What is strategic planning?
Glossary of Terms
- Critical Success Factors (CSF)
- Critical Success Indicators (CSI)
- Environmental Scan
- Gap Analysis
- Line of Business (LOB)
- Strategic Initiatives
- Strategic Issue
What is strategic planning?
Strategic Planning is an orderly process for envisioning an organization’s desired future and determining the required actions to attain that future. Unlike long range planning which simply projects current trends into the future, strategic planning is based on an anticipated desired future.
Strategic planning seeks to answer such questions as, “What is our mission?”, “What are our assumptions about the future?”, “How should we be organized for that future?”, “How should we allocate our resources to our line and support structures?”. By answering these questions (and many others), strategic planning helps an organization create a desired future within the context of a dynamic and changing environment.
. . . the most effective public and nonprofit planners no doubt are now and will be increasingly in the future, the ones who are best at strategic planning.
John Bryson, 1988
Strategic planning focuses on the critical issues, opportunities, and problems facing a community. It offers leaders a chance to look beyond day-today concerns, and even year-to-year issues . . . One of the most appealing features is that it helps distinguish the truly important decisions form those with temporary impact.
Public Technology, Inc., 1994
Strategic (planning) thinking . . . is about synthesis. It involves intuition and creativity. The outcome of strategic thinking is an integrated perspective of the enterprise . . .
Henry Mintzberg, 1994
The mission statement defines the organization’s purpose, its raison d’etre, and the general means to realize that purpose. At a minimum, an effective mission statement should include the following:
- the social and political needs the organization fulfills
- the current and future scope of activities required to fulfill those needs
- the unique characteristics of the organization that distinguish it from other organizations focused on the same or similar needs
The mission statement helps all members of the organization to focus and guide internal decision making.
. . . the mission statement contains an inherent definition of priorities for the strategic agenda . . . and identifies the major opportunities for growth and the capabilities that have to be enhanced to achieve a superior competitive advantage.
Arnoldo Hax & Nicholas Majluf, 1991
A recent survey of twenty five “corporate tools” . . . showed that managers used mission statement more than any other tool . . . Managers liked mission statements because they make a difference in whether a company succeeds or fails.
Patricia Jones & Larry Kahaner, 1995
Organizational values define how members of the organization approach their work; values help determine appropriate behavior and guide individual decision making. Taken together, an organization’s guiding values or principles create an overall operating philosophy and ethical framework to facilitate professional decision making.
Values form the bedrock of an organization’s culture.
Terence Deal & A. A. Kennedy, 1982
For values to be truly shared, they must be more than advertising slogans; they must be deeply supported and broadly endorsed beliefs about what is important to us. Constituents must be able to enumerate the values and have common interpretations of how values will be put into practice. They must know how values influence their own jobs and how they directly contribute to organizational success.
James Kouzes & Barry Posner, 1995
The vision of the organization is a simply defined, compelling ideal state that the leadership team foresees for the organization. Nothing should be done in an organization that is not compatible with the vision.
Imprinting the vision of the organization among members of the organization is the heart of the strategic planning process; it leads to strategic thinking throughout the decision-making process and by all members of the organization.
If there is a spark of genius in the leadership function at all, it must lie in the transcending ability, a kind of magic to assemble — out of all variety of images, signals, forecasts and alternatives—a clearly articulated vision of the future that is at once simple, easily understood, clearly desirable, and energizing.
Warren Bennis, 1985
The ideal vision . . . can be likened to an organizational dream – it stretches the imagination and activates people to rethink what is possible.
William Belgard, Kim Fisher, & Steven Rayner, 1988
Long-Range Planning vs. Strategic Planning
There are some significant differences between long-range planning….what most people tend to think of when considering the future of their institution … and strategic planning.
- Long-range planning is a projection from the present (where you are now) or an extrapolation from the past (where you have been).
- Strategic planning builds on anticipated future trends, data, and competitive assumptions.
- Long-range planning tends to be bottoms-up, often a consolidation of plans from individual units.
- Strategic planning resides at the top level of the organization and then informs lower levels from long-range planning.
- Long-range planning tends to be numbers-driven.
- Strategic planning tends to be idea driven, more qualitative; it seeks to provide a clear organizational vision / focus.
Think of strategic planning as a strategy… “How can we orchestrate our future?” …different from typical long-range planning, which asks, “What does our future look like based on the information we have?” Both are important, but they serve different purposes. Strategic planning forces an institution to consider how it sees itself, what it wants to become, the values it will use to make decisions, the guiding principles it will refer to for change.
Glossary of Terms
CRITICAL SUCCESS FACTORS (CSF) – Critical success factors (CSF’s) represent a limited number of key performance areas in which an organization must achieve the levels of performance required by its mission and values.These factors are specific to each Line of Business (LOB), and may be unique to certain LOB’s. CSF’s drive the process of strategy implementation by defining managerial preferences with regard to key variables at a given point in time.
CRITICAL SUCCESS INDICATORS (CSI) – Critical success indicators drive the process of strategy implementation by providing the performance measures used to track progress on critical success factors. The specific indicators can include both hard (quantitative) and soft (qualitative) indices.
ENVIRONMENTAL SCAN – Analysis of key external elements or forces that influence the conditions in which an agency functions. This is commonly referred to as the opportunity of and threats to the agency (see SWOT analysis).
GAP ANALYSIS – Gap analysis is the identification of the disparity between current performance and desired future performance on key critical success indicators. This disparity leads to the development of specific strategies, priorities, and resource allocation decisions to close the gap.
In every planning period, a company is expected to make progress against strategic goals and measures.
Alexander Hiam, 1992
LINE OF BUSINESS (LOB) – Line of Business refers to a distinct set of products or services offered by an organization along with clearly identifiable customers and competitors. There should be an obvious link between a organization’s mission and each Line of Business.
STAKEHOLDERS – a term designating anyone who directly, or indirectly, receives the benefits or sustains the costs derived from the actions of the organization. As the term suggests, it includes all those who have a stake in the actions of the organization and their resultant outcomes.
STRATEGIC INITIATIVES – Strategic initiatives represent the essential issues that an organization must confront during the next 3-5 years to best achieve its mission and to move toward its desired future. Strategic initiatives originate from the organization’s assessment of its internal and external environments. They consist of both short-term and long-term activities, specifying the pragmatic steps necessary for managerial action. Each strategic initiative may require a distinct commitment of resources from executive management.
The strategic initiatives are the recipients of all the analysis conducted . . . They should be articulated in such a way as to convey a sense of the critical tasks that every unit in the organization has to deal with in order to develop an effective strategic position.Arnoldo Hax & Nicholas Majluf, 1991
STRATEGIES – Strategies represent the organizational means for achieving desired outcomes. It is a pattern of organizational policies, programs, and managerial approaches to achieve high priority outcome goals set by the organization.
Crafting strategies is the fundamental entrepreneurial activity of executive management.
. . . strategy is formed by two critical forces acting simultaneously: one deliberate, the other emergent. Managers need deliberate strategies to provide the organization with a sense of purposeful direction. Emergent strategy implies learning what works . . .
Arnoldo Hax & Nicholas Majluf, 1991
STRATEGIC ISSUE – The identification of strategic issues is the heart of the strategic planning process. Strategic issues are the fundamental challenges affecting an agency and/or its units.
The manner in which the strategic issues are framed will determine much of the subsequent politics of the process. It will also have a powerful impact on . . . how stakeholders assess their interests and weigh costs and benefits of alternative strategies.
Bryson & Alston, 1996