Strategic planning has its obstacles. The complexity of this process, especially when it comes to implementing the strategy has been known to make executives stray into using comprehensive planning initiatives - centred around budgets and KPIs.
So what makes strategic planning so tricky?
Factors such as rapidly changing markets, and difficulty in aligning priorities of departmental stakeholders, create barriers to successful strategic planning. This is further compounded by the failure to take sales and marketing plans into account when planning the company's financial forecasts. Furthermore, a lack of centralised plans, and intuitive decision making using data-based evidence, are common pitfalls that can impact on the cohesiveness of strategic planning.
Defining strategic planning
Strategic planning can be defined as the development of a measurable set of goals with a plan of action to achieve them. The strategic plan should always be linked to the core values of your company, alongside your market position and the market opportunities available. They should also be adjusted using historical and current performance data from your company to achieve your anticipated results. And against the threat of unforeseen scenarios, contingency plans should also be drawn up.
An important aspect to a successful strategic plan is collaboration and integrated planning between departments. The shared responsibility for plans drives ownership and accountability, guiding realistic expectations and achievable goals. For example, within corporate finance teams, strategic planning helps to identify current and upcoming financial threats and to address them quickly, so that financial and business objectives within different time frames can be met. Strategic plans function not only as a roadmap of goal attainment, but they also enable business leaders to make well-informed decisions about resource allocation and budget costs.
The execution of strategic planning
Throughout its stages, from conception to implementation, strategic planning centres around the establishment of goals and measuring outcomes. For business leaders to plan effectively, they need to have a clear understanding of where their organisation stands within the industry. They need to know where their competitive edge lies, know their strengths and weaknesses, and to be able to identify opportunities - and any threats that may impact their business.
Ongoing business plans need to be repositioned to clearly define the purpose of the organisation. Having specific goals shared across an organisation are essential both to ensure there are clear expectations of future improvements, and to enable business leaders to properly evaluate their organisation's growth potential. A timeline can then be drawn out, showing the company's objectives, including milestones relating to specific business goals.
Once the goals and outcomes have been identified in the strategy, business leaders need to decide which processes to include, and allocate the responsibilities and actions to the appropriate teams - at each milestone. Monitoring the plan's progress will keep the goals realistic and achievable. Therefore it is important to review milestones, to assist with time management and to give a clearer indication of progress, and to implement any corrections to help keep things on track.
How do you know if course corrections are necessary?
There will always be an element of uncertainty in enacting plans. Unexpected variables such as economic shifts, tax reforms, and technological disruptions can completely change the course of your performance. Within a turbulent and highly complex market, business executives must be able to evaluate and analyse the necessary steps to review the viability of their strategic plans.
To decide if any corrections are necessary, the following guideline questions can help:
- If unchanged, what will be the expected outcome?
- What threats or obstacles have arisen or could arise?
- What will be their impact?
When course correcting, you should seek clarity and accurate solutions in the readjustments of your plans. Applying low-cost band-aid solutions are risky as they are not guaranteed to solve the root cause of the problems, and they could further adversely affect your ability to hit your mark.
A few things to consider in creating course correcting solutions are:
- Do the threats or obstacles impact on only one, or a few, areas?
- Can these threats or obstacles be overcome or handled without impacting on other steps of the plan?
- If a pivot to the plan is necessary, how could this affect the timeline of the plan?
- What is the cost of making a pivot? Is this sufficient funding?
- What would happen if no action is taken to change the plan?
Adjusting a well thought-out strategic plan can be problematic and frustrating, but understanding and minimising the fallout of having an off-track strategic plan is essential. Integrating Predictive Technology can be very helpful in projecting the consequences of changing - or not - the strategic plan. It can also identify the impact of minor adjustments or large overhauls and how they relate to the business goals of the plan.
Optimising the allocation of resources in your annual budget
Budgets are critical for any type of organisation. Resources need to be allocated in an efficient manner to enable a business to reach its short and long term goals. Business leaders need to ensure that staff at all levels of the organisation, invest in achieving the set goals and have the appropriate skills to do so, thereby enabling each team to produce high revenue returns for the resources allocated.
Fostering communication in business and sharing goals is vital in forming cohesive teamwork and ensuring that strategies are implemented effectively. These values must be consistently promoted by strong leadership. Employees from all corners of the enterprise are essential resources for achieving both departmental and corporate goals. Only by prioritising staff wellbeing and optimising performance, as well as integrating additional resources such as technology, can companies achieve their goals.
Technology to implement better management strategy
Companies in rapidly changing environments need to be agile and flexible. Sudden market changes can occur spontaneously, requiring businesses to come up with ideas and adjustments on the spot, in areas such as innovation, resource allocation, business dynamics and cost prices.
Businesses need to allow room within their strategic planning to adapt to new changes, and, for many organisations, this is hindered by poor communication. There is often a misalignment of goals and plans between non-financial teams, executives, and financial teams, creating friction during implementation and a lack of accountability for outcomes. Organisational cohesion is essential; everybody within an organisation should have a clear and shared understanding of the overall business strategy and of their individual roles. Connected Planning technology will help achieve this high level of communication.
Connected Planning provides a platform which connects data, strategies, plans and people across an enterprise so that everyone will have a shared understanding of up-to-date information. This, in turn, encourages more effective business decisions and better calculation of risk. By embracing Connected Planning technology with real-time updates, new market changes can be identified, communicated and be adapted to appropriately.
Furthermore, Connected Planning allows for the immediate distribution and updates of strategic plans to every appropriate business unit and department. Progress can be easily tracked and alterations can be made to reflect any market changes. The implementation of a Connected Planning platform promotes organisational unity, efficient communication and agility - all essential factors in modern business and strategic planning.
Factors to consider when building a strategic planning platform
Traditionally organisations have relied on two resources for strategic planning that are now considered outdated: Packaged Legacy Applications and spreadsheets. Packaged Legacy Applications have an inflexible functionality and they focus on inbuilt financial reporting and analytics, rather than the modelling of revenue streams. Spreadsheets require large amounts of effort and time to build intricate financial logic. Furthermore, they are error-prone and have multi-user issues in a large-scale corporation.
Enter the modern era. Connected Planning technology is now at the centre of strategic planning; here are some of its key advantages:
- No limits scalability: Let your models grow with your company without sizing constraints.
- Cloud-based: Cloud-based technology will seamlessly connect all departments across your corporation so that strategic planning resources are allocated to, and updated by, each team.
- Real-Time oriented: Real-time updates of plans are crucial in increasing the accuracy of data and speeding up the implementation cycle.
- What-If Scenario Analysis: Cuts hours from your analysis time, compared with Packaged Legacy Applications or spreadsheets.
- Integration of Data: The rapid integration of data, providing analyses of key drivers and trends.
- Easy accessibility to information: Vital for a company as it allows all stakeholders to gain key business insights, and then come to an informed decision.
Strategic planning with MODLR
MODLR is a powerful Connected Planning platform that will enable your business to excel in effective strategic planning, by providing real-time updates, along with Data Integration, Scenario Analysis and detailed modelling. MODLR will give your strategic planning a competitive edge. The Corporate Performance Platform's easy-to-use interface will allow your company to identify all major points in company strategies and to provide intelligent solutions leading to the ideal scenario. Variations and market changes can be rapidly analysed - achieving that all-important business precision and agility.
Register a free MODLR account here.