Strategic planning and why it pays to be bold and be brave
Strategic planning is something that every business does to varying degrees. Annual operating plans (AOP), medium-term planning (MTP) and long-term planning (LTP) are commonplace. However, a little virus-shaped disruption came along in March 2020. Yes, coronavirus ripped apart many business plans and projections. In fact, it was so disruptive and unpredictable that some businesses asked, why bother? Find out more about strategic planning and why it pays to be bold and be brave .
Strategic planning needs
Not all businesses invest the time to go through the detailed, iterative process required for MTP and LTP. Some boards and business owners focus on the coming year only, yet still don’t go through an end-to-end AOP process. Whether you have a 10-year long-range strategy or a simple 12-month budget, understanding why it is important matters.
Broadly speaking, the larger the business and the larger the numbers involved, the LTP is needed. Those in large-scale infrastructure projects, utilities, oil & gas, mining etc, operate in years rather than weeks or months. In other industries, it helps to understand the stakeholders, both internally and externally. A blue-chip is likely to aim for MTP to underpin future demands on cash flow and the subsequent impact on dividends. A smaller business is often focused on the year ahead, perhaps to the detriment of other strategic choices.
Whatever the need, strategic planning gives you something to aim for, a RACI and a roadmap for key programmes. Let’s talk a little more about the benefits.
Strategic planning benefits
A well-documented ‘strat plan’ establishes the strategic priorities for a business. From the mission statement to strategic goals, it provides a framework for more detailed business planning. How this is achieved varies. Some boards have a formalised process. Others hide away in a ‘hot house’ for a few days to thrash out the priorities. Some of the benefits of strategic planning include:
There are lots of benefits to strategic planning. However, there remains two elephants in the room. Firstly, are the attendees fully informed on the market, customers and competitors to plan effectively? Secondly, is the business really challenging itself to create superior returns or fiddling around the edges? A workshop based on internal opinion and maintaining the status quo is unlikely to lead to market leadership.
Strategies need bold ideas
So, you are all set to start planning for 2022 and beyond. You can’t park it anymore as the UK and the world starts to live with Covid-19. It’s time to put the hard yards into your AOP, MTP or LTP. If there is a sense of, “Why do we bother?” or “We didn’t see the benefit last time”, it may be time to be bold.
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In a recent article, we discussed?why change and transformation are two different things . Change represents doing what you do differently or selling what you sell to someone else. Transformation involves a change to the business model to change what you do and sell it to someone new. The latter often leads to longer-term, sustainable competitive advantage, but requires bold choices. Anyone taking such brave decisions usually needs to come armed with insights and research. Transforming the business capabilities to capitalise on a growth opportunity is difficult. If the average director tenure were 3-5 years, many may choose to pass on such transformations. Yet, some businesses are bold and brave enough to go for it. Others are pressured by external stakeholders after several years of underperformance.
It also helps not to get caught up in the myths that stop us from planning effectively. According to the Harvard Business Review, the myths of strategic planning are: it only focus on productivity, the leader identifies the priorities and it is just a thinking exercise[1].
Strategic planning tools and support
Ranging from situational analysis to competitor analysis and?market intelligence reports ?to customer research, there are many ways to support strategic planning initiatives. Think Beyond offers support in all of these areas to find new opportunities for growth. There are many templates, models and matrices for strategic planning but it often helps to involve a third party. A third party, possibly a management consultancy, will ask the difficult questions. Furthermore, they provide information, an objective lens and recommendations on how to proceed.
Any plan is only as good as the information and expertise on which it is based, mated to the accountability to deliver on it. With the right strategies established, the detailed plans to spell out how to achieve those strategic goals need owners, timescales and resources. Best to make sure that when you set out on your ‘strat plan’, the rest of the business knows how it cascades down.
Choose a management consultancy offering finance and marketing
As a management consultancy, we are ideally placed. With nearly half of the FTSE350 in possession of accountancy or finance backgrounds and a declining representation of sales and marketing causing alarm over diversity on boards, we offer something that fits with our time. Our research, plan and change services enable accelerated time to value. From strategic business planning to transformation, from market profiling to neuroscience and lead generation to assurance, we offer best in class options for directors.
If you would like to discuss your strategic planning, simply email?[email protected] .
Alternatively, give us a call to book an introductory session on?01565 632206 . You can also?request a call back via our handy online form.
Finally, why not check a related article about?the benefits of working with independent advisors .