of the enterprise (time and capital) are sharply focused in support of that course and direction. The process encompasses both strategy formulation and implementation.

The strategic planning process involves the following:
Situation Assessment
External (i.e. customer markets, competition, technology, supplier markets, economic conditions, government, etc.)
Internal (i.e. resources, structure, culture, capabilities, limitations, strategic competencies, etc.)
Assumptions about unpredictable future events and developments
Strategy formulation - sense of vision as to course and direction
Intentions (mission statement, goals, objectives)
Implementation Plans (action plans, budgets and schedules)

Beyond the planning, itself, there must be periodic monitoring of progress and developments as well as good implementation management.