Introduction
Successful companies are, in essence, effective organizations, as they can organize towards a long-term objective. The different units within the organization work together in an agile mechanism to align the company on a path towards the long-term objective. That long-term objective is often a dream-like purpose, a mission that motivates and unites the workforce. Strategic planning is the process of periodically revisiting that long-term mission and breaking it down into achievable, near-term objectives (typically 5-year period), which are then further broken down into priorities and smaller objectives.
The Importance of Strategic Planning
Strategic planning is important to establish a successful business for multiple reasons.
1. It provides a clear mission or sense of direction.
a) In a business setting, it can be easy to find yourself fixating on small details and forgetting about the big picture. Strategic planning gives you the opportunity to take a step back and look at the company’s broader mission, the purpose behind your day-to-day activities, and reinvigorate your sense of purpose in your work. After refamiliarizing yourself with the company’s overarching goals, you can slowly zoom back into the smaller details and work with individuals to set achievable goals that direct the company toward its greater mission.
2. It outlines measurable goals.
a) Strategic planning is all about looking at the big picture and breaking it into smaller and smaller pieces. The long-term mission of a company is not usually a measurable goal; for example, LinkedIn’s mission is to “connect the world’s professionals to make them more productive and successful.” What must LinkedIn accomplish to succeed in this mission, and how will they know when they have succeeded? Strategic planning breaks the broad mission statement into smaller parts, which are then broken into even smaller parts, and so on, until you are left with a list of action items that you can complete to achieve the overall mission. You may not know how exactly to “connect the world’s professionals to make them more productive and successful,” but you can certainly manage tasks like adding an “About” section to people’s profiles and letting users edit their profile pictures to indicate that they are looking for work. Strategic planning helps you to identify all these small pieces that must be put into place to achieve the mission.
3. It enables you to track the progress of your strategic goals.
a) Strategic planning requires you to break the overall mission down into strategic goals, then break those strategic goals into sets of actionable goals. Achieving each actionable goal means you are one step closer to achieving its respective strategic goal. Thus, with strategic planning, you can track the progress of your strategic goals by keeping track of the completion of their respective actionable goals. This makes it easier to to know how far along you are in the process of succeeding in the overall mission, which can be vague without actionable goals as benchmarks.
EGI and Allovance: Strategic Planning Process
At the University of Michigan Economic Growth Institute (EGI), we use Allovance as a tool to assist organizations with strategic planning. Allovance implements an “objective, scientifically proven, data-backed, repeatable strategic planning model” to help businesses develop a plan aligned with their strategic priorities that will help them to achieve their long-term goals. The Allovance process consists of the strategic team working together to create a Strategic Value Scorecard, which is made up of top-level priorities, each weighted to signify priority level, and then broken down into actionable objectives with their own relative weights. Then, the team collaborates with experts on the subject matter to create unbiased metrics for each objective that measure success. After this step, project owners can submit their projects, which are scored against the scorecard to determine how well they match up to strategic priorities. The strategic team can then build a strategic plan that includes projects most aligned with the company’s strategic priorities.
Through its quantifiable Strategic Value Scorecard, the Allovance process ensures projects are selected based on how well they align with the organization’s overall strategy hence removing bias that is commonly found in the decision making process.
Conclusion
Strategic planning allows you to break your company’s broad, long-term objective into achievable and timely goals, which are then prioritized according to how well they align with strategic goals. It reilluminates the company’s overall purpose, outlines actionable goals, and enables you to track the progress of strategic goals over time. For your business to succeed, strategic planning must be a top priority. The Allovance method for strategic planning brings quantifiable measures to strategic priorities and project selection ensuring data based decision making.
October 21, 2022
By Ilana Mermelstein