Having a strategic plan is a vital aspect of any successful organization. Unfortunately, most organizations have strategic plans that are really financial plans in disguise. And the larger the organization, the more true this statement is. In other words, the goals of the strategic plan are monetary goals.
Having goals related to profits is fine, but that’s only one element of a strategic plan. You also need a plan for what you’re doing to de-commoditize your commodities—those products and services with increasingly thinner margins and greater competition. You need a plan that outlines what you’re going to do to differentiate yourself from your competitors. You need a plan that details your innovation strategies for creating new products and services that drive new markets. Those key elements are often missing in a financially focused strategic plan.
So yes, financial planning is a vital component of strategic planning; it helps your company reach your financial goals. But true and thorough strategic planning also looks at how you gain new competitive advantages and other broader concepts that can accelerate growth beyond the target numbers of a financially focused plan. Therefore, your strategic planning needs to be a mix of financial planning (strategies to reach financial goals), strategy focused planning (strategies to create sustainable competitive advantage), long-range planning (using research to determine future positions), and tactical planning (to determine your execution strategies).
An old saying tells us, “Failing to plan is planning to fail.” That saying has never been truer for companies than today, which is why having a strategic plan is so essential. But just having an annual strategic planning process that creates a fixed, static plan is no longer enough. Today it’s important to build change into the plan and have the ability to adapt it in real-time because the world and markets are changing so quickly. In other words, it’s time for companies to do some dynamic planning.
Dynamic versus Static Planning
These days, a traditional static plan is becoming less desirable and less effective, and a dynamic plan is becoming more relevant and imperative. What’s the difference? A static plan is a document, either digital or printed, that is published, shared with key employees, and then put in a file cabinet or digital folder. In contrast, a dynamic plan goes beyond one-way informing and also communicates the plan in a two-way, on-going dialog to everyone in the enterprise. A version is also shared with strategic partners. It’s a living, breathing, and evolving entity that everyone engages in and supports. Think of it like this:
- A dynamic strategic plan communicates rather than informs. It’s a two-way dialogue between the company leaders and the employees.
- A dynamic strategic plan reaches beyond the company walls and goes out to strategic partners. After all, how are your strategic partners going to help you if they don’t know what you’re trying to do?
- A dynamic strategic plan evolves. It elicits dialogue and input from others. It can be continually refined and improved. This is in contrast to a static strategic plan, which is sent out to employees with the expectation that they’ll adapt to the plan rather than the plan adapting to them and the market.
Why are these three points so important? Because with a typical static strategic plan, people may not have time to read the plan, they may not agree with the plan, and they may not take action on it. In addition, they may find major flaws in the plan but have no means to provide risk-free feedback regarding their concerns.
However, with a dynamic strategic plan, you’re communicating with people and you get feedback. You’re not telling people the plan after the fact. Rather, you’re showing them the plan and asking for their help with identifying potential challenges. The goal is to solve the problems before they occur.
Come back later this week for Part 2 of this post…