Most organisations have plans. There is, however, a huge difference between a good plan and a bad plan. A bad plan, for example, is one that consists only of costs and revenues. This plan provides no guidance for the organisation regarding how it is to achieve the revenue targets. There is no linkage between the high level goals and the day-to-day activities necessary to achieve them.
Good corporate planning devises a road map, showing the organisation how it should move from its current level of performance to the desired level of performance, based on the perceived economic environment.
8 best practices for strategic planningAccording to a research report by The Hackett Group, 8 strategic planning best practices of high-performance organisations are:
1. Good plans answer key directional questions
Some are, “Where are we going?,” “How are we going to get there?,” and “What happens if things do not turn out as planned?” High-performing companies do not assume that Plan A will always work. Instead, they prepare alternatives.
2. Good plans address efficiency
Good plans typically address how the organisation will maintain and improve the efficiency of current operations, and which new ventures or initiatives the organisation will implement. In this way, any change in performance can be assessed in terms of the type of activity.
3. Good plans and organisations are focused
High-performing companies do not plan in detail. More detail does not equal more accuracy. More detail does, however, negatively affect the time available for analysis.
4. Good plans include all aspects of the business: financial and non-financial
In addition to detailing how corporate goals will be achieved, good plans also describe how the organisation can continue to be effective and generate programs into the future.
5. Good plans link strategies to activities
Activities as well as their impact on achieving strategic goals are monitored. By understanding these relationships, companies and can build on the true drivers of success.
6. Good plans are measurable
Corporate objectives and strategies have measures of success, while activities have measures of implementation. In this way, the completeness of an activity can be correlated with the success of an objective.
7. Good plans include assignments for accountability
In high-performing organisations, specific people are made responsible for individual activities through rewards and resource allocation.
8. Good plans include the recording and monitoring of assumptions
If the company discovers that their business assumptions are incorrect, they reconsider the associated plan targets and adapt accordingly.
Now that companies can build good plans based on these strategic planning best practices, what’s the next step? Find out more in the full whitepaper “6 steps for linking corporate strategy to the budget”.