Sneak peek into STRATEGIC PLANNING

Strategic planning is a mix of financial and non-financial goals. Some focus on financial targets from the beginning and assess what other efforts will be needed to meet them. Others start with market analyses or a desire for innovation and get to financial targets as outputs of the process. The former could be explained as mapping out the financial performance that would be expected over the next five years and comparing this against baseline projections and examining the gaps. The later could be explained as focusing first on markets, then the distinctive value proposition in these markets/services, then whether the firm has the right initiatives to deliver this value proposition. Either way, non-financial goals generally support the financial ones. A company's planning process actively involves employees whose potential to excel is high (regardless of their current responsibilities), along with the most senior executives and, usually, a strategy team. Any strategy has an array of measurable quantitative factors like achievement of cost/revenue match or unit cost objectives. In some cases they involve the achievement of milestones during the course of a year. Important strategic decisions are made by a small group of senior managers, including the CEO. Company's board of directors focuses on a few roles in planning strategy. Boards are seen to be most active in challenging strategy during the development process and in approving the final strategy. Implementation of strategic planning is crucial to an organization’s success. Integration of strategic-planning group and its human-resources group is one of the key factors to successful implementation. In most of the cases, they are slightly integrated or not at all. Companies don't particularly focus their strategic planning on new opportunities for growth. To be on the top, strategic decision makers should spend more time on business development. By structuring the strategic-planning process to focus on what the company wishes to achieve and by improving the informal side of developing strategy, companies can be better prepared to make real-time strategies in an uncertain world.

Courtesy: Mc Kinsey