Every company should have a vision. Every company has resource constraints, be it financial or human. The question is, how do you achieve your vision while optimizing your available resources to maximize value? A good start is to develop a coherent strategy, well formulated and adapted to the company and its environment.
There exists an almost infinite number of definitions of the concept strategy. Alfred Chandler in 1962 defined strategy as “the determination of the basic long-term goals of an enterprise, and the adoption of courses of action and the allocation of resources necessary for carrying out these goals.” (source: Alfred Chandler, Strategy and Structure: Chapters in the history of industrial enterprise). Michael Porter in 1980 defined strategy as the “…broad formula for how a business is going to compete, what its goals should be, and what policies will be needed to carry out those goals” and the “…combination of the ends (goals) for which the firm is striving and the means (policies) by which it is seeking to get there.” (source: Michael Porter, Competitive Strategy). Thus, the concept strategy covers goals, means and resource allocation.
Creating a strategy is, however, only part of the equation. There are good strategies and there are bad strategies, the crux of the issue is how well do you execute it? An adage says that it is better to have well executed poor strategy than a poorly executed good strategy. In short, a strategy is not better than its execution. This is where strategic planning comes in.
Strategic planning is about creating a road map for executing a chosen strategy. It is a quantitative exercise, but a well-designed strategic plan goes way beyond simply being a long term financial plan. It represents the outcome of the strategic discussions held and the choices and decisions made. One should not confound strategic visions and objectives. Growing by X% is an objective, strategy is about how you get there. As such, the qualitative aspect are at least as important as the quantitative ones in the strategic planning process, which is about a lot more than simply defining future growth and revenue targets.
Going forward I will provide my thoughts and insights into various aspects of the strategic planning function and how it can bring value to organizations of all sizes. In the meantime, thoughts and comments are welcome.