What is Personal Strategic Planning?
Personal strategic planning is the process of analytically assembling useful or advantageous information and using it to create a plan for improving your life. It is an exercise that involves creativity, visioning, brainstorming, generation of competitive advantage, and recognizing and taking advantage of opportunities. The same process applies to business but that of a business is more rigorous and the goal tends to be to gain or improving profitability.
What is Personal Financial Planning?
Life planning is the exercise of creating a plan for a life marked with, prosperity, financial independence, happiness, joy, health, contentment and peace. The process involves creativity, visioning, brainstorming, recognizing and taking advantage of opportunities to create a workable pathway for multiple sources of passive income. Its objective is to secure financial security and independence so that an individual or a family can meet expected expenses, withstand monetary emergencies, and lead a stress-free life. Life planning involves creating a plan for many aspirations of day-to-day and future life but it also entails personal financial planning which includes income, budgeting, saving, investing, insurance, tax, estate and retirement.
Importance of Personal Strategic Planning and a Financial Plan
An individual needs a plan to guide his or her life to achieve a life that is marked with contentment, prosperity, financial independence, happiness, joy, health and peace or whatever an individual may desire. Without a personal strategic plan to guide and keep actions on a disciplined path from the start, the tendency is for one to be lazy and waste a lot of time in life without realizing only for one to regret and wish they had been better organized. Thirty-five to forty years of active working life may look like a lot of time but years fly so fast. It usually takes time to achieve anything meaningful and starting early usually creates this required ample time. Worse of all, you may not have the whole of that time to plan and implement because there are usually ups and downs during this period and some downs may be prolonged or become irreversible robbing you of valuable time and resources prematurely. The earlier you order your life through strategic planning, the higher the likelihood of it turning out much better.
Planning which is a brainstorming and soul searching process forces an individual to think through important thinks in his or her life and make a plan on how to go about them. In the process of planning, you get to make choices and decisions you want instead of leaving things up to chance, letting them happen randomly or letting other people make decisions for you.
Planning helps an individual to think about their dreams, desires, needs and many other ideas and opportunities that they could pursue in life and make plans for them. These usually include personal development, career, family, financial, social, public service and business ventures to give just a few examples. Once you have a plan, the plan creates a roadmap which if followed diligently will assist to keep you from spending time on activities that are not important or critical to meeting your desires and to focus on things that will lead you to your goals.
A plan allows you to make better use of your time. Nothing is too small to plan for. You will waste a lot of valuable time and money if you work without a plan. A simple plan that is looking even just a year ahead is better than no plan at all. Without a plan, time that could be gainfully used will be misused and time that has gone cannot be recovered forever. Besides, money that could also be saved will go into unplanned expenditure, entertainment, luxuries and other unnecessary expenditure.
A lot of successful businesses work with plans. That is for example why you hear about a strategic plan, business plan and budgets. You are indeed a business entity and you should have a plan too to achieve the same success. We have all heard, in one version or another, the adage that a person without a vision (read a plan) will perish. Those who study the Bible must have come across this statement in Proverbs 29:18. If you utilize your time between 25 and 45 years well and your income during this period prudently as well, you are likely to breathe easy in later life when responsibilities are likely to be heavier due to children’s education. Your retirement life is likely to be easy too.
Personal life planning mainly concerns thinking about dreams, aspirations, needs, and the kind of life you would like to lead all the way to the end and creating a road map to guide this journey. This is so that life does not just happen but it does so through a plan. Personal financial planning is a major component of life planning. It is therefore important to appreciate a little bit about the main components of personal financial planning, which include income, budgeting, spending, saving, investing, and retirement planning.
Income: Income is a flow of cash or cash-equivalent received regularly or periodically from employment, commerce, investment, property rent, interest, endowment, annuities, or royalties.
Spending: This is money refers to the action of using money to buy necessities and to settle obligations including spending money on wants and needs that may not be necessary.
Budgeting: It is the estimate of necessary expenses, income and other resources needed over a specified period to implement and achieve a certain objective. Budgeting is explained a bit more in later sections of this write-up.
Saving: Saving is the process of setting cash aside, little by little on a regular basis in a safe or in interest-bearing securities or bank accounts. Savings are usually short-term in nature with a horizon of a few weeks to a few years. They are maintained for a number of reasons such as for the purposes of meeting emergencies, purchasing a home, for college fees, to purchase a new vehicle, for travel, retirement purposes or even to accumulate funds for larger, longer-term and higher-income yielding investments.
Investing: Investing is the process of using money or savings to buy an asset that you think will be safe and generate an acceptable return or gain over time, such as a year or longer.
Retirement planning: Retirement planning is the process of planning for retirement, specifically making financial plans to be ready, financially and non-financially, for life after formal working life ends and the paycheque or actively generated income stop. The most important thing about retirement planning is to plan what to be doing in retirement and to have passive income. Passive income is earnings that flow regularly without your active effort in generating.
Saving and investing play a major role in life-planning because they finance many things that you would like to do and have in life. Some of the major reasons for saving and investing include:
To grow or multiply income
Any amount that is saved and invested grows because of interest or returns on investment like dividends on a share and the initial amount can double in a few years. Money that is spent on current consumption is gone forever. Investing money to earn money also protects its purchasing power provided the return is ahead of the inflation rate.
Table 1: Calculation of compound interest
|Deposit||Earnings Per Share (EPS)|
|Compound interest rate||5%||10%||15%||20%||5%||10%||15%||20%|
The above table shows that the power of compounding is such that US$1,000 can grow to US$38,338 in 20 years at a compounding rate of 20% and EPS of US$18 left to be invested by the company at a compounding rate of 20% can grow to US$690.10 in 20 years too.
To build an emergency fund
You need at least six months worth of your monthly expenses for unforeseen emergencies including sudden loss of a job. When you suddenly lose your job, you should be able to your monthly basic needs or expenses for at least six months while looking for another job without having to resort to borrowing from whatever source.
To buy assets
Acquisition of assets such as a car, household items or a house requires savings. You also need savings to acquire income-generating assets to have more than one streams of income to protect your purchasing power from the effects of inflation that can attack your salary. Income generating-assets are also necessary to be able to shoulder more responsibilities that come in life. Many well-to-do people have up to seven streams of income.
To save for education
Nursery and primary schooling for children can be paid from salary but high school and university require savings, as they tend to be heavy.
To save for retirement
If your employer has a retirement plan for you, then you are lucky. Others need to plan and save for their retirement income from day one.
To leave an estate behind
It is a good idea to leave some inheritance for your loved ones including your children and their children. Again, Bible readers should be familiar with this adage very well, which is in Proverbs 13:22.
To have a general-purpose fund
You may need to save for a vacation, wedding, sentimental assets like countryside home, career advancement or gifting.
Essential Aspects of Life for Strategic Planning
Before you even start to engage in personal strategic planning, you need to know why and in what areas your life needs to improve in, or could improve in. You may already have a vague idea of the key areas, but it is essential to step back and think about your life as a whole. It is important to create lifetime vision and goals to set the tone or the overall perspective that guides all other areas that help to attain your overall vision. For a balanced coverage of all essential aspects of your life, you may consider soul-searching and developing goals in the following areas:
Think of your career path and what levels you want to reach in your lifetime noting to consider the knowledge, skills, experiences and attitudes that will be needed to advance your career. In this area, you need to take note that career advancement is influenced by qualifications and two other things. The first is performance. An excellent performance that meets goals and a little beyond expectations allows you to be noticed by your superiors and others as being a capable person who is worthy of advancement.
The second is relationships. Decisions about career advancement are made in the boardroom where you are absent and you cannot expect your superior or anyone else who has a seat in the boardroom to spend their capital in supporting your advancement unless you have a rapport with them that goes beyond junior-superior work relationship. You need to cultivate positive office person-to-person relationships with those above and around you that allow them to know you personally a bit more than the fact that you are a competent person. You need to be visible and network in a positive way within boundaries, of course.
You have to consider whether you want to be married and be a parent and what kind of a spouse and a parent you want to be.
This is about how much income and the resources/assets you want to have, and by what time of your life and for what purpose. Related to this is how to attain financial security and independence to take care of your financial needs, acquiring of necessary assets, money for emergencies, education for children and other obligations you may have or be created by circumstances for you. The bottom line here is the creation of multiple streams of income and investing to acquire income-generating or sentimental assets like countryside land and home.
Permanent and pensionable jobs are becoming scarce. The job you have today can disappear tomorrow without warning. You, therefore, need assets that can generate income to replace employment income when necessary. To acquire assets like rental property, shares, financial instruments such as bonds, tea bushes, coffee trees, an annuity or a business that can generate income for you in working and retirement life requires planning and time that can be upwards of 10 years. So early planning is necessary.
This would include thinking about any other knowledge and skills you may require for other purposes such as starting a business or achieving other goals. You may for example want to think about learning another language like Chinese (Mandarin) to make you more marketable in the world.
This very important attribute shapes many things in one’s life. Simply put, attitude is an inner feeling or thinking, which can be positive or negative, that is usually expressed by outward behaviour, which reveals a person’s view or opinion about a person or a matter. A positive or negative attitude can shape how you go about achieving very many other things in life. As a result, you need to consider whether your current way of thinking is hindering your progress and decide what you may want to do about this. Negative attitude to people, work, ideas and life, in general, can hinder your progress. Do you respect people and their opinions, and do you embrace new ideas or you are cynical? Ask yourself these questions and do something about them.
Time management is the exercise allocating your time between your daily activities to do more in less time.
You need to think about whether you may want to start your business at one point and if so what, when and how and put it in your plans.
Health-Body, Mind and Brain
The body is shaped by nutrition, exercise, quality of sleep, state of mind and stress levels and medical attention to the body. The mind and brain also need guarding and renewing to avoid invasion by negative thoughts and degeneration.
There comes a time when you, for whatever reason, stop working to earn income but you still need income to live. You need to plan for passive income for this eventuality or retirement. Passive income is earnings that flow regularly without your active effort in generating. You also need to live inheritance for your children and their children as well. The Holy Bible (NIV)-Proverbs 13:22 states that: “A good man leaves an inheritance to his children’s children.”
Part of life is about how you feel contented, prosperous, happy, joyful, healthy and peaceful. Dealing with some of the above areas may bring some of these but you may want to think about some specific goals in this area such as going for dinner with family and friends once a month or holiday once a year.
Character is the mental and moral qualities possessed and distinct to an individual, such as ethical standards, principles, and the like.
You need company and social circles too and you may want to have some plans around this as well.
You are a creature of the society and you may wish to contribute to it or improve on it. How do you want your eulogy upon your death to read like? These are things that require early plans as well.
Relationship with God
This requires thinking about too.
Parties to involve in Personal Strategic Planning
A personal strategic plan is mainly about you. However, the implementation and outcomes are likely to impact other parties like your spouse, children, parents, siblings and even some close friends. Given this, it is important as you embark on your plans to decide who you need to involve and to what extent and involve them as necessary and to the extent that is warranted. If you have a spouse, for example, it is necessary to discuss and work together with your spouse as you develop and implement your strategic plan. Failure to obtain their buy-in may make it difficult for you to implement your plans because your spouse or other stakeholders may resist your plans, withdraw critical support or fight the plans outright.
Let us now take each of the strategic planning elements mentioned earlier above one by one to appreciate how they work and how they all come into play to shape your improvement plan.
What is Strategic Planning in a Business Context
Strategic planning is a process of critically gathering advantageous or gainful information and using it to create a plan for starting or improving a business. Strategic planning is about planning your business, whether starting or improving it, in a strategic manner using information generated from a strategic thinking process. It is about developing a smart game-plan for the future of the business and planning its execution. Strategic planning is a process and not a document or a plan but the written output from this process is a strategic or business plan which is the game-plan for the future of the business.
Strategic planning usually involves strategic thinking. Strategic thinking is a process through which a person applies the mind to think about, review and evaluate a situation, factors, facts and information and out of this process he or she comes up with smart methods that if implemented can create an alternative future, usually a better future position, for themselves, others or a business. A person can apply strategic thinking to arrive at decisions that can be related to their work or personal life.
The main purpose of strategic planning exercise is to have a means of thinking about and setting overall plans (ambitions) for the business’s future and to determine how best to achieve those ambitions. It is the process of finding out where you are currently, where you would like to be in the future, the steps that you need to take to reach where you want to be in future and laying out the measures to be used to tell whether plans are on track and finally whether you got there as planned. It is a process for critically asking and honestly answering the questions about where the business is headed or should be headed and what its priorities should be.
The process connects the three key elements namely mission, vision and plans where plans include goals, strategies and initiatives. Strategic planning is a brainstorming process of thinking about all these elements. One has to engage in this process to generate smart ideas or ways of doing things. Strategic planning is really about seeking to initiate change and transformation. Consequently, strategies that are developed, should be capable of solving a problem advantageously and competitively or transforming the business’s or an individual’s status from one position to a better and more profitable position. Strategies should be transformative.
The strategic planning process starts with the development of, mission, vision, values, followed by an assessment of factors around the business that include internal weaknesses and strengths and identification of threats and opportunities in the external environment, setting goals and finally making strategic choices as to paths (methods to use) that are then pursued (implemented) through activities that are then monitored, controlled and evaluated to take appropriate actions (changing course or restarting the strategic planning process). When one is starting a new business or seeking to expand, increase, enhance, improve, upgrade, rejuvenate, revitalize, promote an ongoing business or remain relevant in a changing world, one should engage in strategic thinking and planning and from this process prepare a strategic roadmap or a business plan that can be used to guide starting or improving the business. This is why strategic planning is described as a cyclic process because it is a process that should be visited from time to time in the course of doing business whenever business changes are necessary.
Strategic planning is therefore as already noted nothing but a researching and thinking process that is used to find out creative and smart ways and means of doing or implementing any project. The end product of the process is a strategic plan, which can also be referred to as a business plan. In summary, strategic planning is a structured process that involves researching, thinking, reviewing, and evaluating (brainstorming) to generate useful ideas to define and document your strategic plan- a business game-plan for your future (see business plan below)
At the end of the strategic thinking exercise, you should have a well-thought-out and an implementable plan that tells you how your product or service will be created and competitively driven out of your doors to the shelves of consumers and the resources needed to do so successfully. It should be pointed out that a strategic plan is not a nice document that is produced for the show and the files. It is an alive and actionable plan that should be implemented by taking small and big strategic steps on a day by day basis and making adjustments where necessary as experience is gained until desired results are finally achieved.
Strategic planning exercise can focus on finding objectives and strategies to create or reform one aspect of the business such as marketing only or to create or improve aspects of the business as a whole. It can be as simple or as comprehensive as you like so long as it identifies the key things that you should focus on to forge ahead competitively with your business towards success. For sure not all this “fuss” about strategic planning is always necessary but strategic planning of any depth helps. Where one is conducted, it is always useful to give a thought and come up with some ideas and plans to help create or reform the following key areas of starting and running a business successfully:
- Searching for a peerless and appealing business idea.
- Research methods for researching the business idea.
- Formalization of the business in terms of legal format (as in sole proprietorship, partnership or company), logo, trademarks, website domain name and registration of all these.
- Mission, vision, values, goals, objectives, strategies, and action plans.
- Marketing, branding, sales, distribution, and customer service plans
- Operations plans.
- Ownership and Administrative or governance organs
- Financial management systems.
- Sources of financing the business.
- Business plan
- Operating budget
- Compliance with regulatory matters
- Profitability management
- Growth and continuous improvement strategies.
- Business exit strategies when the time comes.
What is Strategic Planning in a Personal Context
Strategic planning in a personal context is not very different from that of a business. The only main difference is that the elements of a strategic plan (business plan) which include mission, vision, values, goals, objectives, strategies and actions are those of guiding and improving an individual life rather than a journey of a business. The other difference is the strategic planning that an individual would carry out would be less rigorous and elaborate than that of business because there is no competition or customers involved.
An individual may not necessarily prepare a strategic plan or a business plan complete with mission, vision, values, goals objectives, strategies, actions and implementation framework, description of the business, its products or services, how it will earn money, its governance structure, the funding, the resources and facilities required, its operations model and many other operational details necessary for the successful operation of the plan. But if an individual can prepare a detailed and fully-fledged strategic or business plan, that is fine indeed. However, an individual’s strategic plan is usually to have just the vision, mission, values, goals objectives, strategies, actions, and budget and implementation framework. Nevertheless, any well-thought plan for an individual is good enough.
Strategic Planning versus a Business Planning
Strategic planning and business planning are often interchanged as synonyms. However, notwithstanding this synonymy (equivalence in meaning), there are some subtle differences between strategic planning and business planning. Strategic planning is an exercise that involves creativity, vision, generating a competitive advantage and recognizing and taking advantage of opportunities. Activities of strategic planning include imagination, creative ideas and SWOT (strengths, weaknesses, opportunities and threats-see sections below for a fulsome explanation of SWOT) analysis, benchmarking and market research. Strategic planning requires analyzing the market in light of the company’s strengths and weaknesses and optimization of strengths and mitigating weaknesses. The outputs of strategic planning inform the formulation of a business plan. The document that is produced after strategic planning (thinking) and business planning is a business plan, which can also be interchangeably referred to as a strategic plan.
Business planning is about thinking in advance of what needs to happen, putting together information and resources that are necessary for what is desired to happen and documenting these coherently and logically. Strategic planning is about creating strategic information and business planning is about using this information to create a business plan or a road-map. This is the connection between strategic planning and business planning. There can be a strategic planning exercise that does not lead to the writing of a business plan but there should never be a business plan that is not informed by a strategic planning exercise. Of course, a business plan can be prepared anyhow but it is always better when this is informed by a strategic planning exercise which usually generates strategic information.
Strategic Planning Process
The strategic planning process for a business is normally a mammoth task that involves research and gathering of a lot of information on a wide breadth of aspects. A personal strategic plan involves more or the same things but less rigorously as there is usually no customers to serve or competition to fight with. Normally, a fully-fledged or any strategic planning entails all or some of the following work and aspects:
- Setting a framework for decision making during planning.
- Developing mission, vision, core values.
- Reviewing current or past strategic plan.
- Identify strategic issues or problems that need to be solved to start or for improving an ongoing business.
- SWOT analysis (SWOT stands for strengths, weaknesses, opportunities and threats.
- Market research.
- Estimation and forecasting of data.
- Analysis of financial data.
- Scenario planning.
- Sensitivity analysis.
- Goal and objective identification and setting.
- Strategies identification and definition.
- Business modeling.
- Laying out action plans.
- Risk identification and analysis.
- Preparation of a business plan
- Preparation of budget
- Development of implementation mechanism.
- Development of monitoring and evaluation mechanism.
- Putting in place financial and management accounting systems to help gather data for information and decision making.
You can learn more about strategic planning in “How To Prepare a Business Strategic Plan”.
Elements of Strategic Plan
Let us now take each of the above business aspects one by one:
In the context of a business, a mission statement is a brief description of a company’s fundamental purpose of being in business. It answers the question, “Who are we and why do we exist or why the business is being brought into existence in the first place?” The mission is derived from what you want to do as a business person. This is where you define your customers and your products and services, why you offer them and how you offer them. The purpose of a mission is to define a business and its aims to the internal and the outside world so that it is clear to all and sundry what the business is all about. The mission is usually presented as a broad statement of intent but it dictates the shape and form of all aspects of the business including the location, premises, array and nature of the products, services, pricing, quality, customer service, marketplace position, growth potential, technology and systems to be employed, type of employees, objectives, actions, plans, policies, procedures to be put in place, suppliers, competitors and the community.
In a nutshell, a mission can be seen as what people are presently doing or ought to do in the business to achieve the vision. A mission can be stated simply as “To provide the best service possible within the microfinance sector for our clients.” A good mission should be SMART-specific enough to be understood by everybody in the business, measurable with define yardsticks, attainable within available resources and capabilities, relevant to the desired goals and time-bound with set dates of completion for each goal. To come up with a good mission, you need to consider your purpose in life and your passion and engage in research and strategic thinking.
A mission is equally important for the same reasons for an individual. You have to state at least to yourself why you exist and what you want to do with that existence. A personal mission statement sets beacons that guide and lead you to your end goal. When boundaries are well-defined, you will not need to waste time thinking about anything that comes up because you would know straight away whether it fits in your vision and mission or not. In setting a mission, you consider the same set of factors that help guide the development of a vision because a vision often flows from the mission and in many instances, the two are interchangeable. A personal mission can be stated in many ways but an example of a personal mission statement can read as follows:
“To continuously endeavour to acquire knowledge, skills and character that will allow me to be the best all-round editions of myself to create better and fulfilling every day and future life for me, family and other people”.
The late Maya Angelou stated her mission thus: “My mission in life is not merely to survive, but to thrive; and to do so with some passion, some compassion, some humour, and some style”
An amateur is someone who does what they want when they want to do. A professional is one who does what is required to be done when it needs to be done.
The start of a personal strategic plan is the development of a vision. A vision in the context of personal life is a vivid imagination of an attractive future state that you would like to be in or worth striving for. A vision is based on deep desires, dreams and hopes that one has. It answers the question “Where am I and where do I ought to be going and what should the result look like?” Vision is the capability to perceive the end goal while still at the starting point. It is the ability to see something that is not visible. A vision is the end outcome once we have completed faithfully implementing the mission. Another way of looking at vision comes from Burt Nanus (1995) a well-known expert on visionary leadership. Nanus defines a vision as an imagined or visualized realistic, credible, and attractive future for an organization and an individual too. The elements of Nanus’s definition of a vision have been dissected as follows:
- Realistic: A vision must be based in reality to be meaningful for an individual. To use a business example, if you are developing a vision for a computer software company that has carved out a small niche in the market by developing instructional software and has a 1.5% share of the computer software market, a vision to overtake Microsoft and dominate the software market in 5 years from now is probably not realistic for such a company or an individual!
- Credible: A vision must be believable, worthy of confidence, persuasive and credible in your own eyes and those of others close to you.
- Attractive: If a vision is going to inspire and motivate you, it must be desirable, enchanting and attractive.
- Future: A vision is not in the present, it is in the future. In this respect, the image of a person gazing off into the distance to formulate a vision may not be a bad one. A vision is not where you are now; it is that attractive place where you want to be in the future.
The purpose of a vision is to create an attractive picture of a life worth striving for. An attractive vision then inspires you so that when the going gets tough and there is a temptation to give up, you confront this situation with the vision and you find that you get the strength to persevere and keep on going on towards your vision. When you have a vision, you will be purpose-driven, internally-guided, have a long-term view and likely to be well-balanced in your life. When there is no vision, you are likely to be lazy, get preoccupied with day to day activities, and have no motivation to work hard. We easily give up when we encounter obstacles and we also become reactive and impulsive in the things we do which would not be the case if we had a vision and a plan. When there is a vision, we can accomplish a lot more. We would be ordered, have something to hope for and would be motivated to get up every morning and follow a plan that leads to satisfaction and sense of accomplishment daily, weekly, yearly and so on.
With a vision, we become focused and stop lurching from one idea to another which leads to nowhere. One of the reasons why many New Year resolutions fail is because the plans are not supported by a clear vision and purpose. Our goals can only come to pass if we have a vision and align our daily behaviour with the vision. It is, therefore, better to have a vision than to go through the phases of life without an aim. A life-time vision is a long-term goal that normally cannot be achieved over a short period. It is usually achieved over many years by the use of day-by-day, week-by-week, month-by-month and year-by-year small and big goals. As they say, Rome was not built in one day.
According to Craig Hill (Five Wealth Secrets 96% of Us Don’t Know-2018), having a vision is more important than having capital. Vision precedes capital. Capital is synonymous with the provision (read pro-vision where pro means in favour of). In this sense, provision can be seen as that which is provided for or in favour of the vision, as in to support the vision. Those who study the Bible might have seen that Proverbs 29:18 says that “where there is no vision, the people perish”. Where there is no vision, there is no need for provision.
To develop your vision, sit down in a quiet place, relax and close your eyes. Imagine the life you would like to lead. Imagine it in terms of what you might do and accomplish to be contented, prosperous, happy, joyful, healthy and peaceful. In your imagination, assume that you will have knowledge; skills, experience, resources, time, and money you need to develop and realize the life of your imagination. Think of your idea and time in the future when your idea shall have been successfully realized. Try to see how the impact will be on the family and other people. Imagine how it will feel like to have the rewards of success. Write down your vision and brainstorm on the vision along the following lines:
- What kind of health do I want to have?
- What kind of family do I want to have?
- What kind of career do I want to have?
- What kind of income, assets and prosperity do I want to have?
- How do I want my day to day life to look like now, in ten years, and retirement?
- How do I want to be remembered in society?
- How do I want my eulogy to read upon my death?
- Think of the efforts, challenges and resources that may be required to realize your vision.
- Keep on thinking and writing down the various versions of the vision and what it might take to realize the vision until a satisfactory version emerges.
Other factors to consider include your values, your interests or passions, your knowledge, skills, talents and abilities. You also need to consider what is important to you, where you would like to go, what does your picture of the best look like, how you would like to act and the legacy you would like to leave behind. Having formed a vision, compare this vision and your current state and determine what changes you may need to make to start moving towards your vision.
If you are writing your vision as a young person, a good vision for you can be a multipronged one that reads thus: “I want to lead a healthy life that allows me to acquire the necessary knowledge to qualify as an accountant (or whatever you want to be) by the time I am 24 years old”. “I will then thereafter use this knowledge, abilities, and talent to do such things in life that will provide me with contentment, prosperity, happiness, joy, health and peace during my working and retirement life”. The vision can also be as simple as to say “I would like to conduct my life in such a way that I achieve contentment, prosperity, happiness, joy, health and peace during my working life and in retirement”. You can also have a vision that reads thus: “To lead an ordered and purpose-driven life to attain contentment, prosperity, happiness, joy, health and peace for self and others during my working and retirement life”. Having stated your vision, you will then need to define the many things you need to do to achieve this vision. The vision can and should be a big, hairy, and audacious goal (BHAG) but the steps to achieve it can be small and incremental over one week, one month, one year and indeed over your entire active working life.
Values are traits or qualities that are considered worthwhile and they represent an individual’s deeply held motivating and energizing forces. Core values are the essential principles by which a company defines its behaviour and character and they act as the moral compass of the business. Values should reflect what the business is, what it is all about and what it stands for in the moral compass. The purposes of a core value statement are to state the profoundly embedded ethics of the company that guide all actions of the company and serve as the North Star (cultural pillar) of the company’s actions. A company’s core values set the norms of behaviour that are considered essential and therefore direct all actions of all persons in the company. As it is for a business, so it is for an individual as well. If you had a second chance in life, what would you do differently, what would you value most or how would your behaviour be like?
Values define your moral character and professionalism and they shave and guide anything else you need to do to achieve your goal. Without espoused values, there will be no moral compass and there will be no sense of good or bad. In this state, anything goes or will do. It will be like saying whatever I do or however I do, does not matter. Having values also ensures that there will be a discipline which is necessary for the successful execution of any plans and that you will conduct your affairs in a morally upright way which is also a prerequisite for victorious execution of plans. Without values, devotion and commitment to plans may be weak. You have to have a statement of your values to remind you of the character of the person you want to be in the process of life’s journey.
Values are usually expressed in value statements that define and express how the individual will behave and treat other people and go about matters of everyday living. Examples of values that can be espoused at the individual level include integrity, responsibility, respect, courtesy, continuous improvement, loyalty, credibility, honesty, acting ethically, accountability, professionalism, empathy, courage, compassion, friendliness, discipline, order, generosity, persistency, optimism, dependability and flexibility. A personal value statement can read like “I will conduct my life in a professional, ethical, accountable and with compassion to achieve my goals and be the best version of myself”.
Goals and Objectives
Having set your mission, vision and values, goals, objectives need to be set too as the next logical and crucial step. In a strategic planning framework, a goal or an objective is a description of the destination where a business or an individual wants to be or targets that need to be achieved to make progress. Goal or objectives are often used interchangeably but they are somewhat different. Both terms state desired outcomes an organization or an individual is trying to achieve. However, a goal is a broad direction where a business wants to go. It is often general, intangible, conceptual and strategic. Objectives on the other hand are components of a strategic plan that can be assigned to department, units, and individuals in an entity. They are in fact goals that are turned into specific, measurable, attainable, relevant, time-bound (SMART) milestones. Objectives are often referred to as strategic objectives. A goal tends to be descriptive while an objective usually contains elements of measurements and targets in them. For example, a goal may be to increase net sales and the objective for this may be to increase sales in two specified areas by 7.5% in each area by December 2010. Objectives are tactical while goals are strategic. See table 2 below which compare goals, objectives, strategies and actions. Goals or objectives or goals are usually set when one wants to start, to upgrade, expand, renew or energize a business. Both are the main outputs of strategic thinking and planning process.
The concept of goal setting applies to a business as well as an individual. Without clear targets that need to be achieved in the short and long run, the vision may never be attained as envisioned. Therefore, the goals and objectives that require being set are those that are consistent with and will help to attain the vision. Having a vision and setting goals to achieve it allows you to stretch yourself and attain something worthwhile rather than just moving on in life without a concrete aim.
Goal and objective setting is very important in strategic planning. For you to succeed in your plans, you need to set goals and objectives. Goals are the aims that are used to achieve the vision. Without goals, there will be a lack of focus and direction in trying to achieve the vision. In fact, without a goal, you may not strive to do anything. Goals allow you to be in charge of the direction of your life and also offer you yardsticks for evaluating progress and success or lack of it. Before you start to write your goals, you need to understand what goals to aim for to attain your vision. For business, for example, the business needs to know what areas it needs to improve in or could improve in. You need to ask yourself why I am engaging in strategic planning or goal setting or, so to speak, why am I waging or going to war. The same goes for an individual. Below for example are some techniques a business might use to discover what needs improvement:
- SWOT analysis: SWOT stands for strengths, weaknesses, opportunities and threats. The analysis allows the business to discover its internal strengths and weaknesses and external opportunities and threats that exist in the market to develop strategies to exploit the strengths and opportunities and to mitigate weaknesses and threats. SWOT, therefore, involves an analysis of internal (the business) and external (the market or environment).
- Benchmarking: Benchmarking is about researching similar businesses in your industry or area and comparing industry key results areas (KPIs) such as sales, net income, earnings per share (EPS) and the ratio of various types of expenses to sales or net income. This assists in evaluating the performance of your business in comparison with similar businesses to know where to change or improve.
- Market research: This is where a business researches the market it operates in and the market space generally to find out potential customers and their needs, to see what competitors are up to, what marketing effort and materials will be needed, level of prices to charge, and assesses the level of resources that may be required to get into the business. To be successful, you need to define the question/problem, information needs and sources, budget, select research technique, construct research sample, carry out your research and analyze the data. You want to know where gaps are in customer service in terms of products, services, delivery systems and customer care to craft appropriate strategies to turn the gaps into your niche.
Similarly, an individual needs to do a personal SWOT of his or her environment, benchmark with friends or role models and search his or her universe in the light of their vision and present circumstances to see what needs to change and improve in their life.
Goal and objective setting is part of strategic planning and requires strategic thinking. It is through this process that you will be able to set meaningful goals that can be implemented to achieve the vision as desired. In setting goals, you should follow the following standards:
The goals that you set should motivate you and rank very high in your life’s vision. They must be worth pursuing and inspire you when you think about them. Above all, there should be real value in achieving them. If goals are not motivating, you may not devote time and resources to achieve them. The result is failure and disillusionment where you may feel you are incapable of anything in life. A goal can be motivating if you can write down why it is valuable and can explain and convince someone else why the goal is valuable.
SMART Goals and objectives
Ensure that the goals that you set are SMART (specific, measurable, achievable, relevant and time-bound) goals. SMART goals have the following characteristics:
- Specific: A goal should be clear about what you want to achieve. There should be no ambiguity about any goal.
- Measurable: This is about the ability to measure performance and the outcome that shows the goal has been achieved as planned or has not and needs a review to change. There should be an objective yardstick for determining achievement.
- Achievable: This is about ensuring that the goal is something for which you have the time, money, resources and the will to implement it to the end. To be achievable, a goal needs to take into account the ability to achieve such as resources available and present and future or expected circumstances. In other words, cut goals according to present means and ability but stretched them a bit beyond foreseen means and ability to stimulate effort.
- Relevant: Relevant means the goal is in line with the course of your vision such as buying a house by the fifth year of your being employed.
- Time-bound: Your goal should contain a realistic date for completing. Any goal without a timeline for completion will go and on without being completed and will be a victim of procrastination.
Each goal statement should contain all the four SMART parameters positively. An example of a SMART goal statement is “I will save US$500 every month from my salary from now to allow me to raise a deposit of US$20,000 to take a house mortgage in four years”. This goal is SMART because it is specific in what is to be done and achieved, progress and achievement can be measured when the required money is raised, it is attainable because there is the ability to save US$20,000 in four years (500 x 4 x 12 = 24,000), it is relevant because it is in the direction of the goal to acquire a house and it is time-bound because it has a timeline of four years.
This goal statement embodies strategies underlining the fact that strategies are usually part of goal statements and need not be stated separately. Needless to say, to be able to set a goal like this with certainty, you need to have researched to established that in four years, you will be able to find a house whose down payment is about US$20,000 and that you will be able to afford the ensuing mortgage payments thereafter.
That homework is necessary before setting goals to come up with relevant information that can help you set meaningful goals cannot be overstated. For example, if one of your goals is about living a healthy life, you may need to read about nutrition or consult a dietician before setting goals in this area. In yet another example about research, if one of your goals is to pick a career path, you may need to educate yourself about possible careers or consult a career counsellor before deciding on a career path and setting goals. If you wish to have a retirement plan, it is advisable to consult a personal financial planner to help in putting into perspective the information needed for setting goals in this area. If you wish to have an exercise regime, it is usually advisable to consult an expert in physical body training before embarking on this journey.
The point that is being stressed here is that you should conduct the appropriate research, coupled with strategic thinking before setting your goals. Another factor that cannot be overstated is commitment. If you want to become an accountant, for example, you should know that there are fees to be paid to acquire a degree and the professional certificate. You should also know that there are going to be months and weeks of studies in the classroom and the library instead of relaxing with family or friends. You should know the actual steps that need to be taken from start to finish, and the resources that will be required both in terms of money and time and that you should be ready to die of friends and relaxation until you achieve your goal. You should only set this as goal once you are sure you are prepared to pay this price. This goes for any goal you set.
Possible Areas of Personal Goal Setting
Step one in goal setting is to think of what you want to become and what to do to become that person or to be in the state you want to be. Goals can be many and can include all aspects that can help bring about contentment, prosperity, happiness, joy, health and peace if that is what you want out of your life. For many people, priorities can include, good health, happy family, job career, happiness, prosperity, financial security and independence, peace of mind, friendships, recreation and leisure, a comfortable urban home, a countryside land and home, travel, good education for children, relationship with God, growth and learning, financial security in retirement, to name but a few examples.
For a young person, you may want to have goals that will allow you to acquire knowledge (degree/qualification) that will lead you to a career in a certain area. Then once this is achieved, you may make goals that allow you to find a spouse, finance your wedding and get married. This may be followed by goals that have to do with the advancement of your career; saving and investing for emergencies, education for children and to acquire assets such as a car, a house and planning for retirement income. In setting goals, you want to make a list of things you want to do, achieve, posses and experience in your life journey.
You have to make goal statements in every area of your life that you desire to do something or you have to do something to attain your vision. Your goal statement could say “by such and such a date, I would like to…” and state, for example, a goal related to family, career, owning something, saving so much etc. Most things that lead to contentment, prosperity, happiness, joy, health and peace are achieved through having a happy family; successful job career or business; well-balanced diet; body and mind exercises; ordered sleep; avoidance of stress, friendliness, guarding your tongue, heart and mind, personal financial planning, saving and investing, for financial security and independence, retirement planning and of course having a relationship with God. For every aspect of your life that you would want to attend to, have only one main goal in each area and have about ten areas that are listed in order of priority and critical path.
There are two reasons for this prioritization and critical path. One is that a critical path is about the order or sequence of doing things. There are things which cannot be done before the other and have to be done in sequence. For example, you cannot buy materials for the roof of a house and start building the roof before doing the foundation and walls unless of course there is a good reason for acquiring roofing materials before foundation and walling materials. So you have to know which activity should come before which and prioritize them accordingly. Two is the question of ranking.
Not all activities are of equal importance. There is a principle postulated by an Italian Economist known as Vilfredo Pareto which is expressed as the 80-20 principle. This principle applies in so many ways and some examples are about 20% of goods in a supermarket yield 80% of the sales of that supermarket and 20% of a shop’s customers’ yield 80% of the sales. Closer home to our subject, 20% of how a person spends his or her time yields 80% of that person’s income or the desired result. So as we set goals, we should bear in mind that about 20% of our goals are the ones that will give us 80% of our desired results. This 20% are the ones that we should give priority i.e. rank them higher at the top.
You should aim to have goals in every facet of your life that are geared to achieving your vision of contentment, prosperity, happiness, joy, health and peace in the short and long-term, seeing to it that you balance your life. Examples of short-term goals are those that have to be achieved on daily, weekly or monthly basis such aiming to save so much every day, have out of home dinner with family or friends once a month, take a break from work once a week, exercise at least three times a week, plan your work for tomorrow in the evening or your work for the coming week every Sunday afternoon and so on.
Examples of medium-term goals are aims that have to be achieved in three months to three years such as buy or pay off a car loan, reach a weight goal, achieve certain health metrics such as cholesterol level, buy a house, attain a cash savings level for emergencies, acquiring a certain asset for home use or income or sentimental purposes, complete certain home repairs or improvements etc. Long-term goals include aims like becoming a finance director in five to seven years, start your own business, buy a second house, retire at 55, write a book, or have, execute and accomplish your retirement plans by the time you are due for retirement. What you should not do is not to have any goals at all.
As you develop goals and strategies, take time to brainstorm on them and then choose the ones that are more in line with your vision and you will be able to implement to achieve your vision. As a word of caution, set goals that you have conviction about and you genuinely want to achieve. You should avoid setting goals because they are fashionable, nice to have or have been suggested by friends or anyone else other than you. You can take advice from trusted friends and acquaintances that have developed similar plans. But be sure to evaluate the advice in the light of your knowledge, experience and desires. If you have a spouse, you can prepare the goals together.
Once main or lifelong goals have been set, it is time to set small goals. This for example involves setting a one to the two-year plan of smaller goals that need to be implemented and attained to arrive at the main plan. This should be followed by the formulation of one-year, six-month, and one-month plans, all of the increasingly smaller goals that require being achieved to attain lifelong goals. All these plans represent tasks we need to do in, for example, the next three to five years, next one year, next one month, next week and today to start the journey of implementing and achieving goals. All these plans should be derived and dovetail to the overall plan. Smaller goals are the subject of action plans where we are headed to below after a word on strategies.
A strategy is any thought, idea, method or plan of action which if implemented yields desired results as hoped for by the bearer of the thought. In a business context, strategies are any number of broadly defined main strategic methods, techniques or smart pathways (ideas) that a business will use to accomplish its mission and move toward its vision. Strategies are a description of a carefully chosen or formulated set of key methods that if implemented faithfully are expected and should deliver a unique mix of value or desired results such as achieving a goal or solving a problem.
Strategies are similar to actions but are long-term in nature and have elements of creativity, competitiveness, cost-effectiveness, and logical cause-and-effect. They are nothing but smart steps that are deemed smarter, cleverer, superior or advantageous than other alternative methods for achieving an aim. Strategies should allow for things to be done first before anyone else, to be done differently or better than anyone else.
Goals, objectives and even actions have elements of strategy in them. When you choose a certain mission and vision over another alternative vision or one marketing method over another method, the chosen method is your strategy. A policy that requires sales staff to wear a navy blue suit when they come before customers, such a policy is stating a chosen strategy. A strategy is, therefore, an idea, a method, an action or a statement that carries in it an advantage, smartness or competitiveness, which are all factors that can yield desired positive results. Strategies are, therefore, part and parcel of any vision, mission, values, goal, objective, and action statements. Mission, vision, and a set of chosen values, goals, objectives, and actions are strategies. The document that contains these strategies is a strategic or business plan.
Implicit in the above explanation of a strategy is that a strategy should be both cost-effective and competitive (advantageous). If these two elements are missing in the idea, the results, if the idea is executed as planned, will be costly and unattractive. Such an outcome means the “strategy” was not a strategy in the first place. In this sense, a bad strategy, though it looks likes a strategy at the planning stage, is not a strategy at all. Any thought, idea or method that does not advantageously achieve desired results is not a strategy or is a poor strategy at best.
Strategies can be formulated for an area or all areas of the business that require creating or reforming to create and run a business that delivers what customers need or want and that satisfy the aims of the business. For this matter, the whole of the business plan can be regarded as nothing but a set of strategies. That is why a business plan is often referred to as a strategic plan.
For an individual, the concept of strategies for formulating and implementing plans is not different from that of a business. The only slight difference might be that the identification and formulation of strategies are less elaborate and rigorous. Just like it is for a business, strategies for an individual are simply identified better and stated pathways or methods of implementing goals to achieve a vision.
Action plans also known as tasks or initiatives are the specific concrete hierarchical (sequential) steps that need to be taken on day-by-day, week-by-week and month-by-month basis to achieve the objectives and the vision. They are in fact goals, objectives and strategies turned into actionable steps to be undertaken on daily basis. If you like, they are objectives and strategies broken down into the detailed day to day tasks to be performed to implement the overall strategy to realize the mission and vision. Actions too like goals should be SMART (specific, measurable, achievable, relevant and time-bound) and identify specific actions, responsible action parties (department, sections, units, and individuals); resources needed for each action and expected outcomes of the actions together with yardsticks to be used to ascertain achievement.
About 2,500 years ago, Chinese military strategist Sun Tzu wrote about “The Art of War.” In it, he said, “Strategy without tactics is the slowest route to victory. Tactics without strategy are the noises before defeat. He also said “All the fighting men can see the tactics I use to concur, but what none can see is the strategy out of which great victory is evolved. Think strategically and act tactfully”. Each strategy or as is sometimes the case, each goal, should be broken down into specific, tangible and concrete actions plans or sub-goals or steps and activities to be carried out to implement the strategy and achieve the mission and vision.
In the case of a business, tactics are often called initiatives to implement the strategy and involve the determination of necessary organization-wide operational plans, departmental plans, team plans and individual plans, all geared to implementing strategies to achieve the stated or envisioned goals (mission and vision) of the business. In the case of an individual, the individual will make personal action plans to implement his or her strategic plans. The point of emphasis here is that a strategic plan is an overall game plan, vision and strategies are broad intentions but goals and action plans are specific, concrete, detailed and implementable tasks. When formulating initiatives, it is essential also to make them SMART-specific, measurable, achievable, relevant and time-bound. SMART activities lend themselves to easy tacking and this way, you can tell whether progress is being made or not. When breaking down goals to sub-goals, it can be useful to put your thoughts into a hierarchy. This will allow you to identify the dependencies between sub-goals which make it easier to schedule them when creating a time frame for the goals. Sub-goals require researching too so that pertinent and factual information can be used to craft action plans.
When setting action plans, consider the following:
- Time frame: Consider the time a task is expected to take to complete including the start and completion date.
- Actions: Narrate in great details the actions that will be needed to accomplish all tasks.
- Responsibilities: Identity the people responsible for performing and achieving each task.
- Resources: Identify and write in detail the budget and people requirements.
- The outcome: Explain in detail the expected outcomes from all actions and how it will be known that the tasks have been achieved and the ultimate goals attained.
When crafting sub-goals, main goals can be broken into as many sub-goals as possible to a level that they become clear, concrete and implementable tasks. For example, if your goal is to improve your health this can be broken down into two main sub-goals e.g. exercise and nutrition. The exercise sub-goal can be divided into learning about cardiovascular training and weight training as well as finding an activity that appeals to you that provides both. This sub-goal can also be broken down into target weight and body fat and how many times to exercise per week and when-morning or evening. The nutrition sub-goal can be sub-divided into learning about starch, protein, essential oils, fruits and vitamin foods and how to combine them. In another example, if your goal is to have a retirement plan, this goal can similarly be divided into several actions that include learning, researching, taking advice, making retirement budget consisting of income, expenses and assets to generate retirement income and starting to save and invest. What is important in action planning is to have clear implementable tasks that can be used to get from point A to point be B in the short-run and points C and D in the medium and long-run.
Table 2 below illustrates the relationship of goals, objectives, strategies and actions:
Table 2: Relationship of goals, objectives, strategies and actions
|Plan to buy a house||Save US$500 every month starting immediately to raise the required deposit of US$20,000 in the next 24 months.||Use a standing order with the bank to encourage and enforce direct saving of US$500 on monthly basis,|
Similarities in elements of a strategic plan
All these elements of a strategic plan (mission, vision, goals, strategies and actions) are not separate and distinct but rather flow from, expound and reinforce one another and all speak to the aims of and how the business can make progress. If there is overlap, there may well be, because they are all concepts and tools that are defined, created and used to stimulate positive progress towards the one aim of achieving the mission and ultimate vision of the business. There is no big deal if they appear to overlap. They all work together towards the vision and one reinforces the other. The most important thing is to ensure that the mission, vision and values are realistic, clear and inspirational and that the rest (objectives, strategies, actions) are equally clear and SMART-specific, measurable, attainable, relevant and time-bound.