Answers the question, “Where are we going?”

Strategic planning is an organizational management activity that is used to set priorities, focus energy and resources, strengthen operations, ensure that employees and other stakeholders are working toward common goals, establish agreement around intended outcomes/results, and assess and adjust the organization’s direction in response to a changing environment. It is a disciplined effort that produces fundamental decisions and actions that shape and guide what an organization is, who it serves, what it does, and why it does it, with a focus on the future. Effective strategic planning articulates not only where an organization is going and the actions needed to make progress, but also how it will know if it is successful. The result of this activity is a Strategic Plan which is a document used to communicate with the organization the organizations goals, the actions needed to achieve those goals and all of the other critical elements developed during the planning exercise.

Strategic planning has many benefits. It forces organizations to be aware of future opportunities and challenges. It also forces organizations to understand what resources will be needed to seize upon or overcome those opportunities and challenges. Additionally, strategic planning gives individuals a sense of direction and marshals them around a common mission. It creates standards and accountability. Strategic planning also helps organizations limit or avoid time spent on crisis management, where they’re reacting to unexpected changes that they failed to anticipate and/or prepare for.

The volatility of the business environment causes most firms to adopt reactive strategies and not proactive ones. However, reactive strategies are short-term, causing firms to spend a significant amount of resources and time. Strategic planning helps firms prepare beforehand; it lets the company initiate influence instead of just responding to situations.

• Helps formulate better strategies using a logical, systematic approach.  It is still the most important benefit.
• Communication between employers and employees is enhanced.  Communication is crucial to the success of the strategic planning process. It is initiated through participation and dialogue among the managers and employees and shows their commitment to achieving organizational goals.
• Individuals working in the organization are empowered.  The increased dialogue and communication across all the stages of the process strengthens the employee’s sense of effectiveness, initiative-taking and imagination.