What is Strategic Planning?
Strategic planning forms the basis for setting goals and priorities, and for ensuring that an organisation’s plans are going in the right direction. When the plans of different departments are unified and in line with the overall goals, the company has established a common direction.
The points of departure for strategic work are business goals and market analyses, as well as insights into the business environment, customers and business operations. The types of planning that subsequently bring the goals, activities and KPIs together are generally called strategic planning and business planning. Business planning focuses on generating income, increasing efficiency and gaining market share. Public sector organisations have a different purpose compared to businesses and generally focus on operational planning.
Business planning can seem abstract, and it is therefore helpful to visualise strategies and plans to make them easier to understand and use. It is vital to communicate strategy throughout the organisation. This helps to ensure that actions have an impact, which in turn enables the strategy to be translated into meaningful results.
It is also easier to work with strategic planning if goals can be broken down into sub-goals and linked to KPIs that can be tracked over time. This creates continuity between strategy, goals, sub-goals and continuous performance measurement. This process is sometimes referred to as corporate performance management (CPM), which can also include financial management.
STRATEGY, GOALS AND PLANS
An organisation's strategy is its overall direction and most important priorities. Here it is important to think in terms of the bigger picture. When you get down to plans and goals, you should talk about the tactical and operational perspectives instead.
The business plan and operational plan should be seen as strategic work in practice, while the strategic plan should be seen as the organisation’s most important management document. Plans are made in order to lead the organisation in the right direction.
Different parts of an organisation set strategies for their respective areas and work towards their goals. However, it is crucial that these strategies, plans and goals are compatible with the overall perspective. They must also work effectively throughout the organisation's different levels – from both the top-down and bottom-up perspective (from management to operational, and from operational to management).
An approach focused on working towards goals is often known as "management by objectives". This approach is similar to strategic planning, but with more focus on achieving goals. Business plans and operational plans should also be closely linked to financial planning. They are interdependent and should be included in the same planning and management processes.
Budget and forecasting are central to an organisation's planning processes. They are usually done annually or over a rolling 12-month period. Through effective processes and accurate financial planning monitoring, you can enable management and decision-makers at all levels to efficiently and flexibly navigate the business forward. This is often done using tools such as Hypergene.
According to McKinsey, the COVID-19 pandemic has highlighted how vital it is for organisations to be able to rapidly adjust their strategies, maintain full control over costs, and clearly link value creation activities to strategy. There are important consequences for budget work and resource planning, and scenario planning is also very useful in this context.
According to Gartner, the strategic planning process should start with the budget and the financial priorities. Gartner also emphasises the need to link strategic planning to operational goals in order to make it work: “Many organisations lack a coherent plan for their strategic planning which will properly translate high operational goals into functional goals.”
A selection of strategic planning applications that Hypergene can help you with:
- Strategic management
- Business plans
- Operational plans
- Balanced scorecard
- Management by objectives
- Risk analyses
- Quality plans
- Internal control