5 steps of the strategic planning process

Every business should have a strategic plan—but the number of businesses that try to operate
without a defined plan (or at least a clearly communicated one) might surprise you. Research
from OnStrategy shows that 86% of executive teams spend less than one hour per month
discussing strategy, and 95% of a typical workforce doesn’t understand its organization’s
strategy.

Because so many businesses fail in these regards, you can get ahead of the game using
strategic planning.

What is the strategic planning process?

In the simplest terms, the strategic planning process is the method that organizations use to
develop plans to achieve overall, long-term goals.

This process differs from the project planning process, which is used to scope and assign tasks
for individual projects, or strategy mapping, which helps you determine your mission, vision,
and goals.

The strategic planning process is broader—it helps you create a roadmap for which strategic
objectives you should put effort into achieving and which initiatives will be less helpful to the
business. The strategic planning process steps are outlined below.

Strategic planning process steps

1. Determine your strategic position

This preparation phase sets the stage for all work going forward. You need to know where you
are to determine where you need to go and how you will get there.

Get the right stakeholders involved from the start, considering both internal and external
sources. Identify key strategic issues by talking with executives at your company, pulling in
customer insights, and collecting industry and market data to get a clear picture of your
position in the market and in the minds of your customers.

It can also be helpful to review—or create if you don’t have them already—your company’s
mission and vision statements to give yourself and your team a clear image of what success
looks like for your business. In addition, you should review your company’s core values to
remind yourself about how your company will go about achieving these objectives.

To get started, use industry and market data, including customer insights and current/future
demands, to identify the issues that need to be addressed. Document your organization's
internal strengths and weaknesses, along with external opportunities (ways your organization
can grow in order to fill needs that the market does not currently fill) and threats (your
competition).

As a framework for your initial analysis, use a SWOT diagram. With input from executives,
customers, and external market data, you can quickly categorize your findings as Strengths,
Weaknesses, Opportunities, and Threats (SWOT) to clarify your current position.
SWOT Analysis Example (Click on image to modify online)

An alternative to a SWOT is PEST analysis. Standing for Political, Economic, Socio-cultural,

and Technological, PEST is a strategic tool used to clarify threats and opportunities for your
business.
PEST Analysis (Click on image to modify online)

As you synthesize this information, your unique strategic position in the market will become
clear, and you can start solidifying a few key strategic objectives. Often, these objectives are
set with a three- to the five-year horizon in mind.

2. Prioritize your objectives

Once you have identified your current position in the market, it is time to determine
objectives that will help you achieve your goals. Your objectives should be in line with your
company mission and vision.

Prioritize your objectives by asking important questions such as:

● Which of these initiatives will have the greatest impact when it comes to
achieving our company mission/vision and improving our position in the market?
● What types of impact are most important (e.g. customer acquisition vs.
revenue)?
● How will the competition react?
● Which initiatives are most urgent?
● What will we need to do to accomplish our goals?
● How will we measure our progress and determine whether we achieved our
goals?
Objectives should be distinct and measurable to help you reach your long-term strategic goals
and initiatives outlined in step one. Potential objectives can be updating website content,
improving email open rates, and new leads in the pipeline.

SMART goals are useful to determine a timeline and identify the resources needed to achieve
the goals, as well as key performance indicators (KPIs) to make your success measurable.

3. Develop a plan

Now it's time to create a strategic plan to successfully reach your goals. This step requires
determining the tactics necessary to attain your objectives and designating a timeline and
clear communication of responsibilities.

Strategy mapping is an effective tool to visualize your entire plan. Working from the
top-down, strategy maps make it simple to view business processes and identify gaps for
improvement.
Strategy Map Example (Click on image to modify online)

Truly strategic choices usually involve a trade-off in opportunity cost. For example, your
company may decide to not put as much funding behind customer support, so that it can put
more funding into creating an intuitive user experience.

Be prepared to use your values, mission statement, and established priorities to say “no” to
initiatives that won’t enhance your long-term strategic position.

4. Execute and manage the plan

Once you have the plan, you’re ready to implement it. First, communicate the plan to the
organization by sharing relevant documentation. Then, the actual work begins.

Turn your broader strategy into a concrete plan by mapping your processes. Use KPI
dashboards to clearly communicate team responsibilities. this granular approach illustrates
the completion process and ownership for each step of the way.

Set up regular reviews with individual contributors and their superiors and determine check-in
points to make sure you’re on track.

5. Review and revise the plan

The final stage of the plan—to review and revise—gives you an opportunity to reevaluate your
priorities and course-correct based on past successes or failures.

On a quarterly basis, determine which KPIs your team has met and how you can continue to
meet them, adapting your plan as necessary. On an annual basis, it’s important to reevaluate
your priorities and strategic position to ensure that you stay on track for success in the long
run.

Track your progress using balanced scorecards to provide a comprehensive understanding of

your business's performance and execute strategic goals.
Balanced Scorecard (Click on image to modify online)

Over time you may find that your mission and vision need to change — an annual evaluation is
a good time to consider those changes, prepare a new plan, and implement again.

Master the strategic planning process steps

As you continue to implement the strategic planning process, repeating each step regularly,
you will start to make measurable progress toward achieving your company’s vision.
Instead of always putting out fires, reacting to the competition, or focusing on the latest
hot-button initiative, you’ll be able to maintain a long-term perspective and make decisions
that will keep you on the path to success for years to come.