Despite our best intentions, strategic planning often gets postponed due to the urgency of daily tasks. In addition, the ambiguous nature and magnitude of strategic planning can lead to not knowing where to start the process. This can result in a plan that is poorly developed, not actionable, or even non-existent.
In contrast, a well-developed strategic plan provides a “true north” to help guide decision making and align your team around common goals. It identifies key areas of focus and execution required to achieve long-term business objectives. Most importantly, it provides a framework and justification to say “no” to distractions that consume valuable resources and don’t support your long-term goals.
Strategic planning doesn’t have to be cumbersome, but it does need to be thought out, written down, and focused on specific priorities. Here are five proven steps that are the building blocks of developing an effective strategic plan.
Step 1: Internal Analysis
Internal analysis should be the start of an in-depth SWOT (Strengths, Weaknesses, Opportunities, and Threats) analysis that will help guide your plan. Understanding your current state is critical in determining where you are going, how you are going to get there, and how quickly you can realistically expect to reach your future goals.
- Identify in-house capabilities by objectively answering questions about your company that reveal Strengths and Weaknesses:
- What is it about your business that separates you from the competition?
- Do your employees have skills that would be difficult to replace?
- What complaints do you regularly hear from customers?
Step 2: External Analysis
If we have learned anything in the past few years, it has been to expect the unexpected. Unfortunately, we don’t have a crystal ball, but investing time and thorough research into the second half of your SWOT analysis will help you work resiliency and flexibility into your plan, allowing you to respond to future challenges and opportunities more easily.
- Identify changes in the business environment by answering questions related to Opportunities and Threats:
- What supply chain challenges are imminent? Are material costs and availability expected to change?
- What products/services are your competitors introducing? Who are your potential new competitors?
- Are there technology/society changes that we can take advantage of?
Step 3: Prioritize Issues and Opportunities
Using the data collected from steps 1 and 2, customer feedback, and input from other stakeholders, identify the key issues of concern that need to be addressed and key opportunities that can be pursued. Then, you MUST prioritize by ranking them according to risk and return. You only have so many resources, so prioritizing will help you use them wisely.
Step 4: Identify Success Factors
Develop goals and metrics by identifying success factors. How will you know if your plan has been successful? Ask yourself and your team where you want the company to be in 3 to 5 years and then identify metrics that help you track your progress towards individual goals and towards your ideal future state. These should be easy to track and analyze on a quarterly basis.
Step 5: Determine Strategic Priorities
Choose the focus areas that allow you to make the greatest impact on your goals, while keeping in mind the key resources (people/time/money) available. Do you have the resources to support all of your strategic priorities? If not, consider reducing the number or scope. It’s proven that focusing and executing on a few priorities is more effective than struggling with “too many priorities”.
Using a structured strategic planning process can help you establish and execute a relevant and effective strategic plan. Whether your company is large or small, strategic planning is a critical tool for future success and growth.
GaMEP’s strategic planning process helps manufacturers establish and execute a relevant and effective strategic plan and is broken into 4 distinct phases: Discovery, Development, Deployment & Plan Management.
This tip sheet describes the process of the first two phases; Discovery & Development. Read Get Your Strategic Plan Off the Shelf, for more information on the Deployment and Plan Management phases.
By: Andy Helm, Senior Project Manager, Georgia Manufacturing Extension Partnership