Strategic planning
What is strategic planning?
Strategic planning sets out what your organization needs to pursue over the next three to five years to achieve its mission. The strategic plan itself is an analytic and comprehensive guideline that executive management creates to align the organization around its core mission. So that everyone works toward common goals, the strategic plan lays out high-level objectives, the actions needed to achieve those objectives, and the desired results. To create a strategic plan, your company must assess its market position, strengths, weaknesses, and areas of desired growth.
Strategic planning best practices:
There are many different methodologies for strategic planning, but most follow a variation of the following phases:
Phase One - Position Analysis: During the analysis phase, you must assess the inner workings of your organization and the market. This phase involves a SWOT (strengths, weaknesses, opportunities, and threats) analysis of your organization and the market.
Phase Two - Strategy Development: Executive management uses findings of the SWOT analysis as a launch pad to create a high-level strategy by documenting a basic plan that cascades down to every level. This plan defines the company's strategy based on a core mission, lays out advantages over the competition, include long-term forecasts and goals, and determine the approach for achieving these goals.
Phase Three - Execution: Each department and LOB takes this high-level plan and translates it into its operational plan. This phase involves cascading the goals down to each department, and then again to team members. This phase also involves determining lower-level KPIs, budgets, short-term organizational goals, and priorities.
Phase Four - Evaluation: Once the plan is in place and departments begin to action it, strategic planning morphs into strategic management. During this phase, managers must monitor, measure, refine, and evaluate the strategy. From here on out, modifications to the plan help drive the organization's overarching goals forward. It's at this point that departments will institute controls and checkpoints — like progress reviews and quarterly reports — to provide upper management with updates. These checks and balances ensure that everyone stays on course.
What is operational planning?
The strategic plan outlines high-level goals. An operational plan breaks down how divisions, departments, or cost centers intend to achieve those plans. The operational plan is much more tangible, granular, and action-oriented than the strategic plan. It sets out the goals on a lower level and then lays out the blueprint for achieving those goals. Then it defines how activities and resources — human, physical, and financial — will support the broader strategic objectives. Some examples of operational plans could include sales planning, capacity planning, and inventory planning.
Operational planning best practices: Like strategic planning, there's no single way to create an operational plan. Generally speaking, operational plans contain specific strategies, objectives, activities, timelines, and metrics.
Thus, the operational plan should:
- Layout objectives
- Outline the actions or tasks needed to meet these objectives
- Determine the resources needed, like capital, people and budget (expenses)
- Establish the metrics that will measure the goal's progress
- Set out timelines for each action
- Assign roles and responsibilities to each action or task
What's the difference between strategic planning and operational planning?
Think of the strategic plan as your organization's long-term vision. It's high-level. It's overarching. It's big thinking. On the other hand, your operational plan outlines the detailed activities that you need to complete to meet those strategic goals.