In this article, we will evaluate the strategic planning process which one of the most important parts of business management. We will also go over questions such as why companies should make strategic plans and what is strategic planning. First of all, let's articulate our questions: What is strategic planning? What should come to mind when it comes to strategic planning? How should long-term and short-term plans be?
Strategic plan should be seen as a necessary basic element in every business and the future advantages of strategic planning should be taken into account. Strategic planning, properly organized and put into practice, is an undeniable process in developing strategic actions to make future breakthroughs and to ensure the realization of the business vision.
What is a Strategic Plan?
A strategic plan is a planning process that enables a company to make its strategies according to effective rational decisions. Under normal circumstances, companies may not see much of the big picture as their daily rush continues. If we explain what we mean better, we can start by saying that companies have certain places in the market in which they operate. In these places they try to gain more market share, that is the main purpose of every company. However, for this, a company must both know itself very well and evaluate the commercial environment it is in. While evaluating these points, they should start by asking "What are our strengths?", "In which areas are we good as a company?" and "What are our weak points?". Companies also look at the external environmental analysis and should ask questions like, "Where are the competitors?", "What is our company in relation to the competitors?" Thus, they can create a planning process that they realize to improve their current situation and create their own strategic plans.
Therefore, a strategic plan is for a company to determine its goals in order to achieve its long-term goals and to form action plans to reach these goals. Within these plans, companies analyze both their strengths and weaknesses in their own internal world and the external environment.
Benefits of a Strategic Plan
Why should companies make strategic plans? If the strategic plan is not made, will this be against the company? Does it affect the company badly, or does a company have to make a strategic plan for long term success?
In fact, the company's plans and goals are always present in the minds of company executives. Therefore, you can easily get information from a company manager on issues such as growth expectations for the next few years. For example, these goals may be: We should grow at least 20- 30% a year, open up to the European market, develop new products, etc. Since the company manager instinctively knows his market and the situation of his company, you can quickly learn such information from him.
The strategic plan actually means revealing the elements that are already in the mind of the managers in a more systematic way and directing the company resources to these goals by spreading these goals to all departments of the company. So when companies don't make strategic plans, that doesn't mean they don't really have plans. But when he makes the strategic plan, goals are aligned with employees, managers, different employees on other sides of the company. Hence, achieving those goals is much easier. As a result, the primary benefit of the strategic plan is to really raise awareness. More contributions are made throughout the company in many areas such as achieving those goals and getting everyone's contribution.
As a second benefit, we can count the strategic plan providing systematic thinking logically. When we think lean systematically, strengths and weaknesses that managers instinctively think of, or opportunities and threats in the market, become concrete. What can and cannot actually be done, and therefore the realism of the goals is tested. Ultimately, a productive process emerges that sets more realistic goals and enables you to think about points that have not yet been thought of.
Long Term Planning
The third benefit of strategic plans is to help companies making long-term plans. Making long-term plans makes it easier for companies to consider risks more(it requires good risk management) and take action beforehand. It also helps them see the opportunities in the market faster. It enables to think more realistically about the situation in the market and to take positions more quickly in the short and medium-term.
A strategic plan is instrumental in evaluating such opportunities earlier. In this way, both future-proof insurance and opportunities are created for the company. In summary, companies give themselves a chance to develop. Of course, companies do not have to make strategic plans. However, when they do, they enter a process of progress that can be very productive and well-concluded.
- Companies think about the points that perhaps they did not think about in setting goals.
- Provides long-term planning. Companies do not have to make a strategic plan, but when they do, they enter a useful planning process.
Steps of a Strategic Plan
We made strategic planning as a company, made the situation concrete, and we know where we want to go. So, while implementing our plan, what are the steps we need to pay attention to in order to achieve success? What should we pay attention to, what path should we follow? What kind of process should we follow in general terms?
While answering these questions, it would be best to start by talking about the strategic planning process. First of all, let's talk about the stages of strategic planning. Subsequently, we will answer the questions more clearly.
We should state that the plans that fall within the framework of the strategic plan are rather long-term. In the long run, we mean three years or five years. Shorter-term plans are not included in the strategic plan. So we have to think long term at first.
When making a strategic plan, the job starts with understanding the purpose of the company. This goal is called the company's mission. Mission briefly describes what a company exists for and what it provides to its customers and stakeholders. A machinery company, for example, has its mission: "We are a company that produces machines that are one of the most important elements of the production industry, or produces machines that directly contribute to the production and make production both efficient and high quality."
After that, the vision statement comes. A vision is a statement that includes what the company anticipates in the future, where it wants to go, and what it dreams of. Therefore, we can think of the vision as the company's goals.
Of course, there are core values that strongly feed all these processes. While companies are preparing plans, it is useful to ask questions such as "What are our core values?", "What will be our basic principles while making the plan?".
Whatever a does, these values remain at the end of employees’ minds while developing products, conducting operations, and developing services. Therefore, the core values of a company actually make up the DNA of that company.
Current Situation Analysis
At the last stage of the plan, it is useful to review the mission, vision, and core values established in the previous stages. After doing these, we must observe the analyzes that show our current situation.
Companies are living creatures. Like live animals and plants, companies also have internal structures. Also, what is our condition, what is the strength of our internal factors, they should be looked at. We may be looking healthy and athletic right now. But our breath may not be enough. Likewise, we look at the factors that originate in companies.
Also, there are external factors. Just as people have an environment, companies also have their own circles. Of course, companies are not alone, they are trying to get a share of a certain cake in the market. Therefore, it is necessary to examine external factors while analyzing the current situation. Current situation analysis is that a company examines its own internal and external factors. Ultimately, he will have made an analysis accordingly.
We call this SWOT analysis (Strengths- Weaknesses- Opportunities- Threats). Here, strengths and weaknesses form internal factors. These are factors in the company's own hands. External factors are environmental factors. So, there may be political factors. If we think for the company, the control of the situation of competitors in the external environment can be counted among external factors. External factors also affect companies. If we are to put it logically, opportunities and threats actually mean external factors.
After the current situation analysis, the details of the strategic plan should be examined. In the current situation analysis, companies; Opportunities and threats are evaluated by determining internal factors, external factors, strengths, and weaknesses. Training and employment are carried out in order to eliminate these deficiencies by planning according to their weaknesses. After the current situation analysis, strategies should be developed for purposes such as annual growth, entering the foreign market, and developing new products in order to reveal its strategic goals. For example, suppose that the goal of a production company is to grow and have a share in foreign markets. This company may have strategies such as cooperation and opening a liaison office in line with its growth strategies.
What can be done for strategic purposes is generally compared to a power plant. Strategies should be developed to imagine a few moves ahead.
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Setting Strategic Goals
After creating the strategy framework, defined as strategic goals and objectives; You should set your targets such as growth target, entering the target market. While determining these goals, they should be determined in a structure that can be taken slowly and surrounded by a certain time period. This structure is called a strategic goal.
Consider a company's strategy to grow with distributors in foreign markets. This company aims to open a liaison office in the German market and partner with the distributor in the first year. The next year it aims to establish a factory in the Middle East. By doing this, it will make the broad target structure applicable.
While determining these strategic goals, each goal should be brainstormed and it should be determined which goal will be beneficial for the company during the implementation phase. As a result of these determinations, other strategic targets may be revised. Objectives to be achieved that year during the implementation phase will now be included in the monthly target category. This category also indicates that the operational planning phase has passed to achieve the goal.
Let's go through the same example. Planning a visit to Germany for the liaison office to be opened, determining where to be located, conducting the necessary interviews, and posting a job in Germany to find the staff to work in the liaison office help make strategic goals more understandable and applicable. In this context, the strategic planning structure is determined from annual strategies to daily and monthly strategies.
Strategic goals, described as measurable time goals, need to be embodied in key performance indicators (KPI). The determination of key performance indicators and the subsequent realization of daily and monthly targets is an indication that companies can achieve greater goals. Based on this approach, companies can make the big picture applicable and spread it to each department and principle within themselves. Thus, the goals achieved in the departments in order to realize the strategic goals spread to the general and make a great contribution to the companies.
Strategic plans should be reviewed at the beginning of each year. Therefore, there is no unchangeable rigid application. Strategies and practices may change according to the external environment and the status of the company to achieve its goals. The unchanging elements of a strategic plan are vision, mission, and core values.
Corporate Level Strategy
In companies that do not have a strategic plan, there are strategies that company managers do not always embody in their thinking. With strategic planning, these ideas are revealed and made concrete. But strategic planning should not be viewed as a game-changer. Especially as the number of employees increases, it becomes much more difficult to manage the company and to align the company in line with the vision and goals. The fact that companies with 200-250 employees do not have strategic plans shows that companies do not perform a good practice.
In companies with fifty employees or more, fundamental values such as vision and mission must be determined. In addition, each company's SWOT analysis and market analysis provide great benefits. However, five-year targets, especially strategic plans are vital for companies that have a certain market share and have reached a certain maturity. It is better to set more general targets rather than strategic plans in small companies whose future is not very clear (growing 300% to 400%). In line with these goals, the agile strategic planning practice we call OKR will be more appropriate as a strategy.
If the company's annual growth rates are not dramatic (10% -50%), it has a certain market share and if it sees market developments, it will definitely be much more beneficial to make a strategic plan.
Strategic Planning and OKR (Objectives and Key Results)
Can a company make strategic planning while setting goals through OKR?
The criteria we call KPI in strategic plans are clearly defined. For example, %30 increase in sales must be made in the sales department. Therefore, we will have a KPI so that the sales staff must meet the %30 targets of that company. Let's assume that the same firm applies this strategic plan perspective in OKR. OKR's idea is; What can be done for a 30% increase, how can a process be developed to push the target?
"Measure what matters."
- John Doerr
As it turns out, the KPI has to be already there for companies to be successful. Therefore, the strategic plan may depend on the human resources and individual performance system in this direction. However, OKR is a system that puts forward challenging projects for companies to go further. After all, strategic plans and OKR are not alternatives to each other. The two work at the same time, but the two are separate concepts.
How to Create a Strategic Plan?
Before starting the Strategic Plan Preparation Guide, it would be best to start with the phases that make up the process. Our Strategic Planning process approach, which we have shaped in line with your needs and expectations, consists of 4 main phases.
1) Where are we?
Before starting this process, many documents, data, and/or plans should be ready for use:
- Company objectives and strategies
- Financial statements
- General description of the current business, including products and operations
- Information on competitors
- A list of target markets to be
- evaluated Information on the markets to be evaluated
2) Where Do We Want To Reach?
The position we want to reach; is the goal that we have set in accordance with the mission and vision statements, and core values. It is the ideal position we want our company to be in.
3) How Can We Reach Where You Want To Go?
In order for companies to determine their strategic goals in line with the vision and mission they have created, they must conduct studies such as market, competition, customer, channel, product analysis.
4) How Can We Track and Evaluate Our Success?
It is important to manage the performance of the institution by measuring all activities carried out within the framework of strategic planning at certain periods.
- Evaluation and Performance Measurement
An organizational structure is a system that outlines how certain activities are directed in order to achieve the goals of an organization. These activities can include rules, roles, and responsibilities. The organizational structure also determines how information flows between levels within the company. In this extent, the organizational structure of the company has to be created to serve the long-term goals and objectives.
- Strategic plans should be designed for 3 or 5 years of time periods, in accordance with the recommendations of the Strategy Committee.
- The strategy department should make workshops to design the strategic plans. Workshops should include employees from all units.
- At the end of the workshop, the strategies planned with the participation of all units of the company should be given the goals that are desired to be achieved with the workshop, and the compliance of the goals with the indicators should be measured in 6-month periods in the meetings organized by the Strategy Committee itself.
- Unit business plans for the goals of the workshop are prepared by each unit within its own structure and the results and budgets should be followed.
- The individual performance system, which is related to the unit business plans and is compatible with the strategy, is carried out by the relevant unit managers and Human Resources coordination and must be reported to the Strategy Committee in 6-month periods.
- Evaluations should be made as a result of the measurements made, and the recommendation to revise the plans, if necessary, should be conveyed to the Board of Directors by the Strategy Committee.
- Requests of the Board of Directors to take relevant actions should be conveyed to the Executive Board, and if necessary, revisions or actions should be taken through the decisions taken by the Executive Board.
- In the workshop attended by all units; The main strategy should be formed by reviewing the analyzes.
- Sub-strategies related to the main strategy should be determined with the contribution of all units.
- Indicators should be assigned and targets should be given to measure the performance of the determined sub-strategies. Achieving the main strategy depends only on the success of the sub-strategies.
- Actions refer to the actions that units will take to achieve the success of sub-strategies. To measure the performance of the actions, indicators should be determined and targets should be assigned.
- The success of sub-strategies will only be possible with the success of the actions.
- Sub-strategies should be measured against the goals assigned to their indicators.
- 5-year targets should be determined in the indicators, the targets that change periodically should be added to the targets realized at the relevant time and the performance should be measured by comparing.
- The targets assigned to the indicators of the actions and their performance should be measured.
- For each sub-strategy, the units within the company should determine the actions they will take.
The action distributions and weight-based contributions of the units need to be created and followed. In this extent, the actions, KPIs, weights, and the target market of the units serving the sub-strategy should be followed. Also, The contribution of units and their KPIs sub-strategies should be followed.
Individual Performance System and Corporate Performance Connection
- If we come to the relationship between the individual performance system and the corporate performance system,
- The system should be maintained with a double control mechanism.
- The success of sub-strategies should be measured both by the goals assigned to each sub-strategy's own indicator and by the performance of the goals assigned to the indicators of the linked action.
- While the success of each action is measured by the target of the action indicator, it should also be measured by the goals of individual performance indicators.
- The Strategy Committee should carry out performance measurement and follow-up of sub-strategies and actions.
- The unit manager, the individual, and the Human Resources department can perform the measurement and follow-up of the individual performance system.
The long-term strategic plans to be formed by the companies, the strategic plan preparation guide to be developed accordingly should be supported and integrated with the budget.
Accordingly, strategic planning is a dynamic process in terms of adapting to the changing competitive environment and turning opportunities in its favor.