In Gallup’s annual poll of CEOs, strategic planning is consistently cited as one of the management initiatives with the greatest return on investment.
There are significant benefits to the process of strategic planning. Management teams who engage in strategy:
- Clarify their company’s strategic priorities.
- Establish a clear path for growth.
- Unify their team around a common vision.
- Set clear goals for managers to which they can be held accountable
- Improve business development results.
- Prioritize investments such as implementation of an ERP or opening a new office.
- Create a foundation for key performance indicators (KPIs).
- Promote fact-based decision making.
- Build infrastructure including human capital, improved processes and technology.
- Provide a foundation for departmental and individual goal-setting and incentive plans.
Managers often rationalize that they don’t have time for planning. As Stephen Covey used to point out, we spend part of our time planning and part of our time reacting. When we are reacting, we are often doing the wrong things for clients and experiencing lost time in waste, poor decision-making and defects. Covey claimed that when we increase the proportion of planning to reacting, we save a lot of time.
Having a clear vision provides greater certainty for employees and facilitates better decision-making. Void of a clear roadmap for the future, companies make poor choices about product development, hiring, capacity, marketing and so forth. A clear strategy brings into focus which investments need to be made, and in what order.
In our consulting experience, sales and marketing are far more effective when there is alignment around a company’s value proposition and competitive advantage. When a value proposition can be boiled down to a clear statement, sales and marketing can speak a common language and focus on delivering more value.
In an environment where younger employees seek connection with a broader purpose, the vision communicated to them is critically important. The rate of change requires companies to plan more often, and be in a position to pivot when market conditions change. It is well understood that plans may be irrelevant shortly after they are written, but the process of planning creates unity in a management team and provides awareness of what will need to change.