When done well, strategic planning is all about achieving aspirations. It’s about how you define success 3 to 5 years in the future — your desired future state. It’s not about where you’ll arrive in the future if you keep doing what you’re doing now (that’s long-range planning). It’s about imagining what your business could become, how it might be disruptive in your industry space, and setting a course to achieve that result. It’s about having a dream that motivates and guides your entire team.
Imagining a glorious future is the fun part of strategic planning; it is necessary in order to establish your long-term goals. But there is a risk inherent in this part of the planning process that, if not surfaced and managed well, can derail your best efforts to achieve your aspirations. That risk is not connecting your aspirations, and the strategies to achieve those aspirations, to your day-to-day reality.
Don’t Forget Today
Let’s say you’re in a business that is growing revenues 5% per year and you expect that growth to continue for the next five years. That translates into a revenue forecast five years from now that is 28% higher than today. Not bad! But let’s say, through your strategic planning process, you establish an aspiration of revenues being 100% higher in five years (that’s a CAGR of 15%)! That certainly sets an aggressive new goal for the business.
But before starting to carve that new goal in stone, it’s necessary to perform a reality check. That reality check should come in the form of a comprehensive environmental scan.
The less fun part of strategic planning is taking an unbiased look at the state of your current business and the context in which it operates. That involves identifying the macro-trends, enablers, and barriers that might impact your business over time. This is where many traditional tools — such as SWOT (strengths, weaknesses, opportunities, threats) and PEST (political, economic, social, technological) trend analyses — come into play. This is where, as the old saying goes, harsh facts are friendly.
Let’s say, for example, that during the environmental scan associated with the hypothetical business referenced above it comes to light that their largest customer is rumored to be an acquisition target. And one of their known suitors is a big user of a competitor’s products. That puts the expected baseline 5% per year revenue growth at risk.
This newly-identified risk needs to be factored into the strategic planning process. They would probably continue developing the strategies and action plans to reach their aspirational future state — but would continue to monitor risks, such as the acquisition of their largest customer, and be prepared to adjust their activities and goals accordingly.
Food for Thought
Please remember that strategic planning should be an ongoing process — not a one-time event. I encourage you to “swing for the fence” vis-à-vis your aspirations and long-term goals. But along the way, you must stay grounded in the realities of your day-to-day world and alter course if circumstances warrant. Avoid the potential mistake of setting lofty aspirations and launching strategic initiatives to reach those aspirations without keeping an eye on changing circumstances in your environment.