Strategic planning is an organization's process of defining its strategy or direction, and making decisions on allocating its resources to attain strategic goals.
Furthermore, it may also extend to control mechanisms for guiding the implementation of the strategy. Strategic planning became prominent in corporations during the 1960s and remains an important aspect of strategic management. It is executed by strategic planners or strategists, who involve many parties and research sources in their analysis of the organization and its relationship to the environment in which it competes.[1]
Strategy has many definitions, but it generally involves setting strategic goals, determining actions to achieve the goals, setting a timeline, and mobilizing resources to execute the actions. A strategy describes how the ends (goals) will be achieved by the means (resources) in a given span of time. Often, Strategic Planning is long term and organizational action steps are established from two to five years in the future.[2] The senior leadership of an organization is generally tasked with determining strategy. Strategy can be planned (intended) or can be observed as a pattern of activity (emergent) as the organization adapts to its environment or competes in the market.
Strategy includes processes of formulation and implementation; strategic planning helps coordinate both. However, strategic planning is analytical in nature (i.e., it involves "finding the dots"); strategy formation itself involves synthesis (i.e., "connecting the dots") via strategic thinking. As such, strategic planning occurs around the strategy formation activity.[1]
Strategic planning can be used in Project Management that focuses on the development of standard methodology that is repeatable and will result to high chances of achieving project objectives. This requires a lot of thinking process and interaction among stakeholders. Strategic planning in Project Management provides an organization the framework and consistency of action. In addition, it ensures communication of overall goals and understanding roles of teams or individual to achieve them. The commitment of top management must be evident throughout the process to reduce resistance to change, ensure acceptance, and avoid common pitfalls. Strategic Planning does not guarantee success but will help improve likelihood of success of an organization.[3]
In educational institutions, strategic planning is also a need. We are already in a transitional period in which old practices are no longer permanent but require revision to meet the needs of academia, which is frustrating in the educational sector. To meet the changing needs of this new society, educational institutions must reorganize.[4] Finding ways to maintain achievements while improving effectiveness can be difficult for educational institutions. Keeping up with society's rapid changes. Some strategic planners are hesitant to address societal outcomes, so they often ignore them and assume they will happen on their own. Instead of defining the vision for how we want our children to live, they direct their attention to courses, content, and resources with the mistaken belief that societally useful outcomes will follow. When this occurs, the true strategic plan is never developed or implemented.[5]
which covers the remote external environment elements such as political, economic, social and technological (PESTLE adds legal/regulatory and ecological/environmental);
PEST analysis
which was originally used in the military and recently used by large corporations to analyze future scenarios. The flowchart to the right provides a process for classifying a phenomenon as a scenario in the intuitive logics tradition;[10]
Process for classifying a phenomenon as a scenario in the Intuitive Logics tradition
Scenario planning
which addresses industry attractiveness and rivalry through the bargaining power of buyers and suppliers and the threat of substitute products and new market entrants;
Porter five forces analysis
which addresses internal strengths and weaknesses relative to the external opportunities and threats;
SWOT analysis
which involves portfolio decisions about which businesses to retain or divest; and
Growth-share matrix
and strategy maps, which creates a systematic framework for measuring and controlling strategy.
Balanced scorecards
which uses a constructivist evaluation approach to identify the outcomes of objectives, which then supports future strategic planning exercises.
Responsive evaluation
which determines the competitive advantage of a product or a service through evaluating four elements such as value, rarity, imitability and organization.[11]
VRIO Framework
A variety of analytical tools and techniques are used in strategic planning.[1] These were developed by companies and management consulting firms to help provide a framework for strategic planning. Such tools include:
Strategic planning has been criticized for attempting to systematize strategic thinking and strategy formation, which Henry Mintzberg argues are inherently creative activities involving synthesis or "connecting the dots" which cannot be systematized. Mintzberg argues that strategic planning can help coordinate planning efforts and measure progress on strategic goals, but that it occurs "around" the strategy formation process rather than within it. It functions remote from the "front lines" or contact with the competitive environment (i.e., in business, facing the customer where the effect of competition is most clearly evident) may not be effective at supporting strategy efforts.[1]
While much criticism surrounds strategic planning, evidence suggests that it does work. In a 2019 meta-analysis including data from almost 9,000 public and private organizations, strategic planning is found to have a positive impact on organizational performance. Strategic planning is particularly potent in enhancing an organization's capacity to achieve its goals (i.e., effectiveness). However, the study argues that just having a plan is not enough. For strategic planning to work, it needs to include some formality (i.e., including an analysis of the internal and external environment and the stipulation of strategies, goals and plans based on these analyses), comprehensiveness (i.e., producing many strategic options before selecting the course to follow) and careful stakeholder management (i.e., thinking carefully about whom to involve during the different steps of the strategic planning process, how, when and why).[14]
Strategic Plans as Tools to Communicate and Control[edit]
Henry Mintzberg in the article "The Fall and Rise of Strategic Planning" (1994),[15] argued that the lesson that should be accepted is that managers will never be able to take charge of strategic planning through a formalized process. Therefore, he underscored the role of plans as tools to communicate and control. It ensures that there is coordination wherein everyone in the organization is moving toward the same direction. The plans are the prime media communicating the management's strategic intentions, thereby promoting a common direction instead of individual discretion. It is also the tool to get the support of the organization's external sphere, such as financiers, suppliers or government agencies, who are helping achieve the organization's plans and goals.[15]
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