Strategic Planning: How to Make a Great Plan That Works

61% of executives^{1https://hbr.org/2017/11/executives-fail-to-execute-strategy-because-theyre-too-internally-focused#:~:text=A%20full%2061%25%20of%20executives,of%20being%20promoted%20or%20hired.} felt unprepared for the strategic challenges they faced once appointed to a senior leadership role. It’s normal to feel daunted or uncertain about your strategic responsibilities.

But strategic planning is undoubtedly essential. It’s the compass that points your company in the right direction.

This article will delve into several frameworks and offer a comprehensive strategic planning guide. So, let’s dig in and make your business goals a reality.

What is Strategic Planning?

Strategic planning is a systematic process by which an organization or person defines long-term goals, identifies the resources and actions required to achieve them, and develops a comprehensive plan to guide future direction and decision-making. Proper strategic planning will ensure that resource allocation, stakeholder communication, and project prioritization are all aligned.

Strategic plans usually exist on a timeframe of three to five years into the future. Some more stable industries may plan for even more extended periods, such as ten years, while rapidly changing industries may focus on a shorter strategic horizon, such as one to two years. 

Typically, a strategic plan is broken into shorter tactical and operational plans. Here’s a breakdown of how each of these types of plan is different:

	Strategic Plan	Tactical Plan	Operational Plan
Timeframe	Long-term, 3-5 years or more.	Medium-term, 1-3 years.	Short-term, less than 1 year.
Level	Organizational or company-wide.	Departmental.	Team or individual.
Focus	Overall goals for the organization.	Tactics to achieve the strategic objectives.	Shorter term projects
Detail	High-level, often less specific.	More specific than strategic plans but less detailed than operational plans.	Very detailed, constantly breaking down tasks into individual days or even hours.
Purpose	To set the long-term vision and direction for the entire organization.	To allocate resources and align tasks within departments to achieve strategic objectives.	To implement the tactical plans.
Examples	Expanding to new markets, launching new product lines, and M&A strategies.	Marketing campaigns, staffing plans, and R&D projects.	Daily production schedules, weekly resource allocation, and monthly sales targets.

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How to Make Your Strategic Plan Step-By-Step

SWOT analysis

The first step is understanding where your organization stands. You can also undertake this task as an individual.

What is the current state of the business? What’s going on in the outside world?

Once you’ve taken the time to reflect on the right questions, you will find where the bottlenecks are and the best places to put your efforts.

SWOT analysis is a framework to help you reflect on what’s going on in your business and will inform your decision-making.

SWOT is an acronym for Strengths, Weaknesses, Opportunities, and Threats. Let’s touch on each of those and some questions to guide your reflections.

Strengths

• What does your company do exceptionally well compared to competitors?
• What makes your product or service unique? Why do customers come to you instead of your competitors?
• What tangible assets do you have at your disposal?

Weaknesses

• What are the operational inefficiencies within the organization?
• Where does our team need to gain skills, abilities, or qualifications?
• In what ways is our company viewed as less favorable than competitors?

Opportunities

• Given how markets are trending, where do you expect needs to emerge for new products or services?
• What have customers given you feedback about improving your product or services?
• Where do you see vulnerabilities in your competitors’ business, and can you capitalize there? 

Threats

• Are there any new laws and regulations that might impose restrictions or costs on your company’s products or operations?
• Are there changes in the economy that could impact your business?
• Could any new technological advancements render your products or operations obsolete?

Here is a link to a free table you can use for your own SWOT analysis.

As an individual, you can ask what your strengths, weaknesses, opportunities, and threats are.

PESTLE Analysis

A second framework you can use to help understand the landscape is PESTLE Analysis. This tool enables you to understand the macro environment that your business is operating within to help you make informed decisions. 

PESTLE stands for political, economic, sociocultural, technological, legal, and environmental.

Here are several questions you could consider researching and answering for each factor:

Political

• What is the current and potential future impact of government policies on our business?
• Are there any upcoming elections or political events that could significantly affect our industry?

Economic

• How do inflation, exchange, and interest rates impact our operating costs or consumer purchasing power?
• Are there any economic indicators or trends that signal opportunities or threats for our business?

Sociocultural

• How do cultural attitudes and social trends affect consumer behavior in our market?
• Are there demographic changes that will affect our future workforce or customer base?

Technological

• What emerging technologies could disrupt our industry or provide new opportunities?
• How reliant are our operations on specific technologies, and what is our plan for technological obsolescence?

Legal

• Are there upcoming changes in employment, consumer, or industry-specific laws that we must prepare for?
• Do we have potential vulnerabilities in intellectual property, compliance, or employee rights?

Environmental

• How might environmental regulations or climate change impact our operations or supply chain?
• Are there environmental trends or consumer preferences for sustainable practices that we can capitalize on?

As an individual, consider your goals and how they are impacted by the current political, economic, sociocultural, technological, legal, and environmental climates.

Balanced Scorecard

A third framework called Balanced Scorecard lets you view your organization from four perspectives to give you a 360-degree overview. Here are the perspectives and reflection questions for each:

Financial or stewardship

• What financial goals will we achieve in the short and long term?
• How will our strategy contribute to increased profitability or shareholder value?
• Are we maximizing ROI (return on investment) for our key projects?

Customer and stakeholder

• How do we want to be perceived by our customers?
• What customer needs or problems are we solving?
• Are we effectively measuring and meeting customer satisfaction and loyalty metrics?

Internal processes

• Which business processes are critical to delivering our strategy?
• How efficient are these processes, and where can we improve?
• Are these processes aligned with our customer satisfaction goals?

Organizational capacity or learning & growth

• What skills and capabilities do our employees need to execute our strategy?
• How are we fostering a culture of continuous learning and improvement?
• Do we have the right technological tools to support our strategic objectives?

Action Step: Review any (or all) of these 3 frameworks and reflect on the questions. To get more accurate information, consider creating surveys and feedback forms to get information from employees and customers. Also, consider including stakeholders in the conversation.

Identify objectives

Once you’ve thoroughly reflected on the landscape of the business and the cultural context, it’s time to clarify which targets you’d like to aim at.

Usually, when business leaders talk about objectives, they speak about OKRs. 

An OKR (objectives and key results) is a framework for setting specific, measurable goals and tracking progress through key results that align with an organization’s mission and vision statements.

To create your OKRs, try the following:

Identify 3-5 high-level objectives that align with your organizational goals. These objectives should be qualitative, align with your company’s vision, and be inspirational to your team.

For example, a qualitative objective could be to boost customer satisfaction.

As an individual, you can also consider objectives and key results you’d like to achieve.

Define key results

For each objective, define 2-5 key results that are quantifiable and achievable and measure the objective’s success. To make sure your result is quantitative, you could use the SMART framework and ensure that the result is:

• Specific
• Measurable
• Achievable
• Relevant
• Time-Bound

For example, a key result for a company might be to achieve a Net Promoter Score (NPS) of 70 by 2026.

Individuals going through this process may want their income to be $100,000 / year by 2030.

Develop actionable strategies

Here, you outline the strategies to achieve the objectives set. This is the ‘how-to’ part of your plan. Just follow these steps.

1. Prioritize your objectives. Sort your OKRs by their importance and urgency. It could be helpful to get input from stakeholders.
2. Break the OKR into chunks. Break down each OKR into smaller, achievable tasks or projects.

In the example above, one activity to get an NPS of 70 might be to run a customer feedback survey and act on the results.

3. Allocate resources. Once you’ve determined all the activities to achieve an OKR, determine what resources (time, personnel, budget) each activity requires.

In our example, you may need $5,000 for software to get feedback and analyze data. And it might require 2 marketers and 1 data analyst to run. 

4. Set milestones and deadlines. Get clear on your interim goals on the path to your target, and set timelines to track the progress. 

It can be helpful to add these dates to a shared calendar.

5. Track and adapt. As I’m sure you know, things don’t always go according to plan. Continuously monitor your performance metrics and shift strategies when you need to.

For example, you may want to try new tactics if your NPS isn’t by 65 by a particular date.

Communicate with your team

It all starts with creating a good action plan. But the better you can lead and communicate with your team, the more likely your plan is to succeed. Plus, surveys suggest^{2https://www.forbes.com/advisor/business/digital-communication-workplace/} that poor communication leads to employees who could be more productive, more satisfied, and more trusting of leadership. 

There are several major considerations around communication.

1. Allocate responsibilities for OKRs. Identify which departments, teams, or individual roles are most suited to tackle each key result. Make sure everyone is clear about what they are responsible for. If you are setting goals as an individual (and not a company), consider if you want to outsource work.
2. Plan a check-in schedule. Figure out how often you want to check in on progress toward each OKR. 

During these check-ins, review OKR metrics, discuss any challenges, and shift strategies as necessary.

3. Make sure everyone is on the same page. 95% of employees^{3https://www.researchgate.net/publication/7515395_The_Office_of_Strategy_Management#:~:text=On%20average%2C%2095%25%20of%20a,have%20to%20be%20like%20this.} need to be made aware of their company’s strategy or help understand it. Be part of the 5%! Think of how much more aligned your team can be if everyone points in the same direction. 

Revisit the OKRs often in team meetings and one-on-ones to make sure they stay top of mind.

4. Celebrate milestones when the team does reach an OKR; woohoo! Celebrate and acknowledge people’s hard work to keep that morale sky-high.

Watch Out for These Pitfalls When You Do Your Strategic Planning

You’ll be in great shape if you have a plan in place. However, it can also be helpful to think about some of these obstacles to avoid unnecessary challenges.

Lack of stakeholder engagement

One of the most common challenges is when a leader creates a strategic plan, but the stakeholders are out of the loop. This can make for a plan that’s out of touch with the organization’s needs.

Actionable Tip: To overcome this, involve representatives in the planning process. Schedule regular check-ins or workshops to collaborate on shaping the strategic plan through its different phases.

Skimping on analysis

Another common pitfall is moving forward without sufficient data or a thorough internal and external business environment analysis.

Cutting corners usually doesn’t pay off. Spending ample time upfront with your analysis will save you from failures down the road.  

Actionable Tip: Before drafting your strategic plan, take the time to go through a detailed analysis like SWOT, PESTLE, or Balanced Scorecard. 

When you run these analyses, capture as much data and feedback as possible.

Communication breakdown

Even the best strategic plans can only succeed if you communicate them effectively.

Your business is a collection of people, after all. And it will run much more effectively when everyone is clear on their role, and the team is harmonized and pointing in the same direction.

Actionable Tip: Clearly outline the responsibilities and timelines for each part of your strategic plan. Use whatever project management tools you need alongside regular updates to keep everyone informed and accountable, ensuring your plan moves from concept to reality.

One weak link can break the chain, and you must ensure all the links are strong.

Frequently Asked Questions About Strategic Planning

Takeaways on Strategic Planning

Best of luck with your strategic planning! If you give yourself ample time, you’ll be in great shape. 

Just remember to follow these steps:

1. Analyze the landscape using SWOT analysis, PESTLE Analysis, or Balanced Scorecard.
2. Set clear and specific objectives by considering your top qualitative aims and making quantitative targets for each.
3. Develop actionable strategies by prioritizing your OKRs, breaking each into smaller chunks, figuring out the resources required for each one, setting milestones and deadlines, and checking in and adapting along the way.
4. Communicate with your team by ensuring everyone knows their responsibilities, checking in throughout, ensuring everyone knows the OKRs and how their role relates to them, and celebrating milestones.

If you want to improve your strategic thinking abilities, you might enjoy this article.