What is Strategic Planning?

Strategic planning forms the basis for being able to set goals and priorities, and for ensuring that an organisation’s plans are going in the right direction. When the plans of different departments are based on the overall goals and then brought together, the company has then established a common direction and a common strategy.

The points of departure for the strategic work are the business goals and market analyses as well as insights into the business environment, customers and business operations. The planning which subsequently brings the goals, activities and KPI’s together is often called strategic planning or business planning. Business planning focuses on generating income, increasing efficiency and gaining market shares. The public sector does not have the same focus and there they talk instead about operational planning.

Business planning can often be experienced as abstract. It is therefore very helpful if the strategy and the plan can be visualized, because it is then easier to understand and use. A prerequisite for ensuring that the strategy leads to actions which make an impact, which is itself a prerequisite for converting the strategy into actual results, is that the strategy is communicated throughout the organization.

It is also easier to work with strategic planning if the goals can be broken down into sub-goals and linked together with KPI’s which can then be tracked over time. This creates a red thread from strategy, via goals and sub-goals to the opportunity to measure how the organization is performing on a continuous basis. In English this is sometimes called Corporate Performance Management (CPM), even though CPM also includes financial management.

STRATEGY, GOALS AND PLANS

The strategy is the overall direction, the most important priorities, and here you should be thinking ‘helicopter perspective’. 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, and the strategic plan as the organization’s most important management document. The reason why plans are made is to lead the organization in the right direction.

Different parts of the company set strategies for their part of the business and work towards their respective goals, but it is crucial for the overall results that these strategies, plans and goals are compatible with the overarching business perspectives and that they work effectively, both from the management and down in the organization (top down) and from an operational level and upwards in the organization (bottom up).

Working to reach goals in a company is often called management by objectives and is similar to strategic planning, but with the focus being on the achievement of the goals. Also, business plans and operational plans should be closely linked to the financial planning. The one presupposes the other and should be included in the same planning and management processes.

Budget and forecasting work is a central and important part of a company's planning processes. It can be done in different ways; usually annually or over a rolling 12-month time period. Through effective processes and by monitoring the financial planning, the management and decision-makers at all levels have the opportunity to efficiently and flexibly navigate the business forward. This is often done using tools such as Hypergene.

According to McKinsey, the pandemic has highlighted the importance for companies to be able to rapidly adjust their strategies, have full cost control and to be able to clearly link value creation activities to the strategy. In this context, scenario planning is also of great importance. All of this has consequences for budget work and resource planning.

According to Gartner, the first thing to do in the strategic planning process is to start with the budget and the financial priorities. Furthermore, they believe that it is important to link the strategic planning to the operational goals in order to make it work: “Many organizations lack a coherent plan for their strategic planning which will properly translate high operational goals into functional goals.”


Examples of strategic planning applications which Hypergene can help you with:

  • Strategic management
  • Business plans
  • Operational plans
  • Balanced scorecard
  • Management by objectives
  • Risk analyses
  • Quality plans
  • Internal control