Basic Description of Strategic Planning (including key terms to know)

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    © Copyright Carter McNamara, MBA, Ph.D., Authenticity Consulting, LLC.
    Adapted from the Field Guide to Nonprofit Strategic Planning and Facilitation.

    (This page is referenced from Strategic Planning.)

    (Key terms to know in the following descriptions are included in italics and bolding.)

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    What is Strategic Planning?

    Simply put, strategic planning determines where an organization is going over the next year or more and how it’s going to get there. Typically, the process is organization-wide or focused on a major function such as a division, department, or other major function. (The descriptions on this page assume that strategic planning is focused on the organization.)

    How to Get a Feel for Strategic Planning — There’s No Perfect Way to Do It

    Planning typically includes several major activities or steps in the process. Different people often have different names for these major activities. They might even conduct them in a different order. Strategic planning often includes the use of several key terms. Different people might use apply different definitions for these terms, as well.

    Don’t be concerned about finding the “perfect way” to conduct strategic planning. You’ll soon notice that each writer seems to have their own particular interpretation of the activities in strategic planning. However, as you read the materials linked from the topic Strategic Planning in this library, you’ll begin to notice some information that is common to most writers.

    Read the basic description described below on this page. Then review the various materials linked from the library on the topic of Strategic Planning. Once you start strategic planning, you’ll soon find your own particular approach to carrying out the process.

    One Way to Look at Strategic Planning

    One interpretation of the major activities in strategic planning activities is that it includes:

    1. Strategic Analysis

    This activity can include conducting some sort of scan, or review, of the organization’s environment (for example, of the political, social, economic, and technical environment). Planners carefully consider various driving forces in the environment, for example, increasing competition, changing demographics, etc. Planners also look at the various strengths, weaknesses, opportunities, and threats (an acronym for this activity is SWOT) regarding the organization.

    (Some people take this wide look around after they’ve identified or updated their mission statement, vision statement, values statement, etc. These statements are briefly described below. Other people conduct the analysis before reviewing the statements.)

    (Note that in the past, organizations usually referred to the phrase “long-range planning“. More recently, planners use the phrase “strategic planning”. This new phrase is meant to capture the strategic (comprehensive, thoughtful, well-placed) nature of this type of planning.)

    2. Setting Strategic Direction

    Planners carefully come to conclusions about what the organization must do as a result of the major issues and opportunities facing the organization. These conclusions include what overall accomplishments (or strategic goals) the organization should achieve, and the overall methods (or strategies) to achieve the accomplishments. Goals should be designed and worded as much as possible to be specific, measurable, acceptable to those working to achieve the goals, realistic, timely, extending the capabilities of those working to achieve the goals, and rewarding to them, as well. (An acronym for these criteria is “SMARTER”.)

    At some point in the strategic planning process (sometimes in the activity of setting the strategic direction), planners usually identify or update what might be called the strategic “philosophy”. This includes identifying or updating the organization’s mission, vision, and/or values statements. Mission statements are brief written descriptions of the purpose of the organization. Mission statements vary in nature from very brief to quite comprehensive, including having a specific purpose statement that is part of the overall mission statement. Many people consider the values statement and vision statement to be part of the mission statement. New businesses (for-profit or nonprofit) often work with a state agency to formally register their new business, for example, as a corporation, association, etc. This registration usually includes declaring a mission statement in their charter (or constitution, articles of incorporation, etc.).

    It seems that vision and values statements are increasingly used. Vision statements are usually a compelling description of how the organization will or should operate at some point in the future and of how customers or clients are benefiting from the organization’s products and services. Values statements list the overall priorities in how the organization will operate. Some people focus the values statement on moral values. Moral values are values that suggest overall priorities in how people ought to act in the world, for example, integrity, honesty, respect, etc. Other people include operational values which suggest overall priorities for the organization, for example, to expand market share, increase efficiency, etc. (Some people would claim that these operational values are really strategic goals. Don’t get hung up on wording for now.)

    3. Action Planning

    Action planning is carefully laying out how the strategic goals will be accomplished. Action planning often includes specifying objectives, or specific results, with each strategic goal. Therefore, reaching a strategic goal typically involves accomplishing a set of objectives along the way — in that sense, an objective is still a goal, but on a smaller scale.

    Often, each objective is associated with a tactic, which is one of the methods needed to reach an objective. Therefore, implementing a strategy typically involves implementing a set of tactics along the way — in that sense, a tactic is still a strategy, but on a smaller scale.

    Action planning also includes specifying responsibilities and timelines with each objective, or who needs
    to do what and by when. It should also include methods to monitor and evaluate the plan, which includes knowing how the organization will know who has done what and by when.

    It’s common to develop an annual plan (sometimes called the operational plan or management plan), which includes the strategic goals, strategies, objectives, responsibilities, and timelines that should be done in the coming year. Often, organizations will develop plans for each major function, division department, etc., and call these work plans.

    Usually, budgets are included in the strategic and annual plan, and with work plans. Budgets specify the money needed for the resources that are necessary to implement the annual plan. Budgets also depict how the money will be spent, for example, on human resources, equipment, materials, etc.

    (Note there are several different kinds of budgets. Operating budgets are usually budgets associated with major activities over the coming year. Project budgets are associated with major projects, for example, constructing a building, developing a new program or product line, etc. Cash budgets depict where cash will be spent over some near term, for example, over the next three months (this is very useful in order to know if you can afford bills that must be paid soon. Capital budgets are associated with operating some major asset, for example, a building, automobiles, furniture, computers, etc.

    Basic Overview of Variety of Planning Models

    Here’s a quick overview of a variety of strategic planning. This overview will help you get a feel for the variety of perspectives on strategic planning. Basic Overview of Various Models

    Now that you have some basic sense of what strategic planning is, you can go on to polish your understanding by returning to the topic of Strategic Planning, starting within the section Basic Overviews of Strategic Planning Process (basics, special topics, and sample plans)

    For the Category of Strategic Planning:

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