Strategic Planning

What is Strategic Planning and Strategic Plan

Strategic planning is a calculated way of making business plans using facts from a strategic thinking process and the plan is the document from this process. Once you have settled on a business idea and you want to implement it, one of the next steps is to have a strategic plan or a business plan for the business. Most successful businesses work with plans that look several years ahead. That is why you hear about strategic plans, business plans, and budgets. You therefore as a matter of good practice need to engage in strategic planning at the start of your business. Strategic planning is the exercise of developing a smart game plan for the future of the business and the execution of the plans. 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 involves strategic thinking. Strategic thinking is an exercise through which a person applies the mind to think about, research, 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. Engaging in strategic thinking allows you to brainstorm and think outside the box to come up with solutions to current issues confronting the business or new ways of doing things and serving the market.

This is where you hold brainstorming sessions and toss your business ideas up and down to come up with creative solutions and ways of doing business. Strategic planning is about looking at where you are now, identifying where you ought to be in the future, defining smart steps to be undertaken to get you there and setting out the measures that will help to tell you whether you are on the right track and finally whether you got where you wanted to be 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.

A strategic plan should not be mistaken for any or other partial plans that a business may make, such as production, product, marketing, technology, and workforce plans. It is also not forecasting or budgeting. However, much as the strategic plan is not all this type of plans, the strategic plan is holistic business-wide (corporate) plan that guides and models all other types of plans. In other words, all other individual plans including a business plan flow from strategic planning (thinking). However, even though a strategic plan is usually for the whole business (corporate strategic plan), there can be mini strategic planning exercises to create or reform a single facet of the business such as production, product, pricing, marketing, distribution, technology, employee plans, operations, management, etc. Remember strategic planning is merely thinking and plan-making process to find and implement smart pathways of achieving desired results. So there can be an overall corporate strategic plan and a mini-plan for creating or reforming any individual aspect of the business.

Strategy, strategies or a strategic document is a description of a carefully considered and chosen set of 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. A strategy is any identified and chosen method that is smarter, cleverer, superior or advantageous in comparison with other alternative methods of achieving an aim. What makes any method a strategy is a competitive advantage or the smartness in that method. Strategic planning is a thought and decision-making process and a strategic plan is a document that is prepared out of this process.

When you are 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, you should engage in strategic thinking and planning and from this process prepare a strategic roadmap and 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. 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. At the end of a strategic planning exercise, you should be able to eliminate all the unworkable and uncompetitive ways of doing business so that all resources and firepower can be focused on what works and is competitive. The purpose of coming up with strategies is to evade competition.

The process of brainstorming and analysis is the heart of strategic planning because this is where the key moves to start or take a business to higher heights will be identified and formulated and the result is a master game plan that identifies the customers, products or services to be offered and their benefits and the quality of resources required in terms of skills and systems. It, therefore, requires a lot of inclusive and collaborative efforts to research, scan and analyze information to be able to identify the most effective and advantageous ways of realizing desired goals. In this process, company-wide inclusive brainstorming teams and sessions are necessary to ensure that there is wide-spread buy-in and no stone is left unturned and all available eyes and brains are utilized in the search of better ways of doing things. An elaborate strategic plan need not be carried out for every business that is contemplated. However, some form of plan, however basic it is, helps a lot to clarify matters and set the tone for the business to be.

What is the Purpose of Strategic Planning Exercise?

The main purpose of strategic planning is to generate pertinent information for making plans to create or improve the business and the execution of those plans. Strategic planning is not only for a new business but it should also be carried out each time a business requires improving or changing the way business is being carried out. It 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. The main purpose of strategic planning exercise is to think about and define the product or service that you want to offer, how you will find the customer for it, and the nature of the business that will make and deliver that product or service to the identified customer where they want it when they want, in the form they want, and at a competitive price. Any aspects of a business can require strategic thinking but the main areas that often require strategic planning include:

1. Business idea: Identification of a peerless and viable business idea that fits and meets the needs of a certain customer.
2. Initial research: Researching the idea to assess suitability and viability and patenting the idea to protect creative innovations and marks like manufacturing processes, management strategies, trade dresses, trademarks, copyrights and trade secrets
3. Purpose: Development of mission, vision, and values (see below for an explanation of these).
4. Formation: Formalization of the business which includes a selection of name, logo, legal format or structure as in sole proprietorship, partnership or corporation, website domain and registration of all these including trademarks such as logo and name.
5. Marketing: Development of marketing, sales, distribution channels, and customer service plans.
6. Management: Development of management or administration organs and systems.
7. Operations: Determination of needed operating facilities.
8. Finances: Development of financial stewardship monitoring and analysis and decision-making reports.
9. Systems: Development and documentation of operating systems, processes, policies, and procedures including regulatory compliance systems and procedures.
10. Business model: Defining how a business will create value for customers and how it will unfailingly generate cash and make a profit from this.
11. Aims: Formulating smart and SMART objectives, strategies, action plans, and implementation matrix to create and implement all the above activities.
12. Continuous improvement: Thinking about needed continuous improvement activities in any of the areas above.

Strategic planning (thinking) is a recurrent process not just for synthesizing information for business planning. It is also used to create ideas, for innovation, improving, upgrading, systematizing, or simplifying things or the whole business to produce and deliver products or services the way consumers want, where they want and when they want at affordable prices. A business must engage in perpetual innovation to search for better ideas and ways of doing things to satisfy the ever-changing consumer needs or even just to evade competition. Strategic thinking is the hotbed of innovation and creation.  Think of how McDonald has evolved around simplicity and affordable prices. See how Uber and Google search engine has evolved around simplicity again and pricing. Ipad, for instance, innovated around the concept of simplicity, easy to use and an all range of mighty useful features. All these are products of strategic thinking. Creativity and innovation are the main purposes of strategic thinking or planning.

Strategic Plan versus a Business Plan

A strategic plan and a business plan are often interchanged and used 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 exercise include imagination, creative ideas, and SWOT (strengths, weaknesses, opportunities and threats-see relevant sections below for a fulsome explanation of SWOT analysis. Strategic planning requires analyzing the market in light of a company’s strengths and weaknesses and optimization of strengths and mitigation of weaknesses. The outputs of strategic planning inform the formulation of a business plan. The document that is produced after strategic planning (thinking) or business planning is a business plan which can also interchangeably be referred to as a strategic plan.

Strategic planning or thinking is about creating strategic ideas, data, information, and information while business planning is mainly about using this information to create a coherent business plan (strategic plan) or a road-map for the future of the business. This is the subtle distinction and connection between strategic planning and business planning.

Strategic Plan versus Business Model

A strategic plan and a business model should also be distinguished. A business model defines how a business does what it does and how it makes money out of what it does. According to business management expert Peter Drucker: “A business model is supposed to answer who your customer is, what value you can create/add for the customer and how you can do that at reasonable costs so that you can make a decent profit for the business as well”. The bolded words are this author’s additions to bring home the point. With this definition, a business model is an articulation of the underlying principles of how a business generates, delivers and captures value for its customers and the business as well.

A model describes the rationale of how an organization creates, delivers, and captures all forms of values including economic, social and cultural values. In theory and practice, the term business model is used for a broad range of informal and formal descriptions to represent core aspects of a business, including purpose, target customers, offerings, strategies, infrastructure, organizational structures, trading practices, and operational processes and policies. A strategy, on the other hand, is about creative ways of doing things and defines the difference between one business’ ways and those of its competitors. However, the process of business model construction is part of business strategy formulation and a business model is, in the end, a product of strategic planning or thinking.

For example, all restaurants follow the same business model that is buying the same raw materials of foodstuffs, preparing them and serving them to walk-in-walk-out customers at a price that covers costs and includes a small mark-up to cover overheads and profit. As far as these processes are concerned, all restaurants do the same thing and can be said to have the same business model. However, some restaurants may seek to differentiate themselves from competitors by sourcing choice raw material food items, preparing them using delicious recipes, serving generous portions, serving a soft drink with each meal, having home and office delivery, having a cosy room, serving healthy food only or having an overly pleasing customer service. All these differentiation gimmicks are strategies within the business model to outwit competition. Herein then lies the main difference between a business model and strategic plans.

Strategic Planning Process

A fully-fledged strategic planning process is normally a mammoth task that involves the following work and aspects:

1. Framework for decision making: Putting in place structured decision making and approval process to govern the exercise of strategic planning to ensure that it conducted in a coherent, comprehensive and orderly manner.
2. Developing mission, vision, core values.
3. Reviewing current or past strategic plan: Strategic planning is about the future but the current or immediate past strategic plan needs a review to see what worked and what did not and to determine what to drop and what to carry forward.
4. Identification of strategic issues or problems that need to be solved to start or for and ongoing business to create and deliver products or services that customers want and that meet profit goals of the owner.
5. 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 guard against weaknesses and threats. SWOT, therefore, involves an analysis of internal (the business) and external (the market or environment).
6. Benchmarking: Benchmarking is about researching similar businesses in your industry or area and comparing industry or competitor 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.
7. 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 and to see what competitors are up to, demographic layout, market size and industry trends, 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 a 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. Market assumptions also need validation using a customer survey or statistical methods.
8. Estimation and forecasting: Customer demands and a lot of numbers that will go into forecast assets and liabilities (balance sheet) and revenue and expenses (income statement) will need forecasting. Resource requirements will also need estimation. These can be predicted using simple or complicated methods such as reference class forecasting.
9. Financial analysis: Strategic planning often entails the commitment of new resources and there is usually a need to perform cost-benefit analysis including estimation of payback periods and return on investment. Forecast financial statements (balance sheet and income statement) are also analyzed to see how the forecasted performance ratios are turning out in the plans.
10. Scenario planning: This is a “what” “if” process that involves visualizing future possible conditions or events, estimating their effects and formulating how to respond to the events.
11. Sensitivity analysis: This is used to identify which variables have the biggest impact on output with just small changes in each variable or to test the effect of up and down changes of a single variable while holding other variables constant. For example, it can be used to answer the question what would be the forecasted net income if sales increased or decreased by 15% from the forecasted level?
12. Goal and objective identification and setting: The end game of strategic planning culminates in the identification of desired outcomes in the context of perceived strengths, weaknesses, opportunities and threats. Desired outcomes are selected strategic goals (objectives) that need to be turned into targets to be achieved in all areas of the business to solve the identified strategic problems and advance towards the envisaged mission and vision.
13. Strategy definition: There is every need to identify, define, and select smart methods for every area of business that will be used to successfully achieve goals and the whole strategy. There will be as many strategies as there are goals.
14. Business modelling: A business model is an explanation of the underlying principles of how a business generates, delivers and captures benefits for its customers and the business as well. Without a doubt, any strategic planning must address these principles or rationales.
15. Actions: Laying out initiatives (actions) that can be used to implement the strategies to achieve the set goals/objectives.
16. Risk analysis: No strategic plan would be complete without identification and analysis of possible risks that any parts of the plan may run into and mitigating methods than can be applied.
17. Business plan: Everything that comes out and is adopted from the strategic planning process is reduced to a business plan-a road-map that explains how a business will start and run differently or better than others to create value for its customers and profit for
18. Budget: This is an end-of-process tactical tool covering one to three years that is used to predict the end of year financial outcomes (profit or loss). It is also used to allocate resources to prioritized activities and for monitoring the performance of revenue and expenditure on a monthly or quarterly basis.
19. Implementation mechanism: Establishment of an implementation and monitoring plan that usually includes having organization-wide operational plans, departmental plans, and divisional plans, team plans, individual plans.
20. Monitoring and evaluation: Establishment of formal channels of communicating the strategy and monitoring and reviewing the progress of its implementation.

The main outputs of the strategic planning process which are each discussed in detail below are mission, mission, values, goals, objectives, strategies and action plans across some or all aspects of the business. All these components work together to ensure the achievement of the mission and attainment of the vision. To be able to set smart and SMART goals, the strategic process must identify the main strategic issues (problems) that need to be tackled and resolved to create or improve the business. Strategic planning is like going to or waging war. You must identify the reasons why you want to wage a war (to engage in strategic planning), which is to define the issues that if resolved through setting and implementing goals/aims, your business will create and deliver products or services that customers want and which also meet the aims of the owner.

Strategic planning is essentially forward-looking. However, it is also useful to look at the achievements of the current or immediate past strategic plan, if there is any, and the past overall performance of the business to determine what worked and what did not work to draw lessons for the current strategic planning process. Knowing where you have come from and where you are currently, helps a lot to shape the future. By looking at the results of the past strategic plan, you will be able to know what worked and what did not, to decide what to drop and what to carry forward.

Ideally, the strategic planning process starts from the owner who sets the mission, vision, values, and goals for the coming one year or so. A strategic plan is usually for a period of three to five years, reviewed annually for continuous improvement purposes. The reason why the owner should be the one to set mission, vision, and goals is that the owner is the vision bearer and is the one who knows the goals he or she wants to achieve and the level of returns he or she is looking for. Once vision and goals have been set, the owner or managers of the business, if any, step in to develop strategies and actions to be implemented to achieve the goals. In a sole proprietorship, the whole process can be carried out by the owner and his or her assistants. In a large organization, the process of strategic planning may involve holding iterative and brainstorming sessions that include all key teams in the business to develop all the components of a strategic plan.

Talented and competent people are a key component of strategic planning. Whether the business is small or large, having the right people to drive the strategic plan is more important than anything else. It is only the right people who will debate and figure out how to move the business from the status quo to a better position and keep adapting to changes. Research carried out by Jim Collins (2001) and his team in their book entitled Good to Great showed that it is better to figure out the “who” first before the “what”. This means it is far better to have the right people first before vision, mission, strategy, initiatives, structure, and technology. In an organization, the owner of the strategic plan is the proprietor of the business or the CEO in a large organization. However, the CEO can delegate coordination of this function to the finance department or any other department such as the business development department. Most organizations have strategy coordination functions in the finance department.

An elaborate strategic plan need not be carried out for every business that is contemplated. However, some form of plan, however basic it is, helps a lot to clarify matters and set the tone for the business to be. When it is carried out, it invariably entails an iterative and cyclical process that is used from time to time to soul-search and to define and redefine the principal aspirations of the business now and then as the ever-changing economic environment dictates. The principal aspirations of any business are created by defining and documenting the vision, mission, values, goals/objectives, strategies and actions.

What are vision, mission, values, goals, objectives, strategies and actions?

Vision, mission, values, goals, objectives, strategies and actions are aims, targets or standards that a business sets to undertake to reach the desired end. These factors form the backbone of a business plan. Mission, vision, and values define the business and its aims while goals, objectives, strategies, and actions are smart tools that are used to achieve those aims. Without these, a business will beat about the bush and cannot hope to achieve much.

A business that eventually becomes successful starts with a picture (vision) in mind of how the business will look like in the end once it is completed. It then defines the sort of things that such a business ought to be doing on a day to day basis to act as and to become a successful business. And then engages in a strategic planning exercise to create information for preparing a business plan to set a mission, values, goals, objectives, strategies, and actions in all areas of the business. These tools are the ones that will keep the business focused and on track doing the things that a successful business should be doing even before it becomes successful. Faithful implementation of properly set mission, vision, values, goals, objectives, strategies, and actions helps to propel the business to success.  Below is a discussion of what these factors are and how to identify and create them.

What is a Mission?

A mission statement is a brief description of a company’s fundamental purpose of being in the 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. This is where you define your customers and your products and services, why you offer them and how you offer them. The mission or purpose of the business is defined by how it is serving or meeting customer needs and not by the industry or business name. The purpose of the theatre business, for example, is to make people happy and not to provide a great platform and stage plays. To give another example, the purpose of an amusement park is to please people and not to provide the best amusement facilities in the world. The purpose of a pharmaceutical company should be to create healing medicine through continuous research using the best medical research facilities. 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, customer service, marketplace position, competitors, growth potential, marketing aspects, technology and processing systems to be employed, office structure, type of employees, objectives, strategies, actions, plans, policies, procedures to be put in place, suppliers, service providers, and the relations with 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.

The main purpose of a mission statement is to clarify to the employees and other stakeholders the primary purpose and other measurable objectives of the organization. The mission statement articulates the company’s purpose both for those in the organization and for the public. It is to express the organization’s purpose in a manner that sets the tone for employees and inspires their support and ongoing commitment to the goals of the organization. Everybody in the business should be able to verbally express this mission. The main purpose of a business is captured by a mission statement and delivered through vision, objectives, strategies and action plans. The mission gives rise to objectives or goals that must be attained to achieve the mission as envisioned. A mission can be stated simply as “To provide the best service possible within the microfinance sector for our clients.”  To come up with a good mission statement, you need to engage in strategic thinking and planning around your business idea so that you can be sure about your value proposition.

To succeed, you better target a mission with a noble intention and not one that directly targets money or personal benefit. Jim Collins and Jerry Porras (1994) in their book: Built To Last talks of how the fortunes of Merck, the pharmaceutical company were negatively affected when they changed their mission from focusing on “medicine is for the people” to “being a top-tier growth company”. The book also restates the mission of Johnson & Johnson written in 1943 which begins by “We believe our first responsibility is to doctors, nurses, and patients, to mothers and fathers, and all others who use our products and services”. In the end, the credo states “when we operate according to these principles, the stakeholders should realize a fair return”.

John Kay makes the same argument in his book: Obliquity: Why Our Goals Are Best Achieved Indirectly. He observed that ICI, a chemicals company, suffered poor performance when it changed its mission from “to serve customers internationally through responsible application of chemistry” to “to be the best leader in creating value for customers and shareholders through market leadership, technological edge, and world competitive cost base”.

What Is A Vision?

A vision is a statement about what the organization wants to become. The vision articulates your dreams, aspirations, and hopes for you and your business and captures these as a mental picture of how the business will look like once it is all done. It answers the question “Where are we and where do we ought to be going and what should the result look like?” 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, attractive future for an organization. Yet another way of looking at this is to view it as a vivid imagination of an attractive goal that is worth striving for. 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. Having a vision is more important than having capital and in starting a business, vision precedes capital. Capital is, in fact, 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 read the Bible might have seen that Proverbs 29:18 says that “where there is no vision, the people perish”.

The main purposes of stating and documenting a vision are:

• A clear vision serves as a means of communicating the aspirations of the business to all stakeholders (internal and external).
• It also functions as an anchor that constantly reminds, motivates and inspires people in the organization to continue working towards the desired goals.
• It assures and holds positive promises to customers and stakeholders. Vision expounds the mission in the sense that vision states that given the mission that has been espoused, this is what we want to become in the process of achieving that mission and this is the direction that the business will take to attain that mission in the best possible way.

A vision statement may apply to an entire company or to a single division of that company. Whether for all or part of an organization, the vision statement should answer the questions, “Where do we want to go and what do we want to become?” Vision expounds the mission in the sense that vision states that given the mission that has been espoused, this is what we want to become in the process of achieving that mission and this is the direction that the business will take to attain that mission in the best possible way. Vision boils down to what the business wants to achieve ultimately after the mission is completed or implemented. It describes an end goal and as such, it should be a short visionary and inspiring statement. To come up with a good vision, it is necessary how could be great, how could we grow the business, what can excel in,

Vision is realized by setting goals that are then implemented using strategies and actions. An example of a good vision is a statement like “Five years from now, Computer Services Ltd. will have annual revenues of over US$1 million by consistently providing timely, reasonably priced repair and instructional services”. Another example of a vision statement is that of Alzheimer’s Association which simply reads: A world without Alzheimer’s disease”- www.alz.org/about/strategic-plan

What are Values?

Values are the moral cornerstones that the business pays special attention to and abides by in day to day operation of the business. They are the moral cornerstones that the business pays special attention to and abides by in day to day operation of the business. They are, if you like, the code of conduct within the business. The sole purpose of having and stating values is to guide behaviour within the business and relationships with customers, the planet, and people (society). There are no right or wrong values so long as they are understandable and inspire the internal people and are not repugnant. Some values that would not hurt to espouse include integrity, responsibility, reliability, innovativeness, customer care, respect and fair-mindedness, and care for the planet and people or society.

What are Goals and Objectives?

A goal or an objective is a description of the destination where a business wants to be or a target that need to be achieved for a specified purpose. Having set the mission and vision for the business, goals, and objectives need to be set too as the next logical step. Goal or objectives are often used interchangeably but they are somewhat different. Both terms state desired outcomes an organization is trying to achieve to be of service to customers and to meet the expectations and profit goals of the owner. 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 a 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 tools while goals are strategic moves. See table 1 below which compare goals, objectives, strategies, and actions. Goals or objectives or goals are usually set when one wants to start, upgrade, expand, renew or energize a business.

Goals are usually high-impact 5 or so priority things that you must do in the first year and the same number that you must do in the next 3 to 5 years for the overall mission and vision to be successfully attained. Objectives are smart targets to aim for and achieve to accomplish the mission and attain the vision. Needless to say, the formulation of goals and objectives is one of the main reasons for engaging in strategic planning and is also the main output of strategic thinking and business planning exercise. The main purpose of strategic thinking and planning is to identify smart pathways (goals and objectives) that can be implemented to achieve your mission and vision in the current market space or to get to a blue ocean. Goals are the main outputs of strategic thinking and planning process. The setting of goals is at the centre of building and managing a business. To start anything, to create anything, to reform or improve anything, to implement anything or to achieve anything in business, you need to set goals and objectives to aim at.  The main tool that is used to make any progress in business is the goals and objectives. Without a little bit stretched goals and objectives that can be aimed at on a daily, weekly, monthly and yearly basis, very little will be achieved. Goals and objectives drive the business.

In essence, objectives break down the mission and vision into several broad pillar or framework initiatives that must be undertaken and put in place to set the direction towards attaining the vision. Compared to actions, objectives are broad descriptive statements of aims and intentions.  Goal setting is very important in strategic planning. Goals set the direction of the business and allow you to be in charge of this direction as well as offering 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. This requires strategic thinking and is the reason why goal setting is part of strategic planning. Goal setting requires research, SWOT and benchmarking as explained above in the paragraph on strategic planning.

Objectives speak to the key aims that you have carefully selected to be implemented to start your business successfully or compete effectively with ongoing business in the current market space (red ocean) or move your new or ongoing business to a new market space (blue ocean). W. Chan Kim and Renée Mauborgne (2005) define, in their book “Blue Ocean Strategy”, a red ocean as an existing market space that has been bloodied by fierce competition and a blue ocean as a new market space that will not have competition for a good while. They argue that the aim is to create a product or service that is so different that it creates a new market and owns that market. In formulating objectives for a red ocean, you have to focus on how to exploit gaps or shortages in the supply of the product or service you are targeting to supply in the market. Alternatively, you can identify competitive advantages or strengths that you possess and can leverage to allow you to gain or increase your market share.

In crafting objectives for a blue ocean, Chan and Mauborgne advise that your focus should be to eliminate factors that the industry you are operating in offers but do not add value to the product, reduce other not so important factors well below industry standards, raise other factors way above industry standard and create others that the industry has never offered. You need to figure out where customers are being under-served and create product features, whole products or services to fill this void to differentiate your business from those of rivals and their products. When you do this you will be able to create a road-map that will allow you to have a focused strategy that is divergent from that of the industry and has a compelling message (tagline) that you can express in a few words but still captures the superior value of your product. A tagline that is quoted in Chan and Mauborgne’s book that I like a lot is one by Southern Airlines that at one time read: “The speed of a plane at the price of a car whenever you need it.” The airline had indeed introduced services that very well lived up to the tagline. The services involved hopping from city to city in many states in the USA just like road transport does only that the plane does it faster than road transport. The airlines had also removed unnecessary luxuries so that the price could be brought close to that of road transport.

The goals and objectives should be holistic and target to transform and create strategies for reforming all aspects of doing business including marketing, selling, delivery channels, customer service, business development, production and operating processes/systems, administration, and financial management. However, whatever is done in all these areas should be to support the objectives (road-map). A key component in setting goals is desired specific outcomes such as market share or rate of return on investment (ROI) to be achieved in the short-term to medium-term.  ROI is simply net profit after tax divided by capital invested or to be invested in the business. This is usually computed in an iterative process when preparing the budget until a budget position (sales units, prices, and costs) is arrived at that returns the desired profit.

Goals should, therefore, be established with the desired ROI or other targets in mind. For instance, to have sales of US$50,000 in the first year or grow sales by 25% and attain an ROI of 20% or a market share of 15% in the next two years are examples of goals. Strategies and action plans will then explain in detail how these goals are to be attained.  To achieve a vision, several goals may be required to outline the path to achieving the vision. Goals and objectives are identified and implemented (actualized) through the use of strategies and detailed actions to achieve a vision. In the end, several goals require to be achieved to realize the vision. The number of goals that are usually necessary can be anywhere from 3 to 5. Since goals are long-term and objectives are short-term, several objectives may be required to be achieved to realize one goal. One goal may normally require 3 to 5 objectives too.

In formulating objectives, it is important to make them SMART-specific, measurable, attainable, relevant and time-bound. To set smart and SMART goals, you need to engage in SWOT, benchmarking and market research. See these under the strategic planning section above. SMART goals have the following characteristics:

1. Specific: A goal should be clear about what you want to achieve.
2. Measurable: This is about the ability to measure performance and the outcome that shows the goal has been achieved as planned or not. An objective yardstick for determining achievement should be stated.
3. 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 budget or means but stretched them a bit beyond foreseen ability to stimulate effort.
4. 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.
5. Time-bound: Your goal should contain a realistic date for completing. Anything goal without a timeline for completion will go and on without being completed.

An example of the development of a SMART goal is as follows:

1. Overall goal: I want to increase the sales of my mushroom farming business to increase net income.
2. Objective: Increase sales by 15% to increase net income by 10% in two years hence.
3. Specific: I will increase mushroom production and contract five additional supermarkets to stock the additional products.
4. Measurable: I will measure the growth by maintaining records of additional output and how many new supermarkets I have contracted in addition to the existing shops and retail customers.
5. Achievable: I will be able to expand output by using existing spare resources. I will contract the five supermarkets by using my currently free afternoon time to find the supermarkets.
6. Relevant: By adding new outlets to my current customer list, I will be able to grow the sales by 15% and increase net income by 10%.
7. Timely: To increase the sales, I will be ready with additional outputs and will contract the additional supermarkets in the next three months.

SMART Goal statement: I will, within the next three months, contract five new supermarkets to stock my mushrooms in addition to the existing list of customers by expanding production using excess and my currently free afternoon time to find the customers. This expansion will lead to an increase in sales and net income as desired. Notice that this statement embodies strategies illustrating the point alluded to in the paragraph below that strategies are embodied in goal statements.

What are Strategies?

Strategies are any thoughts, ideas, chosen methods, techniques or plans of action which if faithfully implemented yield specified desired results. A business planner will be looking for positive business results while a robber, for instance, will be seeking to steal and emerge unscathed but both use strategies and hope for their desired results. In a business context, strategies are methods, techniques, ideas, activities, or pathways that are deemed smart, clever, competitive, or advantageous, which if applied will accomplish aims as planned or desired. They 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, that choice is a strategy. When you choose one marketing method over another method, the chosen method is your strategy. If one location is, for well-considered reasons, preferred over another possible location, the preferred location becomes the strategy. If one format of an office structure is adopted instead of another format, the adopted format becomes the chosen strategy for the business. When, for instance, you state that we will target a market share of 20% in the next 12 months to achieve a return of 17%, the decision is a strategy that could be informed by market conditions, ability and the financial aims of the business. 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. Strategies are, therefore, part and parcel of any vision, mission, values, goal, objective, and action statements.  The competitiveness of the chosen ideas in these statements is what makes the ideas to qualify as strategies.

When someone says it is not strategic to attempt to run all races in a sports season, that person is implying that such a move is not smart and will yield poor results. Not strategic implies lack of advantage or competitiveness and has the potential to yield sub-optimal results. 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. 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.

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.

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 or method, the results, if the idea is faithfully executed as planned, will be costly and uncompetitive (or unattractive). Some results will be gotten but they will not be profitable for the businessman and may achieve costly victory for the robber. Such an outcome means the “strategy” was indeed a bad strategy and therefore not a strategy in the first place. In this sense, a bad strategy, though it may be called or look likes a strategy at the planning stage, is not a strategy at all ab initio. Any thought, idea or method that does not advantageously achieve desired results is not a strategy or is a poor strategy at best.

Strategy formulation and analysis entails examining the power or the potential of the company’s strengths and opportunities and enquiring into the significant endogenous and exogenous forces such as weaknesses and threats that may affect the company’s position. As this is done, the aims of the business in terms of financial targets, mission, values and desired excellence in serving customers are taken into account. This process of strategic analysis is the heart of strategic planning because this is where the key smart moves or methods to start or take a business to higher heights will be identified and formulated and the result is a master game plan. You use strategic planning (brainstorming exercise) to identify strategic issues that hinder your business from taking off and thriving. You then set goals and strategies (smart methods or moves) to resolve them. This is where goals and strategies come to work together. Strategies explain how goals are to be achieved and goal statements almost always embody strategic moves or styles in them.

Having said all these about strategies, what then is the main difference between a goal/objective and a strategy? A goal is a broad main outcome that you want to target to achieve something like the mission and ultimate vision. A strategy, on the other hand, is the approach you take to achieve a goal. It is like a tool or tactic you use in pursuit of an objective or a goal. 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. Ordinary ways of doing things in a business as usual mode without any particular superiority or competitiveness should not be counted as strategies unless they are actions to implement a strategy. Strategies should be transformative ideas.

Strategies can only be judged to have been truly smart strategies after they have been implemented and have produced desired results. You can beforehand preview possible success of the contemplated strategic actions by estimating sales, costs, and profit at the strategic planning stage to see if strategies are likely to produce desired results. You do this by preparing a trial budget that can be adopted once estimated realistic sales and costs that can deliver the desired profit are identified. That is why budgeting and business planning are important when crafting a strategy. You then should have desired targets like profit or return on investment (ROI) of say 15% as you carry out your strategic planning. If your business is new, it may take a while before it can break-even and make a profit. If this is the case, your planning should take this into account and identify the break-even point that can then be targeted.

What Are Actions?

The actions, also known as initiatives are the specific concrete hierarchical (sequential) steps that need to be taken daily to achieve the objectives and the vision. They are in fact goals, objectives and strategies turned into actionable steps to be undertaken daily. 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.

Table 1 below illustrates the relationship between goals, objectives, strategies, and actions:

Table 1: Relationship of goals, objectives, strategies, and actions

 Methods that can be used to develop a Strategic Plan

Formulation of a strategic plan can take any format depending on the size of the business and the culture, traditions, values and the circumstances of each business. The method used does not matter so long as plausible goals and strategies are identified objectively and realistic implementation plans are put in place. However, a process that is collaborative, consultative and inclusive will enhance communication and buy-in of the plan. Below is a synopsis of some methods that can be used to formulate some aspects of the strategic plan.

a) Planning Guidelines

As strategic planning is likely to involve teams, it makes sense to ensure that everyone in a team is talking from the same script. For this reason, there should be a briefing checklist issued to all teams to ensure that all relevant issues are considered, debated and answers provided. The checklist should contain the following information:

•  Executive summary: This is a one or two-page brief capturing where the business is coming from and where it should go. It should also contain the past performance of the business, the present status, the outlook for the future and the issues and risks that might impact that future. This should essentially state why the business is planning to introduce changes or to go to war, so to speak.
• The current strategy: This should briefly explain the existing strategy including vision, mission, values, objectives, strategies and action plans and how their impact on the business has been. This is where you explain what has been achieved and what has not and what worked and what did not work for purposes of drawing lessons for the new strategy. It is also for identifying what has been achieved, what to drop and what to carry forward to the next plan.
• Assumptions of the current strategy: This should capture the assumptions that were made about internal and external factors around the business, customers, rivals, socio-political environment, regulation, and technological scenes. How the assumptions have or have not changed should also be captured in this section.
• SWOT (strengths, weaknesses, opportunities, and threats): This section should explain the strengths and inherent weaknesses that currently exist internally in the business so that plans can be made to ride on the strengths and counter against weaknesses. It should also capture foreseen opportunities and threats facing the business from outside ranking them based on likelihood and their impact on the business. Opportunities can be exploited and threats can be eliminated or reduced. Other strengths, weaknesses, opportunities, and threats can be identified and added as the strategic planning process for the coming period gets underway.
• Key success factors: These are the existing few things that must be done that drive the survival and prosperity of the business. A few more will be identified as the strategic planning gets underway.
• New strategy: This guideline is to remind everyone involved in the strategic planning process that the process must, in the end, come up with a new strategy that covers vision, mission, and restatement of values, objectives, strategies, action plans and resources required. We speak of restatement of values because values do not usually change much. The objectives and action plans must identify strategic (superior) ways of doing things that cover key aspects of the business including production of goods or services, marketing, sales, delivery/distribution, customer service, processes and systems, administrative and financial management aspects, technology, operating facilities, employee and stakeholder management, where other stakeholders include suppliers, service providers, financiers, regulatory authorities, the society, planet, and shareholders (people, planet (environment), and profit).
• Implementation plan: Strategy is prepared for implementation and no strategy is complete without an implementation plan. So this guideline is there to remind that a strategy document must have an implementation plan that explains what is to be done, by whom, by when and how performance will be tracked.
• Performance appraisal and reward system: This is also a reminder guideline that is there to ensure that planning teams must think and put in place performance and appraisal systems to appraise and measure each individual’s performance. Remember that work that is not measured does not get done. Coupled with this is a reward and sanctions system to reinforce values, encourage and reward exceptional performance and discourage and penalize sloppy performance. If there are no rewards for excellent and very good performance, people may be disillusioned.

b) Devolving the Strategic Planning Process

Conventionally, strategic planning has been the preserve of the owner or senior management and a few other managers of the business. However, wisdom suggests that everyone in the business should be involved. There are several reasons for this wider involvement. One is that it is beneficial to have more minds and eyes scanning the environment than just a few smart guys. It is not humanly possible for a few people to see and think of everything. Two, the people on the floor and field who interact with the actual work and customers are likely to know more than the far removed top guys. Three, involvement empowers people with information about the strategy and the business as a whole and this enhances their performance. Fourth, involvement enhances buy-in and ownership of the strategic planning process and the outcome and reduces resistance to change.

The entire business should have one strategic plan. However, there is nothing wrong with each division, department, section and even each team having their vision, mission, strategies, objectives and action plans. Each department has different responsibilities and may want to define their objectives in line with the responsibilities. Nonetheless, the silo strategic plans should dovetail to the organization-wide strategic plan and all pull together in the same direction. Values do not change and they should be more or less the same for the entire organization as well as all divisions, departments and any teams that may have their strategic plans.

Analysis of the Business Environment

To come up with pertinent data for business planning, it is necessary to research and analyze the business environment. This is a systematic exercise that involves scanning the overall environment that covers the internal aspects of your business, competitors, your industry and the macro-environment including customers and business partners. The macro-environment can be analyzed using several tools that include S P E C C T R E analysis, M E Porter’s 5 Forces and Strategy Canvas of Chan Kim and Renée Mauborgne. These tools are as follows:

S P E C C T R E Analysis

Table 2: Factors to consider in the environment when developing a strategic plan

As environmental factors are being considered, it is useful to ask which factors are relevant to the particular business, which are the most important now and how these factors are likely to change in the medium and long-term horizon and if they will change, what will be the likely problems and opportunities arising from these changes.

M E Porter’s Five Forces Model

In his book entitled Competitive Strategy (1980), M E Porter identified five key market forces that are still relevant to date that he said are important and should shape strategy formulation. These are:

Table 3: Important market forces that should shape strategy formulation

For each of the five forces, it will be necessary to consider which factors and trends indicate strength and weakness and the strongest of the forces become critical for strategy formulation. Porter also argued that competitive advantage is not in the single activities in an activity system or chain. The competitive advantage comes in how the activities are stringed together and built to reinforce one another in a unique activity system. While every single activity can be copied by competitors, the full benefit cannot be derived unless the whole stringed up system is duplicated, which can be costly to do and time-consuming.

Strategy Canvas

Strategy Canvas Map which is a tool promoted by W. Chan Kim and Renée Mauborgne in their book entitled Blue Ocean Strategy is also another technique that can be used to formulate a strategy road map. A blue ocean as defined by Chan and Renée is a market space where there will be no competition for some time as opposed to a red ocean which is an existing market space that has been bloodied by competition. They said it often looks natural to target to outperform your peers in the industry when it is better, instead, to make competition irrelevant. They further pointed out that if you look carefully, there is always a reason why people do not use features or products that the industry you play in provides, and this presents a good opportunity to unlock exceptional new values for people. This also presents a good opportunity to differentiate your business. In crafting objectives and strategies to create a blue ocean market space, Chan and Mauborgne argued that you should consider the current factors your competitors invest in and compete on and purpose to eliminate factors that the industry you are operating in offers but do not add value to the product, reduce other not so important factors well below industry standards, raise other factors way above industry standard and create others that the industry has never offered. You need to look at where customers are underserved in terms of product (quality, functionality, features, benefits, appeal and after-sale support), delivery strategy (ease and convenience), price (competitive), and customer care and create a product or service that sustainably fills that void to set yourself apart from competitors.

To be able to do this, you should understand the industry, competitors, and identify opportunities for profitable growth and use this knowledge to develop smart strategies. When you do this, you will be able to create a road-map that will allow you to have a focused strategy that is divergent from that of competitors in the industry and has a compelling message (tagline) that you can express in a few words but still capture the essence of your product. A tagline that is quoted in Chan and Mauborgne’s book that I like a lot is one by Southern Airlines that at one time read: “The speed of a plane at the price of a car whenever you need it.” The airline had indeed introduced services that very well lived up to the tagline. The services involved planes that hopped from city to city in many states in the USA just like road transport does only that the plane does it faster than road transport. The airlines had also removed unnecessary luxuries so that the price could be brought close to that of road transport.

In figure 1 below, the graph on top depicts the offerings or factors of competition in the current market space (industry) while the lower graph depicts blue ocean strategy that has been developed by reducing factors 1, 2 and 3 way below the industry standard to allow for the price to be reduced below the industry level as well, raising factors 4 and 5 way above the industry standard and creating a new factor 6. Factors 1, 2 and 3 could be factors that are currently being offered for granted yet they are not being appreciated by consumers because they add no value while at the same time keeping prices high. When these factors are eliminated or minimized, they create room for price to be reduced to compete well with an alternative product in another market (such as road transport). Factors 4, 5 and 6 could be factors that are currently underrated or not offered at all by the industry and yet they would add value for the customers by offering something more superior to an alternative cheaper product.  If you carefully consider the quoted tagline of Southern Airlines, it means that services or product offerings were rearranged in such a way that price and connectivity were brought down to close to that of road transport while at the same time keeping the speed of a plane.

Figure 1: Strategy Canvas

In time, even a blue ocean market becomes a red ocean. To make the blue ocean market last longer, you should string and combine your competitive activities into one unique self-reinforcing system that is hard for competitors to copy and get the full benefit without incurring a lot of costs and spending a lot of time to duplicate the entire system. Make barriers to entry as difficult as you can.

SWOT Analysis

SWOT stands for strengths, weaknesses, opportunities, and threats. In strategy formulation, it is important to carry out a SWOT analysis to reveal both strengths and weaknesses within the business and the opportunities and threats present in the external environment. Strengths and weaknesses are internal to the business while opportunities and threats are external to the business. Strengths are advantages that exist within the organization and include resources such as assets, technology, knowledge, skills, talent, capital, reputable name or brand, patented or exclusive way of producing a product or service, motivated employees, prestigious location, proximity to markets or infrastructure, etc. Weaknesses can take the form of the absence of any or all of these advantages. Opportunities include aspects like unsatisfied demand, absence of substitutes, a yawning gap, unfulfilled niche, unresolved customer problems, strong entry barriers, a monopoly situation, etc. Threats can be the absence of some or all of the listed opportunities including aspects like strong competition, possible changes to law/regulation, labour instabilities or shortages, input constraints, looming hyperinflation or rescission, risk of input suppliers integrating forwards to make the product as well or buyers of the final product integrating backwards to supply the inputs also, etc.

The purpose of SWOT is basically to take stock of the internal and external environment to facilitate the formulation of appropriate objectives and strategies to exploit the existing strengths and eliminate or minimize the weaknesses and threats to take advantage of existing opportunities in the market. This involves looking at the market to find out needs that are currently not being met and why, what changes are occurring in the market and how can these be made use of, what is the competition like and why do customers buy from them. It also involves looking at the demographics of the potential customers of the new business and finally comparing the proposed products of the new business with those of the competition and formulating strategies to beat the competition or move out to a blue ocean altogether as argued by W. Chan Kim and Renée Mauborgne (2005) in their Blue Ocean Strategy thinking.

To identify all SWOT issues, it is also necessary to review the performance of the immediate past strategic plan of the business if one is available or the general past performance of the business and draw lessons from the review. The starting point of any strategic planning is a critical review of the current strategic plan to decide what worked and what did not work and what needs to be carried forward and what needs to change. There is a need as well to analyze the overall purpose of the business and the expectations of stakeholders. Stakeholders may include regulatory authorities, public, customers, strategic partners, business sector and industry associations, suppliers, a board of directors and employees.

Strategy Implementation Framework

It is only the implementation that can move the strategic plan from where it might sit in the shelf and turn it into actions that can realize the objectives. Without an effective implementation plan, nothing will happen despite the existence of a robust strategic plan. A good strategy normally addresses the “what and why” of the plan while an implementation plan addresses who, where, how and when. If these questions are not properly tackled, the strategy is bound to fail.

Strategic planning is about change. Change is very unsettling to many people and needs to be managed well. If not well-managed, people may become lukewarm to the idea, resist or even fight it outright. To get it right, it is necessary to involve all or at least key players in the following steps:

1. Create discontent with the current state of affairs. If people are happy with the way things are going, they will resist any proposed change. The best way is to find ways of getting everyone in the organization to see why change is necessary, what they risk by not changing and what they will gain by changing. As change is underway, this should be managed by transparent sharing of relevant information.
2. Deliberate possible changes and attractive future positions with key players. People must start quickly to see that by staying where they are, the boat may sink with them. More importantly, they need to see that there are possible positive directions that they can take control of and that it is in their benefit to do so now rather than later.
3. Craft a logical strategy. Create a coherent strategy that is based on specific goals that need to be targeted and achieved; has superior methods that will be used to achieve the goals; create small tasks in a sequential manner that have to be implemented today, tomorrow, next week, next month and so on; identify, resources (money, facilities, time and energy) that will be needed and where they will come from; and have clear and workable implementation framework, monitoring and evaluation system, performance appraisal system and reward and penalty system.
4. Involve all pairs of eyes and hands in knowing about the plan and in implementation. Initially, a few key people may start the debate and set the framework but as soon as the planning process is ready to roll, everyone must be involved. Managers should manage the process by walking around (MBWA-management by walking around).

Some of the common reasons why strategy implementations fail include:

1. Lack of buy-in from employees.
2. Insufficient communication with all stakeholders leading to resistance.
3. The strategy is seen as meaningless and unworkable.
4. The strategy has too many objectives, strategies, and actions and therefore overwhelming.
5. No implementation plan.
6. Strategy progress is reviewed only annually.
7. Lack of accountability and responsibility.
8. Lack of empowerment of employees.
9. Strategy delinked from the employee reward system.
10. The strategy is under-resourced and with an inadequate budget.

Requirements for successful implementation of the strategy

The main components that are usually needed to be present to support implementation are first, is people with the right knowledge, skills attitude and time to devote to the work. Second, is resources that include finances, equipment, facilities, systems for gathering data and employee and management time. Third, is the implementation framework that includes structures for assigning responsibilities to each player, monitoring and measuring performance and rewarding exceptional performance and punishing sloppy performance. Include here is a structure for reviewing the strategy and making changes as necessary. An implementation framework like the one below can be used to monitor implementation.

Table 4: Strategy implementation framework

 Balanced Score Card

Balanced Score Card (BSC), a tool that was developed by Robert S. Kaplan and David P. Norton (1996), is also a useful mechanism that can be adopted for the corporation as a whole as a means of implementing the strategy. Each department, division, section, and individual employee can have a BSC. BSC is a performance management tool that simply tells every role (position) in a business that you are required to carry out certain specified activities to achieve certain outcomes within a certain time and states the measures that will be used to regularly evaluate performance. BSC links the strategy to the people and their performance. BSC is a typical example of a closed-loop control mechanism. In such a mechanism, a standard or desired target value is set and then performance is regularly measured and compared with the set standard or reference value. Any difference between the actual and set value is investigated and corrective action is taken. This is basically how BSC is designed to work. The tool assumes that everything and anything a business entity does to be in a successful business should fall into four perspectives or performance areas namely financial, stakeholder or customer service, internal processes, and learning and growth.

In each perspective of BSC, there should be an objective or goal, strategies, initiatives (actions), measures, key performance indicators (KPI), targets and metrics to implement each strategy and track performance of each strategy in each area. Objectives, strategies, and actions or initiatives have been explained elsewhere in this write-up. The other unexplained or new terms within the BSC have the following meanings:

1. Financial Perspective: This perspective asks the question, to succeed financially how should we appear to our Shareholders? In this perspective, the financial performance of the organization is monitored and evaluated using financial data and targets such as sales, revenue, expenditure, net income, budget variances, financial ratios such as return on investment, etc. The objective in this perspective is to have goals and strategies that target to improve financial performance- aim at higher sales and effective use of resources such as reducing costs, curbing waste and investing cash profitably to increase revenue and profits.
2. Customer Perspective: This asks the question, to achieve our vision how should we appear to our customers? In this perspective, the performance of the organization is evaluated from the standpoint of the customer or other stakeholders that the organization is supposed to serve. Performance is measured through customer feedback and customer satisfaction in terms of service, quality, and availability of products and competitiveness of price. The aim in this perspective is to have goals and strategies that will offer superior customer experience and satisfaction, increase customer awareness of the company’s products or services and improve customer attraction and retention.
3. Internal Processes: This perspective addresses the question, to satisfy our shareholders and customers, what internal business processes must the business excel at? Processes are a set of activities that are put in place to achieve a specific goal. In this perspective, the desired efficiency of internal operational processes is defined, monitored and evaluated to ensure that they produce quality products at a reasonable cost and to eliminate unnecessary delays, gaps, bottlenecks, errors and waste and do more with less. Internal processes are about the methods that are used in the value creation chain. Value creation chain is everything that is done by a business to turn inputs into valuable finished products or services that are then made conveniently accessible to the customer at a competitive price. The processes and activities along this chain include procurement, inventory receipt, and management, manufacturing and processing, packaging and labelling, marketing and sales, distribution and delivery, customer service, the extent of the support that the various systems and procedures are deployed to support processes and activities. All these make what is collectively referred to as internal processes. These activities also form what is known as the supply chain. The management of the supply chain involves overseeing the interactions of the supply events of upstream agents (suppliers), midstream agents (the procuring entity’s internal processes) and downstream agents (customers) to deliver superior customer value and experience at the least cost possible. The focus in this perspective is the efficacy of these systems and their ability to keep on developing new products; innovating on existing ones; improving the delivery of products to the market; servicing, interacting and supporting the customer; controlling and decreasing costs, and running an efficient supply chain.
4. Learning and Growth (also known as organizational capacity): Learning and growth perspective looks at the question, to achieve our vision, how shall we sustain our ability to change and improve? In this perspective, the focus is on the organization’s human capital, infrastructure, technology, and culture to assess their ability to deliver the vision. On human capital, the concern is about its optimization, its expertise and capability to convert knowledge into a competitive advantage. Other concerns are its leadership abilities, its ability to respond to changes and how well it interacts and shares knowledge and information. In brief, the spotlight on employees is on the development of knowledge, skills, talent, positive attitude and their ability to use modern ways and technology to perform. On infrastructure and technology, the focus is on how well data are gathered, processed, stored, retrieved, distributed and communicated for use by all across the business. On culture, the focus is on the robustness of core values, practices and traditions and how well these are consistent and reinforce one another and are aligned to the overall aims of the organization. Focus is also on the existence of an appropriate performance appraisal framework to track performance and incentives to encourage excellent performance and discourage sloppy performance.
5. Measures: Measures are chosen values that will be used to measure the progress of each particular objective or goal which can be a target such as the desired level of net income as a percentage of net sales (ROI), market share, a certain level of profit or cost reduction by a certain percentage.
6. Key performance indicators (KPI): KPIs are often interchanged with measures but while they are both measurable values, they do not represent the same thing. A KPI is a measurable value like return on investment (ROI) that indicates how well a company performs compared to past performance, peers, industry, competitors or acceptable norms. The main difference between a KPI and a measure is that a measure is a target value while a KPI is also a desired target value that is compared to a standard or a benchmark to show relative performance. A KPI is set, computed and interpreted within a context. For example, a KPI where personnel costs amount to 30% of total operating costs in an industry where the average is 24% would indicate poor performance.
7. Target: Refer to a target value that the company seeks to attain for each measure, such as percentage growth in market share or profits in a given period.
8. Metric: A metric is also often confused with a measure but they do not necessarily mean the same thing. A measure is a specific one value such as earnings per share while a metric is a composite of many measures (values) put together to produce one single metric (measure).

Complete Strategic Plan Document

As strategic planning is a process and the process is complete once you have done and documented the following:

1. Carried out appropriate research to obtain the necessary information.
2. Thought about and brainstormed all the ideas that you have gained from the research, SWOT analysis and any other means about what/how to start or change to improve your business.
3. Have applied the information to identify strategic issues or problems that need to be dealt with to start or improve your business.
4. You have used all the useful ideas to develop a mission, vision, and values. You have also applied the data to develop objectives or goals that you can aim to achieve to make progress. And have also crafted strategies (smart methods/moves) that you can use to achieve those goals and actions (steps) that you need to implement (daily, weekly, monthly, yearly, etc) to achieve the goals and have put all these into an implementation framework like a matrix.  Do not be baffled by goals, strategies, and actions. These can be simple reasonable and actionable statements rolled into one or more statements that simply state what needs to be done, how it is to be done and when to be done. Goals, strategies, and actions need not be distinctly separate unless you can easily and do so. They only need to be smart, transformative and actionable statements.
5. For a business, you will need to define your product, your customers (market), competition, marketing plans, sales plans, delivery plans, internal processes and systems needed, resource requirements and financial forecasts like the budget.
6. However beautifully written, a strategic plan will not deliver unless deliberate steps are taken daily to implement the stated actions. It is actions and only actions that deliver the desired results and not the beauty of the strategic plan.

After all the above, a complete strategic plan should be expressed as a business plan containing an executive summary, mission, vision, values, goals, objectives, strategies, actions, critical success factors, SWOT analysis, marketing/selling strategies, management arrangements (including employees), operating facilities (including production), systems and procedures, a financial plan that includes projected financial statements and analysis of the same (income statement, statement of financial position, cash flow statement), two to three years budget, implementation plan (that includes actions, responsible parties, performance measures, outcomes, and timelines) and appendix, all as explained in the business plan section of this write-up.

Refreshing the Strategic plan

The results of strategy implementation should be evaluated regularly against outputs and customer (market) feedback to ensure that things are still on track. Winston Churchill, the former Prime Minister of the United Kingdom has been quoted to have observed that “no matter how beautiful the strategy is, you should occasionally look at the results”. This requires assessing the results of each strategy regularly (annually or quarterly) to determine how the strategy has been implemented and whether it has produced desired results or needs replacement by a new plan to meet a changed circumstance, new technology, customer feedback, employee feedback, new competitors, new economic environment, or new social, financial or political environment. The review should be to determine what works and what does not work to make changes as necessary. The environment should constantly be kept in view and new goals and strategies should accordingly be set to take advantage of existing and potential opportunities and to counter emerging weaknesses and threats.

Strategic planning is an ongoing process and plans and aims in the current strategic or business plan should be refreshed as often as is warranted by market realities or new objectives. Innovation is an ongoing process that is informed by evolving objectives, customer needs or market trends. In any case, good business requires continuous improvement all round and this means the strategic plan should be reviewed as often as is necessary to compete and provide great service to customers.

However, a strategic plan can also be prepared covering three years and implemented over that period with only minimal changes during the period after which a fresh strategic plan covering the next three years is prepared, unless of course there are drastic changes that call for an overhaul of the strategy before the end of the three years. Another way is to refresh the three-year strategic plan yearly whereby as goals, strategies, and actions of one year are completed, goals, strategies, and actions of the remaining two years are critically reviewed and another future one year is also added in a rolling fashion so that the strategic plan is always covering three years.