Strategic planning is a tool widely used by businesses in general to enable them to achieve their goals. Used correctly, it brings significant benefits to the growth and continuity of the business. This is true even when it comes to the company’s IT department.
However, special care must be taken in its preparation to ensure that it enables the desired objectives to be achieved. When planning is not done correctly, the results are contrary to expectations, causing losses and problems for the company.
With that in mind, this post has included key information about this process, including how to effectively execute strategic planning across all areas of your company, and which tools make this process easier. Check it out!
How important is strategic planning?
Regardless of a company’s field of activity, effective strategic planning is essential for its success. This process helps organize and direct the actions necessary to achieve the organization’s goals and objectives.
This planning is also useful for ensuring business robustness. With everything considered and analyzed in advance, the company is less susceptible to abrupt changes and less easily surprised.
The decision-making process also benefits, not only because it becomes faster and easier, but also more assertive. A history of actions taken and results achieved makes this activity more assertive, improving business profits.
Furthermore, strategic planning shouldn’t be limited to achieving the business’s overall goals and objectives. It can also be used in smaller settings, such as technology, marketing, sales, and all other business areas.
In the case of the Information Technology environment, one of the most important fronts in the current scenario, with this tool being used efficiently, it is possible to recognize the business’s IT needs, plan acquisitions and hiring, and establish strategies for more positive change management.
On the other hand, the use of truly relevant technology helps with documentation and data analysis, further benefiting the corporation’s strategic planning.
How to make efficient strategic planning?
To reap the benefits of this process, you need to develop an appropriate plan. The steps required for proper planning include:
Understand the current situation
If the planning is for the short, medium and/or long-term objectives of the business, for example, it is necessary to understand the company’s current situation.
If the company is experiencing a historical series of declines or stagnant growth, it’s necessary to develop objectives that are related to changing this situation. Conversely, if the company is experiencing rapid growth, it’s necessary to consider ways to maintain its sustainability.
When planning for the IT sector, it is important to understand what resources and technologies the company has today and which are needed for the present and the future.
Understanding the business’s current situation also involves understanding its values, mission, and vision. Knowing this makes it easier to properly align objectives.
Furthermore, it’s necessary to analyze the entire business landscape, evaluating its direct and indirect competitors. This process, also known as benchmarking, is essential for identifying which companies pose threats to the business and how to set goals to overcome them.
Set objectives, goals and strategies
After recognizing the current situation, it’s necessary to establish the objectives to be achieved. These should be more global and comprehensive, while goals serve as steps toward achieving those objectives.
Each goal should be associated with a strategy, which serves as the path to be followed to achieve the desired result. For example: if one of the objectives is to improve data management and the other is to improve automation, the strategy could be in the form of contracting new IT solutions, such as cloud services.
Set deadlines
One of the key characteristics of effective strategic planning is the existence of deadlines. Therefore, creating a schedule cannot be left out of this process. This approach helps prevent loss of productivity and the relevance of actions in general, in addition to optimizing resource utilization.
Deadlines must be consistent with the established goal and objective, ensuring they are achievable. Automating a complex process in just one month, for example, may not be possible, but it could be feasible within a two-month or quarterly period.
Involve different sectors
If the goal is to create a highly efficient process, it’s important to involve different departments in its development. This could include involving the IT department to understand the real needs, as well as the finance department to develop an appropriate budget, for example.
Involving other people directly impacted by the plan ensures that the plan is relevant and has a better chance of being implemented.
Evaluate different scenarios
Another characteristic of efficient planning that achieves goals is its robustness. Because the market is highly dynamic and constantly changing, it’s best to evaluate different scenarios to create strategies that adapt to different realities.
Therefore, it’s worth planning for a normal scenario, a pessimistic scenario, and an optimistic scenario. This makes it easier to understand the different situations that may arise during your execution.
Select metrics
Metrics allow for close monitoring of planning execution, identifying opportunities for optimization, strategies that are yielding results, and other similar issues.
This selection should be made during the development phase to better identify the results. This includes establishing metrics such as the return on investment (ROI) of a particular technology or the amount of resources used versus the time elapsed.
Make the necessary adjustments
Once implemented, strategic planning may require some modifications. Ensuring dynamic optimization, in fact, is responsible for making it even more efficient.
Pay attention to metrics, monitor the situation, and identify opportunities for optimization. When making changes to your planning, document all data so that future analysis can benefit from this information.
Why use tools in this process?
Creating and executing a strategic plan is no simple task. It becomes even more complex in larger companies with multiple products and business areas.
In this sense, some tools and methods are essential to make this process simpler and more efficient, such as competitor analysis models, identifying the business’s strengths and weaknesses, verifying the importance of products and main customers, etc.
These solutions have already been tested by other companies and are guaranteed to be effective. This means that companies simply need to adapt the tools to their specific business needs, making the planning stages faster and more efficient.
What tools to adopt in strategic planning?
SWOT Matrix
The SWOT matrix can be used to facilitate analysis and understanding of the company and the market in which it operates. Its name represents its quadrants, which are:
- Strengths: These are the company’s strengths or key points. These can be an exclusive distribution channel, better market service, lower production costs, or any other relevant advantage the business has;
- Weaknesses: These are the business’s weaknesses, areas that need internal improvement;
- Opportunities: These are the company’s market opportunities, gaps the company can exploit to strengthen itself. Some examples are unserved customer segments and market dissatisfaction with competitors;
- Threats: These are the market threats to the company, the variables and events the business needs to be aware of. Examples of threats include consumer rejection of the product category, new competitors, or trends that shrink the market;
Porter’s 5 forces
A second tool can be used in the first stage of planning. Porter’s forces analysis helps decision-makers assess the business and market more comprehensively. To this end, the author recommends evaluating the five forces that determine the market and a business’s performance. We’ll discuss each of them in more detail below.
- Competitor Rivalry: Understanding rivalry and how competition works within the market. There are more aggressive environments, where competition is high, or more collaborative environments;
- Barriers to entry: observing how difficult it is for other companies to enter the market, increasing competition among them. This directly impacts the previous item;
- Buyer Bargaining Power: Identifying how much consumers in the segment can bargain and impact the price charged for products. Helps understand the business’s key areas of focus;
- Supplier bargaining power: Identifying the extent to which suppliers have power over your business. The higher this value, the better the relationship with that supplier should be, therefore, the greater the importance of this variable in planning;
- Threat of substitute products or goods: analysis of the possibility of replacing your product with others that meet the same need. Impacts business results.
Combined forces analysis allows for better targeting of the organization’s objectives and goals, as well as the tasks and activities that will be carried out to achieve these results.
BCG Matrix
Another important aspect of the strategic planning process is understanding the performance of your products and services. The BCG matrix can be a great ally in this regard, demonstrating the role of each item in the mix in business results.
Two axes are used to construct the chart. The vertical axis represents the market growth rate (high or low), and the horizontal axis represents the product’s market share (high or low). Evaluating these two criteria, each product or service is placed in one of the quadrants below:
- Products with a high share in a low-growth market (Cash Cow) — These are the company’s best products, don’t require much marketing and sales investment, and deliver a high return;
- Products with a high share in a high-growth market (Star) — These are the organization’s standout items, requiring constant investment as the market is expanding;
- Products with a low share in a high-growth market (Question Mark) — These are items that still require investment to yield results, such as launches or disruptive products, representing potential gains;
- Products with a low share in a low-growth market (Pineapple) — These items require significant marketing and sales investment and deliver little return to the business, in some cases, losses.
This analysis allows you to better target investments in the mix and use it strategically within your strategic planning.
Pareto Diagram
The Pareto diagram indicates that there’s an 80/20 relationship in business situations—that is, 80% of something is caused by 20% of something else. In this sense, the company uses this statistical analysis to determine action priorities.
The diagram can be used to identify which customers contribute the most to your revenue, which products drive the best sales performance, and even which employees drive the most goal achievement.
5W2H Checklist
This tool makes organizing your actions simpler. The checklist consists of the seven most important questions you should answer before executing any strategy:
- What?: what action will be done;
- Who?: who is responsible;
- Where?: location/channels used;
- Why?: what are the reasons for taking this action and the expected results;
- How?: which implementation steps;
- How much (How much does it cost)?: total investment value.
Management software
Finally, there are management software and technological solutions that automate and enable all of these analyses, making the development, monitoring, and changes in strategic planning a simplified and efficient process.
These solutions can be found in complete formats, meeting the needs of each business area, or in specialized formats, focusing on specific issues within a company’s sector.
It’s worth noting that this process relies on documenting data and objectives, generating positive and consistent results for the business. Therefore, it’s important that its development begins with a situational analysis and the definition of objectives, goals, and strategies.
From there, you need to consider different possible scenarios, as well as establish metrics and make any necessary modifications to ensure the relevance of what you’ve outlined. Use tools to make everything more agile and accurate.