Guide: What Is Strategic Planning? (With Benefits and Steps)

By Indeed Editorial Team

Published 31 August 2021

The Indeed Editorial Team comprises a diverse and talented team of writers, researchers and subject matter experts equipped with Indeed's data and insights to deliver useful tips to help guide your career journey.

Strategic planning represents an essential process for leaders that provides a direction for their organisation. This plan offers clarity and purpose for the workforce, setting specific goals for the organisation's success and the actions that employees must take to meet them. When you understand how to perform this process, you can assess your organisation or team and begin developing strategies to help it improve or grow. In this article, we discuss what strategic planning is, its benefits and offer techniques you can use to conduct this process.

What is strategic planning?

Businesses use strategic planning to set and achieve organisational goals. Once leaders identify these goals, they develop an action plan that outlines strategies and activities that employees throughout the organisation must perform to reach them. A strategic plan typically includes a performance management system, enabling leaders to monitor and evaluate the progress toward the goals set. Leaders develop formal documents and communicate these strategies, along with the organisation's mission, values and vision, to keep everyone in the same mindset and working toward the same goals.

Related: What Is Strategic Management and Why Is It Important

Benefits of strategic planning

Strategic planning is an essential process for leaders for various reasons, offering benefits for the organisation and its workforce. Some benefits of undergoing this process include:

  • Sets a direction: A strategic plan helps leaders plan a direction for their business, highlighting the areas where they want to grow or improve. This planning process helps them identify future opportunities or challenges they want to address and more easily defines the goals or activities to help them reach their desired outcome.

  • Improves understanding: When setting a strategic plan, leaders analyse their business to identify what it does right and wrong. When leaders and employees recognise their strengths and weaknesses, it helps them develop ways to improve and make the organisation stronger for the future.

  • Enhances collaboration: An effective strategic planning process includes the involvement of individuals across the organisation, such as gaining feedback from employees. Collaborating with individuals from various backgrounds and levels can offer more unique perspectives and innovative solutions for the business.

  • Boosts productivity: When employees are part of the strategic planning process, it can help them feel valued and appreciated at work. As a result, they may be more eager to work toward the goals outlined in the plan to show that they've contributed to the organisation's success.

How to create a strategic plan

You can use the following steps and techniques to conduct the strategic planning process within an organisation:

1. Gather information

To develop a strategic plan, you first need to assess your organisation and its current situation. You can perform this step by analysing external factors affecting the business. Examples of external factors include:

  • Your industry

  • Your competitors

  • Government regulations

  • Consumer behaviours or trends

Researching and understanding these factors can help you identify potential opportunities or threats for your business. These insights also enable you to develop goals for the organisation to achieve within a specific timeframe. For example, your research may highlight the ongoing demand for free delivery from online retailers. You may use this information to set goals related to lowering delivery costs or finding other ways to improve your customers' online shopping experience. Researching your industry and competitors can also help you develop strategies to differentiate yourself in the market.

Related: Research Skills: Definition and Examples

2. Hold discussions with stakeholders

When developing a strategic plan, you want to gather as much information as possible. Beyond researching the external factors affecting the organisation, look internally and host discussions with leaders and staff members. You can ask these professionals for their insights on the organisation's current situation, including what's going well and might need improvement. They can also aid the research process by identifying potential competitors, trends or other market behaviours to monitor. You can also ask external stakeholders, such as investors and vendors, for their insights.

Collaborating with a range of individuals helps you gather more diverse perspectives, often offering new ideas or solutions that you might not have thought of initially. The more information and insights you can gather, the more comprehensive a plan you can develop. Allowing employees across the organisation to participate also helps create cohesion. These individuals receive an opportunity to offer input and develop the plan, giving them a stronger understanding of your organisation's goals and how they can help achieve them.

3. Perform a SWOT analysis

Once you've done sufficient research, you can perform a SWOT analysis to identify your organisation's strengths, weaknesses, opportunities and threats. This assessment allows you to examine each element in more detail to develop actionable goals and strategies that support them:

  • Strengths: When discussing strengths, your team determines what your organisation does well or what makes it better than its competitors. Your organisation's strengths might include employee skills and performance and the resources available to you.

  • Weaknesses: When discussing strengths, focus on the areas of your business that need improvements, such as a small customer base or inexperienced workforce. Use these weaknesses to develop smaller goals and strategies, such as implementing employee training opportunities, as you work toward achieving the organisation's long-term goals.

  • Opportunities: Use your prior research to identify potential opportunities for your business that lead to success. For example, you may have found a target market currently underserved by your competitors that you can take advantage of to grow your customer base.

  • Threats: Similarly, use your research and conversations with stakeholders to identify events or trends that might negatively affect your business. Discussing these threats in advance gives you time to develop strategies to avoid them or minimise their impacts.

4. Identify your goals

Use what you've learned to develop a strategic plan for the organisation. This document typically includes a mission statement, vision statement and actionable short- and long-term goals. This step serves as an iterative process, where you draft these elements and then invite feedback from key stakeholders and make changes until you create a plan that satisfies everyone. Here are the factors to consider:

  • Mission statement: A mission statement defines your organisation's purpose and core values. Clarifying these elements can ensure that you develop goals that align with them.

  • Vision statement: A vision statement defines what your organisation aspires to, often over a long-term period. This statement inspires stakeholders by answering how the organisation hopes to impact its industry, customers or community.

  • Long-term goals: These goals align with your organisation's mission and vision statement. They're typically more broadly defined, such as increasing revenue or upgrading your product offerings.

  • Short-term goals: Short-term goals represent milestones to achieving as you pursue the organisation's long-term goals. These goals are typically more specific, such as increasing sales by 20% within a year and realistically achievable for your employees.

Related: What KPI Stands for and How To Use It in Your Career

5. Develop strategies and action plans

After identifying your organisation's short- and long-term goals, you can develop action plans to meet them. These action plans include specific tasks and activities that you can assign to the appropriate departments within your organisation. For example, a long-term goal to increase brand awareness and recognition may include short-term goals to boost your company's social media following and engagement. You may develop an action plan related to these goals for your marketing department. Developing action plans may also require assessing your available resources to identify and resolve financial or staffing needs.

Collaborate with team or department leaders to create key performance indicators (KPIs) that enable them to assess and monitor progress toward their goals. KPIs measure performance and vary depending on the activity. For example, KPIs related to increasing social media engagement may include measuring the number of comments or 'likes' that your company's posts receive on a particular platform.

6. Communicate your plan

When you develop a completed plan that fulfils your stakeholders' needs, you can communicate it across the organisation. Depending on your defined strategies or action plans, you may need to host meetings with individual departments or teams to provide a clear message about your specific goals for them. The leaders of these teams can then assign and monitor activities using the KPIs developed in your action plan to keep employees on task.

Related: Top Strategies To Define Your Team's Roles and Responsibilities

7. Review and update the plan

As your industry or company change over time, you may need to adjust your goals or the steps required to meet them. For example, an organisation that set a goal to increase its number of physical storefronts may determine it would be more beneficial to focus on its online shopping experience to meet customers' preferences. During the strategic planning process, set plans for reviewing your plan regularly to ensure the goals and strategies you set are still relevant. You can develop a schedule and a list of individuals responsible for this task.

Setting regular review periods can also help your team assess and monitor progress toward achieving goals. For example, if the reviewer notices issues, you can discuss potential solutions or adjust the goal to make it more realistic for your employees. Document and communicate any changes made, ensuring that employees still understand what they need to achieve.

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