Expand your knowledge in strategic planning to leverage your results!

Before you learn how to do strategic planning, you need to understand what this planning is. It is the plan adopted by a company or organization to get out of a current point and reach a desired future point.

The strategic planning originates in the military context, being defined by the strategy adopted to win the wars. It comes from the word strategos, which means the "art of generals".

We see the birth of this concept in ancient times through the record of war games. Later writings such as "The Art of War" by Sun Tzu and "The Prince" by Machiavelli increasingly develop the concept of strategic planning, with Machiavelli structuring a more organizational strategy.

A breakthrough comes with the two World Wars, with the strategy being a prime factor for victory. Thus, in 1950, the concept of the strategy was inserted in the business world.

I will now show you some of the steps in strategic planning.

Needs for Strategic Planning

Before you start doing strategic planning, you need to know why the company needs it. Every organization needs this planning, changing only the complexity and the model of the SP.

Some motivations for the construction of the strategic planning are:

• Expansion of market
• Organization of decision making
• Unawareness of the next business leap
• Difficulty of growth
• Loss of market.

By understanding these needs, you will be able to make strategic planning more appropriate to the purpose and wishes of the company for which you are consulting.

Strategic Segmentation

This is one of the most important steps in strategic planning because it's where we define the competitive model adopted by the company, as well as its positioning and the concept of value innovation.

Competitive model

When we speak of a competitive model, we have three well-defined ones that will indicate the strategic target and the competitive differential assumed by the company. Each model has its advantages and disadvantages.

The company that adopts the "Cost Leadership" model aims to reach the entire industry through the low cost. Thus, it has the advantage of creating barriers for new entrants, but in return, it needs to reach a large market share or advantageous position in order to be profitable.

If the company opts for the "Differentiation" model, it will also target the entire industry, but this time the differential will be the uniqueness of its product. One of the advantages is the absence of comparative products for consumers, which generates consumer loyalty by isolating competitors. However, a high investment is required until the position of differentiation is reached.

The organization can also choose the "Focus" model, where it will establish as the strategic target only one segment of the market. As a competitive differential, the company can either adopt low cost, differentiate or both.

This ensures protection against all competitive forces and is less vulnerable to substitute products. On the other hand, this model implies limitations in the total market share, as well as a trade-off between profitability and sales volume.

Positioning

Regarding the positioning, we have two strategies: red ocean and blue ocean. The table below presents these two strategies in more detail.

The consultant needs to know well what strategy the company has adopted so that it knows how to make appropriate strategic planning.

Value Innovation

The consultant needs to understand the relationship between cost reduction and increased value for the buyer, which will contribute to the value innovation of that company.

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Conceptualization of guidelines

Once the strategic segmentation is defined, we need to define the company's guidelines. In these guidelines, we have the mission, values, and vision of the organization.

The mission is the essence of the company, the purpose it fulfills within society. Based on the mission, we need to arrive at the vision, which is the future position designed for the organization in the long run. In this way, there is a universe of possibilities that is filled by values, which are the translation of the company culture.

With this, we get the company strategy, the way forward that will lead the organization to its vision.

We also have what is called Golden Circle, which defines what, how and why the company develops its product.

Porter Forces

Porter forces serve to analyze the external environment of the organization, focusing on the 5 main points that will determine the company's position in the market.

There are 5 Porter Forces:

• Threat of new entrants
• Bargaining power of suppliers
• Threat of substitute products or services
• Bargaining power of customers
• Competitive rivalry.

We have an article talking only about the Porter Forces, be sure to check it out!

Analysis of results

At this stage, we will analyze the historical evolution of the organization's results and understand how these results have behaved and project trends.

For this, we need to define the indicators and make a historical benchmarking, identifying the gap result. Then we need to identify the trend and analyze it.

In this analysis of results, you can not forget to also do an external benchmarking, comparing the results obtained by other companies with those of the company for which you are providing consulting services.

SWOT Analysis

The SWOT (Strength, Weakness, Opportunity, and Threat) analysis is crucial for good strategic planning. For this, we have the SWOT Matrix, which serves to consolidate the analyzes made previously and to generate the information crossing for decision making.

We need to define the correlation between categories.

Objectives and indicators

In order to arrive at the vision defined above, we will need strategic objectives, which will serve to segment this vision into smaller objectives within the macro strategy to direct actions and facilitate the management of results.

To do this, we will extract from the SWOT Matrix the strategic priorities necessary for reaching the vision and that is covered by the macro strategy. These smaller goals must be finalists, that is, directly related to the company's vision.

A good indicator is the Balanced Scorecard, which we will divide into four categories:

• Financial: How do we look at our partners? How do strategy, implementation, and execution contribute to improvements at the bottom of the organization? It should address profitability, growth and value generation for partners.
• Customer: How do customers see us? How is the company's performance from the perspective of its customers? What really matters to customers?
• Internal processes: What should we stand out? What needs to be done internally to meet customer expectations? What are the critical processes that enable you to achieve customer satisfaction?
• Innovation and learning: Can we continue to improve and create value? What are the most important parameters to compete successfully? What knowledge do you need to leverage strategy?

You need to keep in mind that strategic indicators should measure the end result of the goal, not the means that lead to the outcome. In addition, each strategic objective should be measured by a strategic indicator, rarely two, but no more than that.

A simple example to facilitate understanding:

To measure the ways that lead to the reach of the strategic indicator (result), we have the control indicators. If we observe that the strategic result is not reaching the goal, why is this happening? The information you need to answer this question are the necessary indicators.

Using the previous example, we have as strategic objective the increase in profit and as a strategic indicator the profit margin. In this case, possible control indicators are:

• Income of real estate sales
• Income of real estate rental
• Variable expenses
• Fixed expenses
• Working capital.

Monitoring of results

It is not enough to do good strategic planning, it is necessary to accompany it. If you just set the guidelines, but do not monitor them, you run the huge risk of some event taking your strategy away from the established view.

Whenever a goal is not achieved, a cause analysis should be done, followed by the proposition of an action plan that will be presented to the team, which will define the action to be taken to correct this deviation.

Communication of the strategy

According to PMI Brazil survey in 2010, 76% of companies report the failure of projects to communication. Many consultants do not give due importance to this, giving much more attention to technical skills.

For better engagement, and for strategic planning to work, it is necessary to be transparency and passing information clearly and objectively. It is important to ensure that those involved in the discussions are heard and taken into account.

Visible management frameworks are fundamental for better monitoring of indicators and results and are placed in a place of interest so that everyone can verify the progress of the project.

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