Strategic planning is an excellent way to bring your organization kicking and screaming into the turbulent present, hashing out today's major trends and their implications. For instance, most industries have moved from a quality improvement focus to one of process reengineering. Similarly, the dominant outlook has moved from continual change to transformation. That's nice, but what do we need to know in our business? Which way are the winds of change blowing for our organization? How can we build and sustain competitive advantage? How can we best grow and transform ourselves? Which areas of activity will yield the best investment results? What are areas for disinvestment or harvest? These are just a few of the questions that quality strategic planning poses and answers, along with other favorites such as:

• Have we specified precise improvement goals that will make a difference?
  
• Are we emphasizing high-value activities in our organization?
  
• Are we accessing the resources of all of our business partners?
  
• Are we combining the skills in our organization in new ways?
  
• Are we minimizing the time to payback for our investments and expenditures?

The short explanation for renewed interest in strategic planning is that people have figured out that what got your organization here today won't get it to where it needs to be tomorrow. The need for strategic planning has rarely been greater. Sudden developments, new challenges, and dynamic technologies have tilted the landscape, shifting the behavior of both competitors and customers. Strategic planning — defining long-range goals and objectives that further the organization's vision and mission — provides a solid framework for identifying needed resources in equipment, capital, and personnel. The plan supplies a solid basis for operational tactics and for educating employees as to future business direction and priorities: A strategic plan is a set of management decisions about what the organization will do to be successful. What are the benefits of strategic planning? A thoughtful strategic plan, based on rich input from customers, employees, and other stakeholders will enable an organization to:

• Establish priorities. Define in measurable and objective terms what is most important and needs to be achieved by the agency and its programs.
  
• Do proactive problem-solving. Anticipate problems and take positive steps to eliminate them.
  
• Develop commitment to common purpose. Build orientation and commitment to a common purpose among members of the organization's management team.
  
• Set organization direction. Chart a clear direction and furnish "marching orders" for the organization and its employees to follow.
  
• Set the stage for effective decision-making. Ensure consistency in decision-making and allocate resources most effectively in areas such as staff, equipment, facilities, product/service changes, systems, etc.
  
• Keep management "light on their feet." Provide a management framework which can be used to facilitate quick response to changed conditions, unplanned events, and deviations from plans.

If strategic planning sounds like something your organization should do, then please read on, but remember that something worth doing is worth doing well!

Beware of the Pitfalls!

Dwight D. Eisenhower said it best: "Plans are nothing, planning is everything." While your strategic planning activities will result in a document, the document itself matters less than the process of collecting and analyzing input, and thoughtful discussion and debate. Even at that, examples of failed strategic planning efforts abound. Strategic planning does not provide perfection, nor does it provide instant miracles. However, if expectations concerning the possibilities and limitations of strategic planning are accurately framed and communicated, great value can be had. With this said, there are plenty of paths to bad planning! Some of the more serious pitfalls to be avoided are presented below. In a bad pun that is a take-off on my name, I refer to these pitfalls as the "21 Gunn Salute to Bad Planning." To judge your organization's readiness for strategic planning, please see our Strategic Planning Questionnaire for Business, or our Strategic Planning Questionnaire for Government.

21 Potential Pitfalls of Strategic Planning

Pitfalls in Getting Started

1. Top management's assumption that it can delegate the planning function to a "planner."
   
2. Rejecting planning, i.e., deciding to just "go through the motions," because there has been success without it or because previous planning efforts have been viewed as unsuccessful.
   
3. Assuming that planning is not feasible because of "political" factors or the uncertainties inherent in a future not carved in stone.
   
4. Assuming that an organization simply cannot develop effective long-range planning appropriate to its resources and needs.
   

   Pitfalls in Thinking About Planning

5. Ignoring the fact that planning is as much a personal, "political" matter as it is a rational process.
   
6. Ignoring the fact that planning should be a learning process for everyone.
   
7. Assuming that planning is easy.
   
8. Assuming that the organization's comprehensive planning is entirely separate from the ongoing management process.
   
9. Assuming that effective total planning can be done piecemeal.
   

   Pitfalls of Doing Planning

10. Assuming that the future will be just like the past, rather than thinking through future alternatives and making the tough choices.
    
11. Developing such a reverence for numbers that there is no room for intuition or value judgments.
    
12. Seeking precision of numbers throughout the planning effort and making this the central focus of accountability during the planning process.
    
13. Conspiring in one way or another to do long-range planning every once in a while and to forget it between planning cycles.
    
14. Automatically assuming that older methods should be discarded in favor of newer techniques.
    
15. Developing a rigid structure and process for planning that smother possibilities for flexibility and simplicity.
    
16. Automatically assuming that equal weight should be given to all elements of planning.
    

    Pitfalls in Using Plans

17. Assuming that plans once made are in the nature of blueprints and should be followed rigorously.
    
18. Approaching the planning task, and using the results, on the assumption that it is possible to eliminate uncertainty in the future.
    
19. Assuming that planning must meet some single test of rationality.
    
20. Assuming that planning is an interesting and useful exercise but that, snicker-snicker, resulting plans should not be taken seriously.
    
21. Assuming that because plans result in current decisions, it is only the short-run that counts.

An organization begins strategic planning by taking a critical look at itself and the environment in which it operates. The process begins with an internal analysis of each major operation, e.g., marketing and sales, production, administration and finance, etc. This internal analysis is overlaid against an analysis of external developments such as customer needs, preferences, and satisfaction levels, economic and market conditions, technological advancements and competitive pressures. After the organization planning team assesses the firm's internal strengths and weaknesses against future external opportunities and threats, a vision is developed along with a mission statement that defines the firm's business purposes and values, identifying the ways in which the firm distinguishes itself from competitors.

Then, planning participants develop long-range strategic goals, defining parameters for the firm's rate of growth and profitability. The long-range goals, supportive of the mission statement, serve as a stimulus and challenge to senior managers, line managers, and production supervisors. If strategic goals can be achieved in one year, planning participants have not stretched their strategic vision far enough.

Supporting these goals, the plan must spell out strategies that establish time frames for completion of interim and long-term objectives; identify individual managerial responsibilities in meeting long-term goals; and define the financial, human, and equipment resources needed to accomplish the task.

The last step in the strategic planning process requires a clear-eyed review of the newly defined vision, mission, goals and strategies to assess demands that will be placed on the business as well as likely future effects. What will total plan implementation cost? What are the human resource implications? Is the production capability sufficient? What changes will be necessary? Are strategies, systems, and people properly aligned around the needs and preferences of our customers?

In summary, the planning process consists of five basic steps, as follows:

1. Diagnose the business situation. What are positives that differentiate the firm from the competition? Identify deficiencies of the firm that result in competitive disadvantage. External threats may include negative conditions such as government regulations, market segment decline, and new competitors. Positive opportunities involve new marketing openings and population shifts which add new potential.
   
2. Develop a Vision and Mission Statement. What business are we in for the long haul? Who are our customers and how do we want to be known by them?
   
3. Develop goals. The planning team should use the strategic diagnosis findings to set the strategic goals that the business wants to accomplish over the next three years. A goal should be set for each critical issue area pinpointed as a result of the strategic diagnosis. What is to be done and how well?
   
4. Define strategies. After the firm's strategic goals have been developed, the planning team should develop a set of strategies which describe methods to be employed for accomplishing each goal.
   
5. Determine impact on the business. In addition to weighing resource requirements and adjusting the plan accordingly, plan implementation tactics should also be set forth. Major steps to ensure effective plan implementation include:

• Communicate the plan to all those involved in putting it to work.
  
• Hold people accountable in the plan areas for which they are responsible.
  
• Evaluate progress toward the plan.
  
• Reward successful performance against the plan.
  
• Review and update the plan annually.

When the team has completed these five steps, the plan almost writes itself: This is part of what Gen. Eisenhower meant when he said plans are nothing and planning is everything! An abbreviated outline for a typical strategic plan document generally resembles the following:

Strategic Business Plan Outline

I. Executive Summary
highlights mission, major goals and strategies

II. Strategic Diagnosis Findings
Strengths, Weaknesses, Opportunities and Threats

III. Strategic Intent and Direction
Vision, Mission, Goals, Strategies, Action Programs

IV. Implementation Considerations
Organizational structure, policies and procedures, human resources, and other resource allocation issues

V. Contingency Plans

VI. Financial Plan

Exhibits
Technical Reference Material

High-level involvement is even more important today because the development of a strategic plan may entail more than a simple course correction. Potentially radical decisions about markets and their viability are sometimes necessitated by today's turbulent environments. Decisions about acquisitions and mergers are often indicated in maturing industries.

Now more than ever, companies will rely on sound strategic planning to thrive in the next century. As strategic planning and change management blur into one another, applying-and- revising the strategic plan will fold in with day-to-day operations, becoming less of a stand-alone "event." The result? Managers will make better decisions faster consistent with the long view of where the organization wants to go. Now more than ever, the intuitive luck that helped many a business succeed in spite of itself is running out. The best solution is thoughtful strategic thinking and a plan that makes sense to customers, employees, and others who have a stake in the future success of the enterprise.

For a self-appraisal of your organization's strategic planning, please see our self-assessment questionnaires for business and/or government below.

Ron Gunn, management consultant, specializes in strategic management issues related to matrix management, business competition, business process reengineering and human resources. His work has been published by the American Management Association, The Futurist magazine, and in several trade association magazines and newsletters. He is a frequent speaker and trainer who consults to both business and government. Strategic Futures® is located in Alexandria, Virginia (voice: 703/836-8383; fax: 703/836-9192).