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Do I need a Strategic Plan?

Strategic planning is an organization's process of defining its strategy, or direction, and making decisions on allocating its resources to pursue this strategy. It may also extend to control mechanisms for guiding the implementation of the strategy. 

If you want to run your business rather than your business running you -- you need to do some strategic planning. There are many aspects when developing a solid strategic plan but you don't have to do it all at once to see some results. If you want to grow your business then you can't do it without a strategic plan in place.

Strategic planning is a process and thus has inputs, activities, and outputs. It may be formal or informal and is typically iteractive, with feedback loops throughout the process. Some elements of the process may be continuous and others may be executed as discrete projects with a definitive start and end during a period. 

Strategic planning provides inputs for strategic thinking, which guides the actual strategy formation. The end result is the organization's strategy, including a diagnosis of the environment and competitive situation, a guiding policy on what the organization intends to accomplish, and key initiatives or action plans for achieving the guiding policy.

Michael Porter wrote in 1980 that formulation of competitive strategy includes consideration of four key elements:
  1. Company strengths and weaknesses;
  2. Personal values of the key implementers (i.e., management and the board);
  3. Industry opportunities and threats; and
  4. Broader societal expectations.

The first two elements relate to factors internal to the company (i.e., the internal environment), while the latter two relate to factors external to the company (i.e., the external environment). These elements are considered throughout the strategic planning process.

A variety of analytical tools and techniques are used in strategic planning. These were developed by companies and management consulting firms to help provide a framework for strategic planning. Such tools include:
  • PEST analysis, which covers the remote external environment elements such as political, economic, social and technological (PESTLE adds legal/regulatory and ecological/environmental);
  • Scenario planning, which was originally used in the military and recently used by large corporations to analyze future scenarios;
  • Porter five forces analysis, which addresses industry attractiveness and rivalry through the bargaining power of buyers and suppliers and the threat of substitute products and new market entrants;
  • SWOT analysis, which addresses internal strengths and weaknesses relative to the external opportunities and threats;
  • Growth-share matrix, which involves portfolio decisions about which businesses to retain or divest; and
  • Balanced Scorecards and strategy maps, which creates a systematic framework for measuring and controlling strategy.

My best suggestion is to jump in and get started. You'll be happy you did when you see the results that can be generated.

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