Strategic Planning in Organized Small Business

CHAPTER ONE Introduction What is Strategic Planning? Strategic planning determines where an organization is going over the next year or more, how it’s going to get there and how it’ll know if it got there or not.

The focus of a strategic plan is usually on the entire organization, while the focus of a business plan is usually on a particular product, service or program. There are a variety of perspectives, models and approaches used in strategic planning.The way that a strategic plan is developed depends on the nature of the organization’s leadership, culture of the organization, complexity of the organization’s environment, size of the organization, expertise of planners, etc. For example, there are a variety of strategic planning models, including goals-based, issues-based, organic, scenario (some would assert that scenario planning is more of a technique than model), etc.

) Goals-based planning is probably the most common and starts with focus on the organization’s mission (and vision and/or values), goals to work toward the mission, strategies to achieve the goals, and action planning (who will do what and by when). 2) Issues-based strategic planning often starts by examining issues facing the organization, strategies to address those issues and action plans. 3) Organic strategic planning might start by articulating the organization’s vision and values, and then action plans to achieve the vision while adhering to those values.Some planners prefer a particular approach to planning, eg, appreciative inquiry. Some plans are scoped to one year, many to three years, and some to five to ten years into the future. Some plans include only top-level information and no action plans. Some plans are five to eight pages long, while others can be considerably longer. Quite often, an organization’s strategic planners already know much of what will go into a strategic plan (this is true for business planning, too).

However, development of the strategic plan greatly helps to clarify the organization’s plans and ensure that key leaders are all “on the same script”.Far more important than the strategic plan document, is the strategic planning process itself. Also, in addition to the size of the organization, differences in how organizations carry out the planning activities are more of a matter of the nature of the participants in the organization — than its for-profit/nonprofit status.

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For example, detail-oriented people may prefer a linear, top-down, general-to-specific approach to planning. On the other hand, rather artistic and highly reflective people may favor of a highly divergent and “organic” approach to planning.SOME DIFFERENT MODELS OF STRATEGIC PLANNING NOTE: Much of the following information is in regard to goals-based strategic planning probably the most common form of strategic planning. However, issues-based planning is also a very popular approach to strategic planning — an approach still too-often forgotten. FOR-PROFIT VERSUS NON-PROFIT STRATEGIC PLANNING Major differences in how organizations carry out the various steps and associated activities in the strategic planning process are more of a matter of the size of the organization — than its for-profit/nonprofit status.Small nonprofits and small for-profits tend to conduct somewhat similar planning activities that are different from those conducted in large organizations. On the other hand, large nonprofits and large for-profits tend to conduct somewhat similar planning activities that are different from those conducted in small organizations.

(The focus of the planning activities is often different between for-profits and nonprofits. Nonprofits tend to focus more on matters of board development, fundraising and volunteer management. For-profits tend to focus more on activities to maximize profit. BENEFITS OF STRATEGIC PLANNING Strategic planning serves a variety of purposes in organizations, including to: 1. Clearly define the purpose of the organization and to establish realistic goals and objectives consistent with that mission in a defined time frame within the organization’s capacity for implementation. 2. Communicate those goals and objectives to the organization’s constituents. 3.

Develop a sense of ownership of the plan. 4. Ensure the most effective use is made of the organization’s resources by focusing the resources on the key priorities.

5.Provide a base from which progress can be measured and establish a mechanism for informed change when needed. 6. Listen to everyone’s opinions in order to build consensus about where the organization is going.

Other reasons include that strategic planning: 7. Provides clearer focus for the organization, thereby producing more efficiency and effectiveness. 8. Bridges staff/employees and the board of directors (in the case of corporations). 9. Builds strong teams in the board and in the staff/employees (in the case of corporations). 10.

Provides the glue that keeps the board members together (in the case of corporations). 1. Produces great satisfaction and meaning among planners, especially around a common vision. 12. Increases productivity from increased efficiency and effectiveness. 13.

Solves major problems in the organization. WHEN SHOULD STRATEGIC PLANNING BE DONE? The scheduling for the strategic planning process depends on the nature and needs of the organization and the its immediate external environment. For example, planning should be carried out frequently in an organization whose products and services are in an industry that is changing rapidly .In this situation, planning might be carried out once or even twice a year and done in a very comprehensive and detailed fashion (that is, with attention to mission, vision, values, environmental scan, issues, goals, strategies, objectives, responsibilities, time lines, budgets, etc). On the other hand, if the organization has been around for many years and is in a fairly stable marketplace, then planning might be carried out once a year and only certain parts of the planning process, for example, action planning (objectives, responsibilities, time lines, budgets, etc) is updated each year. Consider the following guidelines: 1.Strategic planning should be done when an organization is just getting started.

(The strategic plan is usually part of an overall business plan, along with a marketing plan, financial plan and operational/management plan. ) 2. Strategic planning should also be done in preparation for a new major venture, for example, developing a new department, division, major new product or line of products, etc. 3.

Strategic planning should also be conducted at least once a year in order to be ready for the coming fiscal year (the financial management of an organization is usually based on a year-to-year, or fiscal year, basis).In this case, strategic planning should be conducted in time to identify the organizational goals to be achieved at least over the coming fiscal year, resources needed to achieve those goals, and funded needed to obtain the resources. These funds are included in budget planning for the coming fiscal year. However, not all phases of strategic planning need be fully completed each year. The full strategic planning process should be conducted at least once every three years. As noted above, these activities should be conducted every year if the organization is experiencing tremendous change.

. Each year, action plans should be updated. 5.

Note that, during implementation of the plan, the progress of the implementation should be reviewed at least on a quarterly basis by the board. Again, the frequency of review depends on the extent of the rate of change in and around the organization. A strategic plan should be visionary, conceptual and directional in contrast to an operational plan, which is likely to be shorter term, tactical, tightly focused, implementable and measurable. A strategic plan must be realistic and attainable.

ESSENTIAL POINTS TO OBSERVE DURING REVIEW AND PLANNING PROCESS A critical review of past performance by the owners and management of a business and the preparation of a plan beyond normal budgetary horizons require a certain attitude of mind and pre-disposition. Some essential points which should to be observed during the review and planning process include the following: •Relate to the medium term i. e. 2/4 years, •Be undertaken by owners/directors, •Focus on matters of strategic importance, •Be separated from day-to-day work, •Be realistic, detached and critical, Distinguish between cause and effect, •Be reviewed periodically, •Be written down. PRECURSOR TO DEVELOPING A STRATEGIC PLAN It is desirable to clearly identify the current status, objectives and strategies of an existing business or the latest thinking in respect of a new venture. Correctly defined, these can be used as the basis for a critical examination to probe existing or perceived Strengths, Weaknesses, Threats and Opportunities (SWOT).

This then leads to strategy development covering the following issues discussed in more detail below: ?Vision ?Mission ?Objectives ?Values ?Strategies ?Goals ?Programs KEY STEPS TO STARTEGIC PLANNING IN SMALL BUSINESS Vision The first step is to develop a realistic Vision for the business. This should be presented as a pen picture of the business in three or more years time in terms of its likely physical appearance, size, activities etc. Answer the question: “if someone from Mars visited the business, what would they see (or sense)? ” Consider its future products, markets, customers, processes, location, staffing etc. MissionThe nature of a business is often expressed in terms of its Mission which indicates the purposes of the business, for example, “to design, develop, manufacture and market specific product lines for sale on the basis of certain features to meet the identified needs of specified customer groups via certain distribution channels in particular geographic areas”. A statement along these lines indicates what the business is about and is infinitely clearer than saying, for instance, “we’re in electronics” or worse still, “we are in business to make money” (assuming that the business is not the Royal Mint! . Objectives The third key element is to explicitly state the business’s Objectives in terms of the results it needs/wants to achieve in the medium/long term.

Aside from indicating a necessity to achieve regular profits, objectives should relate to the expectations and requirements of all the major stakeholders, including employees, and should reflect the underlying reasons for running the business. These objectives could cover growth, profitability, technology, offerings and markets. ValuesValues governing the operation of the business and its conduct or relationships with society at large, customers, suppliers, employees, local community and other stakeholders.

Strategies Next are the Strategies – the rules and guidelines by which the mission, objectives etc. may be achieved. They can cover the business as a whole including such matters as diversification, organic growth, or acquisition plans, or they can relate to primary matters in key functional areas, for example: ? The company’s internal cash flow will fund all future growth, ? New products will progressively replace existing ones over the next 3 years, ?All assembly work will be contracted out to lower the company’s break-even point. Goals Next are Goals. These are specific interim or ultimate time-based measurements to be achieved by implementing strategies in pursuit of the company’s objectives, for example, to achieve sales of ? 3m in three years time. Goals should be quantifiable, consistent, realistic and achievable. They can relate to factors like market (sizes and shares), products, finances, profitability, utilization, and efficiency.

Programs The final elements are the Programs which set out the implementation plans for the key strategies.These should cover resources, objectives, time-scales, deadlines, budgets and performance targets. It goes without saying that the mission, objectives, values, strategies and goals must be inter-linked and consistent with each other.

This is much easier said than done because many businesses, which are set up with the clear objective of making their owners wealthy often, lack strategies, realistic goals or concise missions. APPROACH TO STRATEGIC PLANNING Statements on vision, mission, objectives, values, strategies and goals are not just elements of future planning.They also provide benchmarks for a historic review. Most managers will find it exceedingly difficult to develop a future strategy for a business without knowing its current strategies and measuring their success to date. The starting point must be to determine a company’s existing (implicit or explicit) vision, mission, objectives and strategies.

These are then judged against actual performance along the following lines: •Is the current vision being realized? •How has the company’s mission and objectives changed over the past say, three years? Why have the changes occurred or why have no changes occurred?Identify primary reasons and categories as either internal or external, •Description of the actual strategies followed over the past few years, •Critical examination of each strategy statement by reference to activities and actions in key functional areas covering such matters as: oHow has the company been managed? oHow has the company been funded? oHow has the company sought to increase sales and market share? oHow have productivity/costs moved? Each element is quantified by reference to actual performance. We Ask “why not”? , “why only”? , or “why so”? nd locate the reasons for differences between the actual and desired performance. The technique for exploring performance shortfalls is to review the business’s financial return and to drill down through the components of this return to locate and assess the key determinants of performance. Address Causes Not Symptoms in any organized small business. In reviewing a business it is essential to cut through the symptoms of problems and reach the underlying causes. Questions that can assist in revealing the real causes include the following: ? “What stopped the business from? ” ?”What caused the cause of? ” “Why didn’t the business achieve a 25% return? ” By way of an example consider why this company may be unable to increase its market share: Because it cannot penetrate major customers because its product range is too narrow because the company doesn’t have the capability to produce additional products because of shortcomings in R & D because of a lack of expertise and resource because R & D is not an immediate priority because of a lack of profits because of a high interest burden because the company is over-reliant on borrowings because the shareholders won’t/can’t raise additional permanent capital.The moral in this case is that there are no major customers due to under-capitalisation! USE OF SWOTs Having built up a picture of the company’s past aims and achievements, the SWOT (strengths, weaknesses, opportunities and threats) analysis can commence. Strengths and weaknesses are essentially internal to the organisation and relate to matters concerning resources, programs and organisation in key areas.

These include: •Sales – marketing – distribution – promotion – support; •Management – systems – expertise – resources; •Operations – efficiency – capacity – processes; Products – services – quality – pricing – features – range – competitiveness; •Finances – resources – performance; •R&D – effort – direction – resources; •Costs – productivity – purchasing; •Systems – organization – structures. If a start-up is being planned, the strengths and weaknesses are related mainly to the promoter(s) – their experience, expertise and management abilities – rather than to the project. The objective is to build up a picture of the outstanding good and bad points, achievements and failures and other critical features within the company.The external threats and opportunities confronting the company can exist or develop in the following areas: ? The company’s own industry where structural changes may be occurring (Size and segmentation; growth patterns and maturity; established patterns and relationships, emergence/contraction of niches; international dimensions; relative attractiveness of segments); ? The marketplace which may be altering due to economic or social factors (Customers; distribution channels; economic factors, social/demographic issues; political & environmental factors); ? Competition which may be creating new threats or pportunities (Identities, performances, market shares, likely plans, aggressiveness, strengths & weaknesses); ? New technologies, which may be, causing fundamental changes in products, processes, etc. (Substitute products, alternative solutions, shifting channels, cost savings etc. ) Against an uncertain and shifting background, the objective is to identify and prioritize the key SWOTs in a one-handed manner. Once the SWOT review is complete, the future strategy may be readily apparent or, as is more likely the case, a series of strategies or combinations of tactics will suggest themselves.We use the SWOTs to help identify possible strategies as follows: •Build on strengths, •Resolve weaknesses, •Exploit opportunities, •Avoid threats.

Too many people falsely believe that strategic thinking, formulation and implementation is only for the big outfits…you know, the Toyotas, Microsofts, Honeywells, Nokias, and the Exxon Mobils. Our experience, working closely with people from all walks of life and from all sizes of organization, suggest the opposite is true — smaller organizations need to be more devoted to strategic thought and action as much or more than the big players out there.The most important strategic thing a small organization can do is prepare to do battle with the future, which entails five steps. •Step 1: Anticipate both threats and windows of opportunities for the vision and mission of the business. •Step 2: Decide how to respond to these emerging threats and opportunities. •Step 3: Identify the source which those risks and opportunities will come from.

•Step 4: Figure out when the risks will hit or if the opportunity is truly valuable. •Step 5: Execute actions to mitigate the threats or take advantage of the opportunities.Again, let us emphasize that for practical purposes you don’t need to create a doctoral dissertation when implementing strategy.

Strategic planning for a small business doesn’t have to be as formal, as long, or as detailed as with a large company. The most important thing to do is strike up a dialogue with your customers, employees, vendors, investors, and do your homework about your competitors. It helps to talk about your strategy with a partner, advisor, or trusted consultant to bring some clarity and focus to your mind around the strategic issues that could affect your business in the future.The biggest disservice a small business leader can do for an organization is be unprepared or surprised by unfolding events. Even if you simply think things through in your mind and then briefly share your strategic ideas or decisions with your employees, you will be ahead of the curve and helping people to understand how they can connect with your strategy.

If you’re a small business working toward a strategic plan and you commit it all to paper in a short two to five page plan, so much the better! You just moved ahead of many of your competitors.Invite your strongest employees to respond to your strategic issues, concerns and get them involved so they feel some ownership in this simple process. Have a strategy adaptation meeting with all hands twice a year for a couple of hours to clarify the direction, make adjustments and respond to questions. Your strategic analysis should look at six aspects of the business. 1. Your customers: Figure out who your customers are now, who they will be in the future, how they are changing, and what they will want in the future.

2.Your people and talent: What skills and capabilities will be needed to address the threats and opportunities? How many people, what kind of new roles will be needed, how will people’s roles change in the future to handle the threats and seize the opportunities? Will the organization grow and are we developing the leadership to manage the changes coming? 3. Suppliers and Vendor: Can they give you what will be required to meet future challenges? Are there new offerings that can help you resolve your particular business issues? 4. Competitors: Who are the players in your market?What are the strengths they offer? How can you take advantage of their vulnerabilities with your unique capabilities? 5. Products and Services: Are you preparing something new, refreshing, and value added for your customers or users which enable them to be more productive? 6.

Organizational infrastructure & technology: What will the organization need to do differently in the future to keep up with new and emerging customers? Are you using technology to improve productivity? CHAPTER TWO CONDUCTING STRATEGIC PLANNING PREPARATION FOR STRATEGIC PLANNING Guidelines to Keep Perspective during PlanningMany managers spend most of their time “fighting fires” in the workplace. — their time is spent realizing and reacting to problems. For these managers — and probably for many of us — it can be very difficult to stand back and take a hard look at what we want to accomplish and how we want to accomplish it.

We’re too buy doing what we think is making progress. However, one of the major differences between new and experienced managers is the skill to see the broad perspective, to take the long view on what we want to do and how we’re going to do it.One of the best ways to develop this skill is through ongoing experience in strategic planning. The following guidelines may help you to get the most out of your strategic planning experience. 1. The real benefit of the strategic planning process is the process, not the plan document. 2.

There is no “perfect” plan. There’s doing your best at strategic thinking and implementation, and learning from what you’re doing to enhance what you’re doing the next time around. 3. The strategic planning process is usually not an “aha! experience. It’s like the management process itself — it’s a series of small moves that together keep the organization doing things right as it heads in the right direction. 4. In planning, things usually aren’t as bad as you fear nor as good as you’d like. 5.

Start simple, but start! USEFUL SKILLS TO HAVE WHEN STRATEGIC PLANNING It’s best to have a team of planners conduct strategic planning. Therefore, it’s important to have skills in developing and facilitating groups.Committees (for example, may have committees do environmental scan, get input from others) Conflict Management in Groups Consultants (you may want to use a consultant to help you plan and carry out strategic planning) Creative Thinking (very important when setting goals and how they will be reached) Innovation (very important when designing strategies, or methods to reach goals) Decision Making (useful when selecting which goals and strategies to follow) Facilitating in Face-to-Face Groups (these skills are very important when helping a group come to consensus) Focus Groups (get input from internal & external customers to identify issues, goals, methods) Group-Based Problem Solving and Decision Making (these activities are at the core of strategic planning) Meeting Management (planners make decisions in meetings; these skills will be very useful) Problem Solving (this is helpful, especially when tackling difficult decisions) Valuing Diversity (it’s best to get a wide variety of perspectives when planning)NEED CONSULTANT OR FACILITATOR TO HELP YOU WITH PLANNING? You may want to consider using a facilitator from outside of your organization if: 1. Your organization has not conducted strategic planning before. 2. For a variety of reasons, previous strategic planning was not deemed to be successful. 3.

There appears to be a wide range of ideas and/or concerns among organization members about strategic planning and current organizational issues to be addressed in the plan. 4. There is no one in the organization who members feel has sufficient facilitation skills. 5. No one in the organization feels committed to facilitating strategic planning for the organization.

6.Leaders believe that an inside facilitator will either inhibit participation from others or will not have the opportunity to fully participate in planning themselves. 7. Leaders want an objective voice, i. e. , someone who is not likely to have strong predispositions about the organization’s strategic issues and ideas WHO SHOULD BE INVOLVED IN PLANNING? Strategic planning should be conducted by a planning team. Consider the following guidelines when developing the team.

(Note that reference to boards of directors is in regard to organizations that are corporations. ) 1. The chief executive and board chair should be included in the planning group, and should drive development and implementation of the plan. 2.Establish clear guidelines for membership, for example, those directly involved in planning, those who will provide key information to the process, those who will review the plan document, those who will authorize the document, etc.

3. A primary responsibility of a board of directors is strategic planning to effectively lead the organization. Therefore, insist that the board be strongly involved in planning, often including assigning a planning committee (often, the same as the executive committee). 4. Ask if the board membership is representative of the organization’s clientele and community, and if they are not, the organization may want to involve more representation in planning.If the board chair or chief executive balks at including more of the board members in planning, then the chief executive and/or board chair needs to seriously consider how serious the organization is about strategic planning! 5. Always include in the group, at least one person who ultimately has authority to make strategic decisions, for example, to select which goals will be achieved and how.

6. Ensure that as many stakeholders as possible are involved in the planning process. 7. Involve at least those who are responsible for composing and implementing the plan. 8. Involve someone to administrate the process, including arranging meetings, helping to record key information, helping with flipcharts, monitoring status of prework, etc.

9.Consider having the above administrator record the major steps in the planning process to help the organization conduct its own planning when the plan is next updated. Note the following considerations: 10.

Different types of members may be needed more at different times in the planning process, for example, strong board involvement in determining the organization’s strategic direction (mission, vision, and values), and then more staff involvement in determining the organization’s strategic analysis to determine its current issues and goals, and then primarily the staff to determine the strategies needed to address the issues and meet the goals. 11. In general, where there’s any doubt about whether a certain someone should be involved in planning, it’s best to involve them.It’s worse to exclude someone useful then it is to have one or two extra people in planning — this is true in particular with organizations where board members often do not have extensive expertise about the organization and its products or services. 12. Therefore, an organization may be better off to involve board and staff planners as much as possible in all phases of planning. Mixing the board and staff during planning helps board members understand the day-to-day issues of the organization, and helps the staff to understand the top-level issues of the organization.

HOW MANY PLANNING MEETINGS WILL BE NEEDED? Number and Duration of Planning Meetings 1. New planners usually want to know how many meetings will be needed and what is needed for each meeting, i. e. , they want a procedure for strategic planning.

The number of meetings depends on whether the organization has done planning before, how many strategic issues and goals the organization faces, whether the culture of the organization prefers short or long meetings, and how much time the organization is willing to commit to strategic planning. 2. Attempt to complete strategic planning in at most two to three months, or momentum will be lost and the planning effort may fall apart. Scheduling of Meetings 1. Have each meeting at most two to three weeks apart when planning.

It’s too easy to lose momentum otherwise. 2. The most important factor in accomplishing complete attendance to planning meetings is evidence of strong support from executives. Therefore, ensure that executives a) issue clear direction that they strongly support and value the strategic planning process, and b) are visibly involved in the planning process. AN EXAMPLE PLANNING PROCESS AND DESIGN OF MEETINGSOne example of a brief planning process is the following which includes four planning meetings and develops a top-level strategic plan which is later translated into a yearly operating plan by the staff: 1. Planning starts with a half-day or all-day board retreat and includes introductions by the board chair and/or chief executive, their explanations of the organization’s benefits from strategic planning and the organization’s commitment to the planning process, the facilitator’s overview of the planning process, and the board chairs and/or chief executive’s explanation of who will be involved in the planning process. In the retreat, the organization may then begin the next step in planning, whether this be visiting their mission, vision, values, etc.

r identifying current issues and goals to which strategies will need to be developed. (Goals are often reworded issues. ) Planners are asked to think about strategies before the next meeting. 2. The next meeting focuses on finalizing strategies to deal with each issue. Before the next meeting, a subcommittee is charged to draft the planning document, which includes updated mission, vision, and values, and also finalized strategic issues, goals, strategies. This document is distributed before the next meeting. 3.

In the next meeting, planners exchange feedback about the content and format of the planning document. Feedback is incorporated in the document and it is distributed before the next meeting. 4.The next meeting does not require entire attention to the plan, e. g. , the document is authorized by the board during a regular board meeting. 5. Note that in the above example, various subcommittees might be charged to gather additional information and distribute it before the next planning meeting.

6 Note, too, that the staff may take this document and establish a yearly operating plan which details what strategies will be implemented over the next year, who will do them, and by when. 7. No matter how serious organizations are about strategic planning, they usually have strong concerns about being able to find time to attend frequent meetings.This concern can be addressed by ensuring meetings are well managed, having short meetings as needed rather than having fewer but longer meetings, and having realistic expectations from the planning project.

CONCLUSION Strategy planning really isn’t rocket science; rather it is a common sense and a willingness to ask some challenging questions. Be willing to think it through, communicate with others, and solicit additional perspectives. Write down your conclusions and share them with your organization. Finally, issue a call to work on strategic action each day to compliment the routine tactical work that has to be done to pay the bills and meet current obligations. Help your small business stay ahead of the curve. REFERENCES •Patrick L.Burkhart and Suzanne Reuss (1993).

Successful Strategic Planning: A Guide for Nonprofit Agencies and Organizations. Newbury Park: Sage Publications. •Bradford and Duncan (2000). Simplified Strategic Planning. Chandler House. •Stephen G. Haines (2004). ABCs of strategic management : an executive briefing and plan-to-plan day on strategic management in the 21st century.

•Kono, T. (1994) “Changing a Company’s Strategy and Culture”, Long Range Planning, 27, 5 (October 1994), pp: 85-97 •Philip Kotler (1986), “Megamarketing” In: Harvard Business Review. (March—April 1986) •John Naisbitt (1982). Megatrends: Ten New Directions Transforming our Lives. Macdonald.

•T.Levitt (1960) “Marketing myopia”, In: Harvard Business Review, (July—August 1960) •M. Lorenzen (2006). “Strategic Planning for Academic Library Instructional Programming. ” In: Illinois Libraries 86, no. 2 (Summer 2006): 22-29. •L.

Fahey and V. K. Narayman (1986). Macroenvironmental Analysis for Strategic Management&rdquo.

West Publishing. •R. F. Lusch and V. N. Lusch (1987).

Principles of Marketing. Kent Publishing, •Brian Tracy (2000). The 100 Absolutely Unbreakable Laws of Business Success. Berrett, Koehler Publishers. •Michael Allison and Jude Kaye (2005). Strategic Planning for Nonprofit Organizations. Second Edition.

John Wiley and Sons.


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