Why is Strategic Planning Important?
Have you ever wondered what your company’s corporate strategy is? The majority of companies have less than an hour per month to think about their strategy. If you feel that you do not dedicate enough time to strategy, you are not alone.
Before an organization can realize the rewards of its business strategy, it must determine its strategy with a plan’s help. Figure out what drives your strategy and how it can benefit your organization.
Why is strategic planning important? In this article, we explore strategic planning and its benefits.
What is Strategic Planning?
The strategic planning process is a critical business aspect. It is used to prioritize efforts to ensure that businesses are moving in the right direction.
In a way, it is used to align employees and shareholders on the organization’s goals. It is important because it uses the information available to solve problems and prioritize efforts.
Business Strategy is not an event but a process. Opportunities and threats are constantly emerging and require strategic responses.
Businesses should be prepared to respond to these opportunities and threats, successfully or not. More often than not, the strategies that lead to success are created and updated in real-time.
The strategic planning process requires time and takes effort to do correctly. However, it can help you focus your business and set it up for success. Here are three reasons why you should make time for strategic planning.
Why is Strategic Planning Important?
1. Create a Unified Vision
A corporate strategy affects every employee. It is the company’s vision and a way to reach goals. In today’s interconnected world, having a strategic plan is crucial in creating a unified vision that can align your company and shareholders.
Providing your employees with direction and purpose is key to your company’s growth.
By making them aware of your goals, you can ensure that they know how to help you achieve them. Thus, increasing their sense of pride in their work and the overall productivity and efficiency of your team.
All levels of your organization must align with one another. For instance, if a manager doesn’t understand the strategy, they could counteract the team’s efforts. Your organization must have one unified vision to make decisions that move the business forward.
2. Recognize Your Biases and Flaws in Reasoning
Strategic planning helps you confront your inherent cognitive biases. To take part in this process, you must first explain to your team your reasons for making each decision. Then, back it up with data, projections, or case studies.
Cognitive biases are psychological quirks that lead to irrational decision-making.
Some examples are the recency effect, where you favour the latest outcome because it’s fresh in your mind; Occam’s razor bias favours the simplest or most obvious solution; and inertia bias, which keeps you stuck doing what you’ve always done.
Confirmation bias occurs when people seek to validate a specific viewpoint. If they don’t believe something, they ignore information that supports it. This happens in business, too, as companies seek to prove their points. This is why it’s so important to get feedback from outside sources.
To make a more robust strategic plan, get together with your team and discuss ideas. You can find information that supports or disproves your arguments. One way to combat bias in strategic decision-making is to ask for help from people with different views and opinions.
3. Track Progress towards Goals
A strategic plan is the backbone of a successful business. It allows you to track progress toward strategic goals.
With a strategic plan in place, each department and team understand the larger picture. This creates a top-down approach to monitoring your key performance indicators (KPIs).
To ensure that your organization’s level is aligned and positively impacts your business’s KPIs, you need to define your company’s common goals and strategies.
Then, you can determine key performance indicators for each unit and make sure that they are all in sync with your business’s overall KPIs.
It’s important to remember that even with a sophisticated strategy, it must remain flexible.
A business’s strategy needs to shift with the new challenges it encounters. Be prepared to change your KPIs as goals move and communicate the reasons for change to your organization.
A strategic plan can direct your organization toward success. Today, the strategic planning process is a crucial skill to improve as it can benefit an organization’s vision, execution, and progress toward its goals and objectives.
To improve your strategic planning skills, online courses can provide the knowledge and techniques needed to lead your team and organization.
Business strategy courses can be helpful in many different ways — from basic introductions to key concepts, studies focused on strategy frameworks, and structured courses designed for specific organizational goals.
Learning how to come up with an effective, compelling strategic plan can enable you to invest in your career and provide lasting value to your organization.
About the Author
Eugen Spivak is a multi-award-winning author, business strategist, and a business coach. Eugen is the founder of the Canadian Institute of International Business, an organization focused on a better way to learn business!
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