Great strategy is about treating strategic planning as a critical capability. Investment in people, processes and tools will allow you to identify important strategic priorities and adjust as needed to remain sharp and relevant as conditions change. There is no one-size-fits-all approach but world-class strategic planning incorporates five key principles:

 

Principle 1: Strategic planning and budgeting - Both are essential, but not the same 

The most effective teams are careful to develop processes that link strategy to budgetary and operational planning. But the budget is always an outcome of the strategic aspiration, not the other way around. Budgeting remains a top priority, but it doesn’t get in the way of more expansive thinking.

 

Principle 2: Strategy amplifies the voices of the front line and customers

Strategic planning is traditionally viewed as the realm of the C-suite executive. In such cases, the company’s ‘doers’, who execute strategy, are separated from the ‘thinkers’, who make decisions. Effective strategy processes amplify the voice of the customer, and translate it into a set of behaviors that the front line can embrace wholeheartedly. This eliminates distance between the C-suite and customers and builds the kind of organizational will that leads to strong execution.

 

Principle 3: Undemocratic resource allocation 

Planners spread investment around democratically, divvying up precious resources among every unit with little regard to real future potential. But a winning strategy demands ruthless prioritization. The planning process should be biased toward defining the company’s most critical future growth opportunities and purposely allocating the largest share of funds, time and even talent against them. 

 

Principle 4: Don’t be bound to the ‘yearly-cycle’

Companies are more likely to make timely, high-stakes successful decisions if business needs, not the calendar, determine the cadence of their strategic planning process. Top decision makers need regularly scheduled opportunities for real, no-holds-barred debates on strategic alternatives ranked by monetary value and urgency. This allows a more flexible cycle in which critical initiatives are deployed, monitored and adjusted in real time.

 

Principle 5: Leaders focus on the most important decisions and simplify the rest

Leadership can’t afford a planning process layered with bureaucratic complexity that just diverts focus from what really matters: figuring out how to serve customers better than the competition, both now and in the future. Create time for strategic debates for the leaders, by excluding many of the ‘business as usual’ issues that tend to drag. 

 

Strategic planning capability based on these five principles eliminates the noise from the planning process, creating essential time for debate and distilling the agenda down to the critical issues that will truly propel the company to sustained profitability and leadership.