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Strategic planning process
The document discusses the strategic planning process, emphasizing its importance in defining a company's mission, vision, and core competencies while identifying opportunities and risks. It outlines steps for effective planning, including conducting SWOT analysis, establishing guiding principles, and evaluating initiatives using strategic filters. Additionally, it highlights pitfalls to avoid, such as excessive initiatives and analysis paralysis, to ensure focused and successful implementation of strategic goals.
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Strategic planning process
- 1. Strategic Planning Process Understanding theStrategy Development Framework with in- depth discussion on the Process, Pitfalls and Implementation 12th January, 2019
- 2. Let’s understand StrategicPlanning What is Strategic Planning Why do we Plan How do we Plan1 2 3 • Defines what the Business Stands for (Mission and Vision) • Defines the target areas of interest • Defines Business approaches its target areas of interest • Provides insight into resource requirement and allocation • Provides Focus to Business • Identifies opportunities across focus areas • Identifies risks associated with accomplishing business mission • Set a clear direction and stay in your lane without modifying your strategy every year • Avoid Distractions in your Strategy by avoiding any new initiatives • Hedge resources through diverse initiatives
- 3. Avoid Major Risksto Planning !!! Analyzing streams of data sources without actionable intelligence in sight Too many people / Too many iterations / Too many approvals Too many initiatives – it is overwhelming Too many big changes / initiatives resulting in poor resource allocation Meagre initiatives with incremental contribution to overall growth Focusing initiatives on only those business segments that are already large and compromising future Analysis Paralysis Cumbersome Too Many Initiatives Too Big Initiatives Too Small Initiatives Starving the Growth Segment
- 4. Areas of Considerationfor Strategic Planning Define the principles of strategic planning Identify forces used to assess the market Explain how to conduct a SWOT analysis Articulate how to establish guiding principles and set goals Leverage strategic filters Describe the steps of a strategic planning process
- 5. Set a Direction 1.Articulate the following: • Mission • Vision • Goals 2. Define core competencies • What are we great at • How can we compete Define Strategic Filters • These filters are objective functions we must achieve • They Serve as the evaluation criteria for shortlisting initiatives Defining focus areas • Bucket the initiatives as per impact • Resource the initiative accordingly Diversify Portfolio of initiatives Balance to be maintained across: • Short term and Long term initiatives • Core competencies Execute/ImplementPlan 21 3 4 Document outlining Defined Core Competencies Prioritized list of initiatives Implementation and sequencing plan Steps involved in a Strategic Planning Process
- 6. Tools for Defininga Strategic Environment – Five Forces Supplier Power Threat of New Entrants Buyer Power Threat of Substitution Internal Competition • Understand if the market is dominated by vendors • Are they in a position to influence pricing • How difficult is it for a new entrant to join the competition • Understand if the market is dominated by customers / clients • Are they in a position to dictate pricing • Are there any alternative products or services • Understand what customer buy rather than what we sell • How many competitors are there in the market place • Market share distribution • GTM strategy • Core Competencies Questions that need to be asked for each of the forces
- 7. Tools for Defininga Strategic Environment – SWOT Analysis STRENGTHS • International Brand • Supply Chain • Sales Force • Plant safety • Widest range of products available in the marketplace OPPORTUNITIES • Local economy and population; local market dominance • Trade area is sizeable • Majority of the transactions are in physical stores WEAKNESSES • Relatively recently established • Sales performance issues and in-fighting • High traffic leading to customers not receiving the attention they deserve THREATS • Increased priced of raw materials • Local competitors • Stringent government regulations
- 8. Elements of StrategicDirection 1 3 2 4 Articulate Mission Guiding Principles Articulate Vision Goals • Why does the organization exist • What is its Purpose • Where do we want to be in what time • What to do we want achieve • How do we want people to behave • What are lenses we need to evaluate our company • Quantitative (Revenue, Profit, Sales nos.) metrics within defined timeframe
- 9. Determining Core Competencies •Defining Core Competencies requires clear understand of our strengths. • Examples: Quality of Product, Ability to Innovate, Efficiency of Supply Chain, Brand Strength, Technology Infrastructure • Once identified, we look through our initiative pipeline and map it on the below chart…. LOW LOWHIGH HIGH C1 C2 PURSUE AVOID CONSIDER OWN IT !! Let’s Evaluate STARBUCKS, whose core competencies are QUALITY (C1) and Service (C2), against following initiatives: 1. Launch of New Holiday Coffee Drink Since it is their product – Product Quality is HIGH Since it will be delivered by their Baristas –Service to deliver this is HIGH Conclusion: OWN THIS INITIATIVE 2. Outsource coffee manufacturing and sell it through Big Box Retailers Since it is not their product – Product Quality is LOW Service is also outsourced – Service Quality is LOW Conclusion: AVOID THIS INITIATIVE
- 10. Creating Strategic Filters Step1 Step 2 Get the Right People • Managers • Direct Staff • Supporting Staff Remember Core Competencies • Vision • Mission • Goals • Guiding Principles Step 3 Generate Filter • Qualitative Filters • Quantitative Filter Step 4 Get Everyone in a Meeting Let everyone propose what they think the initiative evaluation criteria should be Bucket the Evaluation Criteria in 6-12 Filters HARD FILTERS – If an initiative fails to pass through this filter then initiative is dropped SOFT FILTERS – These are filters with a priority scale that ranges from High to Low
- 11. Assessing Initiative Portfolio– 2X2 Matrix LOW LOW HIGH HIGH GROWTH(TOPLINE) PROFIT Priority 1 Priority 2 Priority 2 Priority 2 Once all the initiatives are passed through the 2X2 Matrix we are able to assess if the overall portfolio of initiatives will deliver growth or profit for the Business A D F KM B C GE H I LJ Z X
- 12. Planning Resources Define Organization Structure 12 Identify Human Resource Needs 3 Define the Resources as per the organization structure against each initiative