The Importance of Strategic Planning

I find this topic very exciting because business success is strictly connected to the existence of good strategic planning. During my years of work in this area, I have discovered, to my disappointment, that most companies do not have a well-structured strategic plan that is consistent with the economy and their market reality. This may be due to several factors, but these are the most important ones: 

  • Companies are started as a family business: as the years went by, they don’t think it necessary to change the models that helped them grow. These same companies are characterised by very restricted managements in which people who are not family members may never have the possibility to occupy an important position. 
  • Companies that start off by copying other business models: these organisations are born as a result of other companies making a severance payment to an employee who wishes to follow in his or her boss’s footsteps, manages to copy part of the business, but does not understand anything about business philosophy and building a whole structure. 
  • Only as an illustration, there is also a business model in which it is typical to hire people who are, in theory, academically qualified for occupying managerial positions but who do not have experience, so when they have to put their knowledge into practice, they realise that the world is not as they had expected and this will have an impact on the company and its structure. Anyway, there are many other reasons why companies do not have a strategic plan for the medium term that could improve its production, quality and performance standards. 

However, in spite of the foregoing, this article is aimed at enabling the reader to understand the importance of strategic planning, so I may briefly present and explain, in a very specific way, a structure made up of the 4 general steps of a strategic plan. After doing so, I expect that each of you will agree with me that a company without strategic planning is like a ship to wreck. 

  1. Internal analysis is the starting point: this must show the company’s current situation from all its different areas. An internal analysis includes the work environment, the operating system, available and necessary resources, quality standards, the existence or lack of objectives, employee handbooks, operations manuals, the institutional philosophy, the organisational chart, the code of ethics, induction manuals, internal regulations, etc. There is not a standard requirement regarding each line of needs; every company is entirely different from others and this must be a completely tailored task. In this regard, I have found that, unfortunately, most companies see these aspects as pure decoration: every organisation needs them, but none comply with or respects them. Neither employees nor leaders know or are capable of understanding the company’s mission; objectives are not achieved and this does not have consequences; manuals exist but nobody uses them; there is an organisational chart but it is kept in a drawer where only the head of HR can find it; on some occasions, employees are upset and nobody seems to care why; and there are hiring processes without desired profiles. Well, I think you might find some of these things very familiar if you work for any kind of company. 
  2. Step two is external analysis: what is our clients’ situation? What do they think of us? Who are our competitors? Where do we stand in the market? What are the future trends in our market? What impact do we have on the community where we work? Is the immediate environment beneficial or detrimental for our company? What other opportunities regarding the company or our products are we missing? How we can grow more with the opportunities the market offers, etc.? The greatest problem I have found is that the external analysis of most companies is based on assumptions and it lacks the technical and research elements that can really present each of these factors with the necessary responsibility. An example of this is customer satisfaction measurement: companies use the same staff to measure this may bias the results. Some will say that perhaps the problem is the cost of tools and consultants, but whoever thinks that way is not yet aware of the importance of data’s veracity and the quality of a positive change that can be generated in the company when decisions are based on specialised and accurate criteria. 
  3. Step three consists of a comparative analysis: once we have carried out the previous two steps, we must compare all the elements and, as a result, we will obtain the work objectives. 
  4. Finally, stage four involves action plans: each objective must have an action plan with start and end dates, with a person in charge and, most importantly, with an indicator that will tell whether we are doing things correctly. 

Now that we have structured the plan, let me tell you that this is very serious work and that no element has to be taken lightly for any reason; each person within the company has to participate in its development, everyone must have the responsibility to support it and the plan itself will integrate each and every element of the company in a coherent interdisciplinary team that is committed to the organisation. 

In the business world, successful companies have a strategic plan in order to implement it, not just for the sake of having it, and that makes a difference for them.