1. Definition of Strategic Planning
Clear definition of strategic planning avoids the common confusion with business
planning, budgeting, and marketing strategies.
What is Strategic Planning?
Every organisation or major part of a complex organisation occasionally has to make
some momentous decisions- the sort of decisions that affect the entire destiny of the
organisation for years into the future. These decisions are designed to address the
really biggest and most important issues facing an organisation – issues so
significant we might call them 'strategic elephants'. So our definition of strategic
planning must have something about big decisions.
Such decisions are not simply about small adjustments to activity levels, but are the
kind of decisions that may lead to a substantially different organisational structure, or
major changes in the relationships among key stakeholders, competitive position, or
strategic partners of the organization.
Sometimes the outside world forces such decisions on the organisation. Such forces
may include major shifts in the market, big changes in government policy, and
radical moves by competing organisations.
Sometimes, it is something inside the organisation that demands a major
reappraisal. Technological change driving new methods of carrying out its work, or
weakening of its financial structure, or a change in the senior management of the
organisation requiring a large re-organisation are examples of such internal forces.
Organisations have always faced such pressures to make huge decisions. In recent
years, the pressure has risen to the point where a systematic yet flexible process of
dealing with such decisions is called for.
Such a process is variously and sometimes confusingly described as: corporate
planning, strategic planning, business planning, and variations such as corporate
strategic planning, or strategic business planning. Other labels make the subject
more industry specific such as military strategic planning, hospital strategic planning,
and in some jurisdictions what others know as urban and regional planning is
sometimes called strategic planning.
As its name implies simply-strategic-planning.com will focus primarily on ‘strategic
planning’. By this we have in mind any plan which looks forward several years and
which is concerned with massive factors only. The focus of the decisions in the plan
are the organisation as a whole in its environment as a whole.

2. Strategic Planning is Different from Business Planning
A definition of strategic planning must be based on understanding that a strategic
plan differs from a Business Plan in three ways;
 it looks much further ahead;
 it consists largely of words with just a few figures to indicate the scale of the
planners’ intentions. A Business Plan, on the other hand, consists largely of
figures. Because these are often unreliable beyond a few months, managers
are reluctant to look ahead as far as they may need to. Strategic plans can
look further ahead because so few figures are employed, and also
 what few figures they do contain are tested by risk analysis techniques.
Definition of Strategic Planning
A systematic, formally documented process for deciding what is the handful of key
decisions that an organisation, viewed as a corporate whole must get right in order to
thrive over the next few years. The process results in the production of a corporate
strategic plan.
Strategic Plan
A set of statements describing the purpose and ethical conduct for an organisation
together with the specific strategies designed to achieve the targets set for each of
these.
So there we have it - strategic planning, and strategic plan defined.
This is not the end of the story about a definition of strategic planning. As you work
with a strategic planning process you may want to understand more about other
aspects of strategic planning.
There is much more to know about strategic planning!
The following outlines other aspects of a comprehensive definition of strategic
planning.
It helps in gaining support for and understanding of corporate strategic planning to
make clear the benefits of strategic planning.
The question What is strategic planning? will be answered in many ways by different
people. Here at Simply Strategic Planning we see strategic planning as a systematic
way to anticipate and respond to the challenge of change.

3. The importance of strategic planning is in the small number and the long term impact
of the decisions embodied in the strategic plan. These decisions are those required
in facing up to the most important challenges facing an organization. It helps in
coming up with a clear definition of strategic planning to understand the purpose of
strategic planning. These strategic planning issues are characterized by the size of
their possible impact on organizational performance and the time span of the impact.
The geographic scope and impact may also set issues apart as strategic. Many more
organizations of all types and sizes are having to consider this matter in an
international context. Global strategic planning is a process adopted by organizations
that operate internationally in order to formulate an effective global strategy.
An effective strategic choice process positions an organization for making
sustainable strategic decisions. Learn about the five simple components of strategic
planning that reduce risk and dramatically improve long-term performance of your
organisation.
Use strategic planning principles to keep your corporate strategic planning process
on track. Formal strategic planning as a group decision making process benefits
greatly from formalizing of the procedures involved.
Strategic planning and business planning are separate and related, and the idea of
merging them under the umbrella strategic business planning is not useful.It is
important to be clear about different forms of planning, and in particular the
differences between operational and strategic planning.
A persistent problem for some organizations is the difficulty of getting strategic plans
implemented. Applied strategic planning blends strategy formulation with the means
of managing strategy implementation.
Useful strategic planning models include clear procedures for objective setting,
option generation, results monitoring, issue clarification, and participant engagement.
Corporate level strategy covers the strategic scope of the organization as a whole,
and for most organizations is the only strategic plan required.
We have explained in detail what strategic planning is, and that leaves us to clarify
what we mean by strategy and strategic. A top manager approved decision that has
substantial long term effects, and is accompanied by an integral risk analysis is
strategic.
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5. Benefits of Strategic Planning
apply to the organization as a whole
The benefits of strategic planning at the corporate level include consensus on key
issues and strategies to address them, commitment to, and capacity for
implementing the strategies, clearer communication of priorities, improved
cooperation among groups responsible for achieving strategic objectives, and more
effective management control of strategic initiatives. All of these benefits of planning
can contribute to enhancement of corporate performance over the long term.
The Argenti Strategic Planning Process can improve the Performance of Your
Organization by helping you to find Strategic Elephants!
Before elaborating on these benefits of strategic planning, I want to clarify some
terms involved.
Does strategic planning improve corporate performance?
The ultimate benefit of strategic planning would be that it contributes in some
measurable way to improving overall organizational performance.
However, there is little agreement on the extent of any such contribution. Some
research looks at the relationship between strategic planning and organizational
performance. Measurement and conceptual difficulties make this a challenging
endeavor. For example, varying approaches to selecting indicators of corporate
performance make comparison over time and across enterprises and industries
difficult. Such problems obstruct replication of work which might improve our
understanding of any possible relationship between organizational performance and
strategic planning and management.
In addition to difficulties over defining and measuring corporate performance, the
studies do not even agree on what ‘strategic planning’ means. Strategic planning
may variously be confused with operational planning, business planning and
budgeting. Some people define strategic planning on the time span of the decisions.
For example, they may define a plan with more than a one-year planning horizon as
strategic, while any plan of less than one year they see as ‘operational’.

6. A definition of corporate strategic planning
Here I define strategic planning, consistent as a systematic, formally documented
process for deciding the handful of key decisions that an organization, viewed
as a corporate whole, must get right in order to thrive over the next few years.
Decisions that we can call strategic decisions are those likely to affect organizational
performance for some years. So trying to find a link between strategic planning and
performance over periods of say less than three to five years is unlikely to be helpful.
The contribution of strategic planning to organizational performance
A few early studies suggested a direct positive relationship between formal corporate
strategic planning and improved organizational outcomes. Some others were
inconclusive, and a few seemed to suggest a negative relationship.
On balance however, it appears that at least the formal planning process surfaces
relevant issues and options that would not otherwise be considered, and this may be
one of the benefits of corporate strategic planning. Making sure that top managers
are paying attention to the right things is a valuable outcome of the process.
A few meta-analyses address the apparent inconsistency in the research results.
These confirm the difficulties associated with varied approaches to defining strategic
planning and the lack of agreement on performance indicators.
A useful meta-analysis or review of research on the link between strategic planning
and corporate performance is J. Scott Armstrong (1982), The Value of Formal
Planning for Strategic Decisions: Review of Empirical Research, Strategic
Management Journal, 3, 197 - 211.
Armstrong examined the details of the strategic planning process, the setting of firm
level objectives, and strategy implementation. He concluded that, despite difficulties
in making the comparisons, corporate strategic planning does benefit businesses in
terms of increasing the probability of improved performance. The chances of
improvement, even with partially carried out planning processes seem to run at
about 80%, which is significantly higher than for many other management tools.
Studies in some other sectors and for smaller businesses confirm these findings.
The benefits of strategic planning- magic bullet or waste of time?
Still a few see strategic planning as an empty or symbolic ritual that makes little or no
contribution to corporate performance. Others see strategic planning as a magic
bullet that almost guarantees improved performance. Obviously improved

7. performance is a desirable result. However, employing formal strategic planning
does not guarantee improved results. The reality seems to be that even employing
just a few of the essential procedures of strategic planning there is at least an 80%
chance of improved corporate performance.
This may make us more confident to recommend corporate strategic planning as an
aid to improving organizational performance; however, we must accept that the
situation is so inherently complex that we cannot guarantee that strategic planning
always improves performance.
I simply assert that one of the potential benefits of corporate planning is improved
performance of the organization. It contributes to improved performance by enabling
and enhancing a range of other things in the organization that contribute to
performance improvements.
There are a few benefits of strategic planning
From my own experience, I strongly believe that a formal logical systematic
corporate strategic planning process like the Argenti process, that is designed with
the realities of organizational life in mind can contribute those things that will
positively affect corporate performance. Therefore, we look to the multiple benefits of
strategic planning that can make this contribution.
What the Argenti Strategic Planning Process guarantees is that the process will
achieve what it is designed to do. The design and deployment of the Argenti process
provides the benefits of strategic planning that together improve the probability of
improved corporate performance. If even partially implemented formal processes
have an 80% chance of improved corporate performance, then we can expect
significantly higher rates of achievement with a process that is specifically designed
to yield the benefits of strategic planning that I call the ‘Seven C’s’.

8. The benefits of strategic planning and the Seven C’s
The benefits of strategic planning at the corporate level include-
 consensus on key issues and strategies to address them,
 commitment to implementing the strategies,
 capability building,
 communication of priorities,
 cooperation among groups responsible for achieving strategic objectives, and
 control of strategic initiatives. And all of this can contribute to
 corporate performance improvement.
Surveys show long term rate of satisfaction with strategic planning among managers.
Over the years strategic planning has been in the first or second spot. This may be
an indirect confirmation that that there are significant benefits of strategic planning.
See the Bain Management Tools & Trends 2013.

9. Importance of strategic planning
What determines the importance of strategic planning is the small number and the
long term, organisation-wide impact of the decisions in the strategic plan. The
corporate strategic planning sits above and informs all other plans in the
organization.
The strategic plan is the master of other plans.
|Plan Ahea|
|d|
“Failing to plan is planning to fail”. This often-heard quote
from Alan Lakein, the popular author on time management, is
a reminder that many of the day-to-day operational struggles
we face in organizational life had their seeds sown in the past,
when we failed to think ahea . . .d.
You cannot predict the future
True, you cannot predict the future. No manager has a crystal ball in
his or her brief case. Every day has its own “we couldn’t see it
coming”. Nevertheless, many severe day-to-day operating problems
have, as their origin, a failure from months or years earlier- a failure in
strategic planning. Simply, absence of strategic planning, or poor
strategic plans, usually lead to tactical “days you’d rather forget” of
operating nightmares, some of which can last months.
The importance of strategic planning in reducing these "days you would rather
forget" cannot be overemphasized. My definition of strategic planning is “A
systematic, formally documented process for deciding the handful of key decisions
that an organisation, viewed as a corporate whole, must get right in order to thrive
over the next few years.“
Note that in this definition it speaks of the strategic plan being for the organization
‘viewed as a corporate whole’. The kind of strategic planning we are talking about
used to be called ‘corporate planning’. In a sense this makes the importance of
strategic planning blindingly obvious. Get it right and the whole organization is
impacted, and strengthened towards better long term performance, get it wrong and
... !
Strategic planning gives overall direction

10. Strategic planning can provide an overall strategic direction to the management of
the organization and gives a specific direction to areas like financial strategy,
marketing strategy, organizational development strategy and human resources
strategy, to achieve success. These other kinds of planning, some of which are
confused with strategic planning are intended for parts of the organization, or specific
functions or processes within the organization. All of these other types of planning
should be guided and informed by the strategic plan.
Strategic planning is planning for the organization as a whole
To repeat strategic planning involves planning for an organization as a whole - as a
corporate whole. So corporate strategic planning is not product planning, production
planning, cash flow planning, workforce planning or any of the many of other sorts of
planning conducted in today's organizations. All these are designed to plan parts or
sections or departments of organizations. Most companies, even quite small ones,
already employ product development managers, marketing directors, production
planners and finance controllers to look after the planning of these various parts, and
when you do strategic planning you certainly do not want to do all these again under
a fancy new name.
As soon as a strategic plan starts to spell out detailed production plans, workforce
plans, finance plans, and so on, it is going to overreach and become a initiative-sapping
set of edicts from Head Office. The importance of strategic planning comes
not from the degree of control or supervision, and the level of detailed instruction it
includes, but for the scale, time horizon, and importance of the decisions it
embodies.
Strategic planning is corporate. You can only have a strategic plan for an
autonomous or quasi-autonomous organization; you should not have one for any
section, part or fragment of an organization unless it is quasi-autonomous, like a
profit centre, or a wholly owned subsidiary.
However, an indirect tribute to the importance of strategic planning is made by the
common appropriation of the term ‘strategic’ to describe all manner of other partial
plans.
Importance of strategic planners
Some planners seem to think that strategic planning means planning the whole
organization and so they produce vast schedules showing what is going to happen to
every tiny corner of the organization for years ahead in meticulous detail. It is
possible to plan ahead in great detail for short periods of time; it is also possible to

11. plan ahead for very long periods, although only in outline. To try to plan in meticulous
detail over long periods, however, is quite misguided.
Some people may become suspicious that the ‘strategic planners’ who do this are
only trying to cultivate a greater mystique around the practice of strategic planning.
They seem to be saying that you need to be very brilliant to do strategic planning.
This is to confuse the importance of strategic planning with the self importance of
those who se themselves as 'strategic planners'. Top executives in companies with
strategic planning departments get frustrated by 'planners' in their ivory towers,
striving for an unattainable perfection in the messy reality of an uncertain world.
The importance of strategic planning is that it is planning for the corporate whole, not
for its parts. It is not business planning, although it should inform and shape the
business plan, it is not production planning, although it should guide what is
produced, it is not workforce or technology planning or any other type of partial
planning, and it definitely is not marketing, even though it guides who to market to
and where to market. It is not coordinating, forecasting or budgeting. It is a process
designed to yield a corporate strategic plan - a statement of strategies designed to
affect the long term performance of the organization as a corporate whole.
The small number and the great impact of the decisions gives strategic
planning its importance
The purpose of the corporate planning process described
elsewhere on this site is to reach an enthusiastic consensus
among the top executives in an organization as to the handful
of decisions they have to take in order to place their
organization in a strong position to face the long-term future.

12. The purpose of strategic planning
Simply put, the purpose of strategic planning is to set overall goals for your
organization and to develop a plan to achieve them. This involves taking time out
from the daily grind to reflect on the longer term future of your organization. The
reason to carry out strategic planning is to agree on a way to improve the long term
performance of the organization.
The Argenti Strategic Planning Process can improve the Performance of Your
Organization by helping you to find Strategic Elephants!
In my view, improved performance is a desirable result of using a systematic process
of strategic planning. However, employing formal strategic planning does not
guarantee improved results. What a well designed systematic process of strategic
planning guarantees is that the process will achieve what it is designed to do.
What is corporate strategic planning is supposed to do?
The aim of strategic planning is to obtain a consensus among the top people in an
organisation concerning its very destiny.
The primary purpose of strategic planning is to get all those who hold the reins of
power facing in the same strategic direction, agreeing what the few long term top
issues are and how best to deal with them.

13. When such a consensus is achieved morale and motivation are impressively
enhanced. This agreement, understanding, and alignment are key enablers that
contribute to improved organizational performance.
What is corporate strategic planning?
Here I define strategic planning as a systematic, formally documented process for
deciding the handful of key decisions that an organization, viewed as a corporate
whole, must get right in order to thrive over the next few years.
Strategic planning then is designed to guide and encourage those in the organization
who take the major decisions to address the matters most likely to impact the future
performance of the enterprise. This is facilitated by adopting a deliberately
methodical process. This process is one that is specifically designed to flush out
these big strategic issues, called in the Argenti way, strategic elephants. More on the
Argenti way is available here.
Most other approaches stop at considering the goal of strategic planning to be
setting overall goals for the organization and then developing a very detailed plan to
achieve them. Too often the listing of a large number of issues and the forest of
details involved in addressing them makes the big picture clouded or crowded with
minute concerns. This creates opportunities for particular parts of the organization to
get their concerns and views on the agenda, and the requirements of the
organization as a corporate whole do not get the consideration they deserve.
The stress in this view of the purpose of strategic planning is about the handful of
major performance affecting issues, and the very few corporate strategies needed to
address them. It is the size and scope of these issues that makes the plans strategic,
not any particular tool, technique, or currently fashionable matrix.

14. Components of strategic planning
There are five key components of strategic planning that, if carried out effectively,
can help reduce risk and dramatically improve long-term performance of your
organisation.
Make sure that any system of strategic planning that you use, or strategic planning
process that you follow, has formal, clearly documented and communicated, simple
steps for these five essential components of strategic planning.
1. Engaging commitment
2. Setting long term strategic objectives for improved performance of the
organisation
3. Generating strategic options
4. Evaluating and deciding on strategies
5. Monitoring implementation of the strategies against the long term objectives.
I call these components of strategic planning the engager, aimer, option generator,
strategizer, and monitor.
1. Engager
It may seem like a blinding flash of the obvious, but strategic planning is something
people do! Yet in many descriptions of the elements of strategic planning processes
people don’t get much of a mention. The descriptions and the process flow diagrams
seem more like machine wiring diagrams than a process of strategic planning
involving interactions among people.

15. By contrast I believe that engaging commitment from those
people who will be affected by the plan is one of the most
vitally important components of strategic planning. The first
of the key elements of strategic planning should be a
means of engaging the right people at the right time in the
process of strategic planning.
These people include primarily the Chief Executive Officer and their immediate
reporting managers, and the layer of staff or management at one remove from the
Chief Executive Officer (CEO). In turn the CEO must engage with the governing
body, who in turn engage the beneficiary groups they are there to represent. Other
stakeholder groups may possible be affected by the implementation of the strategic
plan in the operation of the enterprise. Their interests must be respected. For more
detail on who these people are, and how they may be engaged in the process see
strategic planning process.
It must be remembered that the processes for engaging people operate in various
way in all the other components of the planning process.
2. Aimer
The second of the vital components of strategic planning is
a means of setting long term strategic objectives for
improved performance of the organisation
Every organization, whether private company or nonprofit
organisation (NPO), should set out to benefit one clearly
defined group of beneficiaries, and a single, long term,
verifiable, target figure should be set to reflect what it is trying to do for them. If it
cannot set such a target, the organization should be reformed until this becomes
possible.
The intended beneficiaries must be defined as one homogeneous group; in the case
of the business enterprise it is the owners or shareholders.
The benefit offered must also be homogeneous and capable of definition in just a
few words. In the business context, the proposed benefit is something like ‘increased
wealth’.
The benefit must be capable of being targeted and of empirical verification-essentially
then, it must be quantifiable.

16. It must be of perceived significance to the beneficiaries, e.g. the benefit resulting
from the point of view of the shareholders is ‘improved prospects for an acceptable
mix of capital gains and dividends within a risk profile that is tolerable’. For more
information go on how to set the long term strategic objectives for any organization
go to Corporate Objectives.
3. Option generator
Formal planning calls for the generation of alternative
strategies. Generating strategic options is one of the
central components of strategic planning.
This strategic planning element of generating options
relies on having done your homework on the key factors
that will shape the feasible options available and in the strategic situation the
organization is facing. Only then can the planning team engage in requisite strategic
choices. The relevant strategic factors include all those unearthed from the
strengths, weaknesses, opportunities, and threats analysis, or SWOTs.
Alternative strategies generated in this component of strategic planning can improve
the adaptability of the organization in two ways.
First, by explicitly examining alternatives, it is likely that the organization will find
alternatives that are superior to the current approach.
Second, the organization will inevitably encounter environmental changes; if
alternative, or contingency plans have been considered for these changes, the
organization can respond more quickly and effectively.
For processes of finding all the relevant significant strategic factors go to SWOT
analysis, and for generating the alternative strategies see business strategy or
strategic planning for non profits.
4. Strategizer
Having engaged the right people, set targets and forecasted to be able to calculate
the size of the performance gaps to be closed, and brainstormed an array of relevant
strategic options, the next of the components of strategic planning that comes into
play is the activity of strategy making. This strategizing component of strategic
planning involves evaluating and deciding on the handful of specific strategies most
likely to achieve the long term risk managed performance improvement being sought
over the next few years.

17. It is all too easy to go with the bright ideas that emerge from brainstorming strategic
alternatives. After all this fun comes some really challenging hard work in leading to
the final decisions around the set of strategies to which the organization will commit
itself.
Having planned the work of implementing the strategic
plan, you need a system in place for working the plans as
they get implemented. The plan should provide for formal
reporting at agreed intervals. To allow for corrective action,
the monitoring system as the last of the components of
strategic planning should be designed to address the
same objectives and factors determined as significant throughout the planning
process.
All of the components of strategic planning should align well with one another in their
focus of the ultimate goal of delivering some clearly defined benefit to the intended
beneficiaries of the organization.

18. Strategic Planning Models
for all seasons and different reasons
In the matter of choosing or designing strategic planning models for your
organisation, two extremes should be avoided. Some people might claim that there
can be only one model of strategic planning for all organisations and at all times. If
only life were so simple!
On the other hand some people claim that everything is so fluid and always
changing, and every organisation is so unique, that no formal model of strategic
planning can be of any help.
I like to avoid extremes. That sometimes puts me off side with everyone!
It may be true that no single formal strategic planning model will suit all organisations
in all circumstances, and a few formal procedures can be the basis of a small
number of models of strategic planning, to suit a large number of organisations in
most circumstances.
There may well be conditions in which no strategic planning framework is currently
relevant or useful.
Keep the five strategic planning essentials in mind
Various strategic planning models have evolved over the years to suit the needs and
cultures of various types of organisations, management styles, and the state of
understanding of the strategic dynamics of the particular organisation in its
environment.

19. The useful models that have survived usually have all or nearly all of five essential
procedures.
Any effective strategic planning approach has to have means of-
1. Setting objectives for long term performance of the organisation
2. Analyzing the factors internal to the organisation and in the environment of the
organisation that give rise to the most important issues for any strategic plan
to address
3. Generating strategic options for addressing the most important issues
4. Deciding among the options
5. Monitoring the results of implementing the strategies.
A number of useful strategic planning models or approaches have developed to suit
different organizational contexts and management styles.
Factors and variables in choosing strategic planning models
Some of the considerations in selecting and assessing strategic planning models
include-
 organizational environment
 organizational health
 stage of development of the organization
 organization size
 structure of the organization
 organizational purpose
 attitudes to 'planfulness'.
Organizational environment
The degree of stability or turbulence of the environment may influence the duration
and sequence of elements in the strategic planning process. A very stable
environment may permit or encourage a more considered, or 'leisurely' approach,
with a great deal of time for data analysis, and widespread consultation. a rapidly
changing or very turbulent environment may require a more rapid fire approach.
The kind of influence exerted over the governance of the organisation and what is,
and who is, included in any strategic planning process may influence the model of
strategic planning employed. For example, a government business enterprise (GBE)
or public service agency may be required by legislation to follow a particular
approach to strategic planning, or as it is still sometimes called in the public sector
‘corporate planning’.

20. Organizational health
The state of organizational health may influence the strategic planning approach. An
organization in some kind of trouble may be advised not to do strategic planning at
all, and a small thriving organisation may be able to manage strategic thinking
informally. When a company is going bust, the focus should be on immediate rescue
or winding up processes, not long range performance improvement through strategic
planning. Any organization run by an autocrat would be wasting everyone's time by
engaging on elaborate participative processes. When a brief major upheaval is in
prospect, then the quality of attention needed for strategic planning may be in short
supply, and should be deferred.
Stage of development of the organization
Where an organizational is in its life cycle may be important in the choice of strategic
planning.
The small and very entrepreneurial start-up organisation may be so driven by an
almost missionary zeal, by the focus on a particular market, application of a new
invention, or similar passion that no special formal effort at strategic planning is
required.
As an organisation grows it reaches a threshold where it needs to introduce more
professional management practices, and one of these probably should be formal
strategic planning. However the model of strategic planning appropriate for the first
formal introduction of the process might be a good deal simpler than that required a
complex group structure of a multinational business.
Structure of the organization
The structure of managerial accountability, the geographic scope, multiplicity of lines
of business, may all require adjustments to the sequencing of tasks, and issues
around who should be involved in various decision processes, as well as the
sophistication of necessary data gathering for the decision-making.
Organizational purpose
The strategic planning approach used may also be influenced by whether or not an
organisation is a for-profit business or a non-profit organisation. Strategic planning
models for nonprofits can become especially complex because of the usual
insistence on having multiple objectives, and including scope for a multiplicity of
stakeholders or interest groups.

21. Attitudes to 'planfulness'
Some organizations by tradition or by management style, or the kind of people
employed in them have different attitudes to being involved in formal planning
processes. Academic institutions have issues over status of the persons involved in
planning and decision making that may not correspond to the managerial
accountability hierarchy in the administrative area of the organization, and this may
set up a need for separate lines of data analysis and decision making, as well a
structuring clear opportunities for different groups to be involved in debating the
issues to be addressed. Some creative organisations in the arts area for example
may reject anything that seems excessively formal, rationalistic, or bureaucratic in
nature. Selecting you strategic planning framework needs to take these things into
account.

22. What is strategy?
A common answer to the question ‘What is strategy?’ would be something like this. A
strategy is a plan of action designed to achieve a specific goal. Strategy is all about
gaining or at least attempting to gain, a position of advantage over adversaries or
competitors.
Being forward looking there is always uncertainty and risk associated with deciding
strategy. The question ‘what is strategy?’ therefore also implies a set of strategic
options from which one chooses a course of action to achieve advantage. Strategy is
more about a set of options or "strategic choices" than a fixed plan.
Henry Mintzberg from McGill University has answered the question what is strategy
by acknowledging the multiple meanings that may be employed.
Mintzberg answers the what is strategy question with 5Ps
The word "strategy" has a multiplicity of meanings, and in his writing on strategic
management theory, Henry Mintzberg, more than most authors explicitly
acknowledges this. He identifies five common usages of the term strategy, each
beginning with ‘P’.
Plan
Commonly strategy is understood as a plan - some sort of deliberately and
consciously chosen course of action. This means strategies are made in advance of
the actions to which they apply, and they are developed consciously and
purposefully.

23. Ploy
A strategy may be a ploy in the sense of a particular manoeuvre designed to mislead
or distract a key player such as a business competitor.
Pattern
This takes us to the end result of plans that turn into action, decisions that are having
some result or impact. If strategies can be intentions embodied in plans to take
action, when the actions are taken, the strategies may be regarded as the realized
decisions. The results of decisions in the form of a cascade of actions can take on
forms which may or may not be very close to what was intended. There will be a
pattern, or a set of patterns in the stream of actions. Mintzberg affirms that a strategy
may be consistency in behaviour, whether or not intended. The definitions of strategy
as plan and pattern can be quite independent of one another: plans may go
unrealised, while patterns may appear without a prior formally documented set of
decisions or plan.
What is strategy? Plans are intended strategy, whereas patterns are discernible in
realized strategy. From this Mintzberg distinguishes deliberate strategies, where
prior conscious intentions that were realized, and emergent strategies where
patterns develop in the absence of such prior planning, or despite it.
Position
What is strategy/ Mintzberg suggests that it may be considered as a position. He has
in mind the location of an organisation in its environment. This may be a geographic
intention like expanding internationally, or the position of a business in a particular
industry. By this definition strategy becomes a matching mechanism, mediating the
relationship between organisation and its context.
Perspective
Strategy may be a perspective in the sense of a persistent mindset regarding the
world in which the organization operates. This mind set or perspective is shared by
the most influential members of the organization. It could be likened to an
organizational personality. This worldview shows in the intentions and/or the actions
of members, as individuals bound by common thinking and behaving.
What is strategy? It is a plan and a position
All five of Mintzberg’s P words seem to be plausible suggestions for how the word
strategy is sometimes used in various contexts. However in general management

24. practice, probably plan or position most frequently answer the question; ’what is
strategy?
Remember at the start of this section on what is strategy, I said that a strategy is a
plan of action designed to achieve a specific goal. Strategy is all about gaining or at
least attempting to gain, a position of advantage over adversaries or competitors. In
many contexts strategy is seen as both plan and position of advantage.
Lets us look at this business of strategy as position of advantage.
What is strategy? It is a position of advantage
Harvard University’s Professor Michael E Porter addressing the question ‘What is
strategy?’ in a classic article by that name in 1992 defined strategy by separating it
from operational efficiency and effectiveness, and putting it in terms of market
positioning.
The article is still available at Harvard Business Review.
Porter asserts that operational effectiveness (OE) means performing similar activities
better than rivals. Better means more efficient, faster, and cheaper. It is necessary to
achieve superior profitability. However, while OE is necessary, it is not sufficient.
Operational effectiveness by itself is not a strategy. It is just the price of admission to
game so to speak. An enterprise needs to establish a difference that it can sustain.
Strategy is about differentiating your organization from competitor enterprises. What
is strategy? It is about being different in the choice of a different mix of activities to
provide a product or service. Strategic positions can emerge from three distinct
sources which serve as a basis for positioning:
 Variety-based positioning: A company can specialize in a subset of an
industry’s product (e.g. sell office chairs only, not office furniture in general)
 Needs-based positioning: A company can try to serve more needs of a
target group than rivals (e.g. not only sell office chairs but other office furniture
and perhaps business equipment as well)
 Access-based positioning: A company can segment customers who are
accessible in different ways (e.g. only sell chairs in central business districts
of major cities).
What is strategy? For many a business it may be a sustainable competitive
position achieved by making choices that require trade-offs.

25. Trade-offs required when two activities are incompatible (e.g. you sell low-cost chairs
while offering highly customized office design and fit out services. Companies have
to make sure that their activities are coherent. This implies refraining from certain
activities.
Strategy is about choosing what not to do, as much as it is choosing what things to
do..
Another important aspect is how an organization combines activities. By creating a fit
among activities, competitors find it harder to imitate the configuration of activities
and resources that make up the value delivering business model.
Obviously, the strength of an enterprise can result from a combination of activities.
We can think of themes (e.g. low-cost), which span across activities. Strategic fit is
fundamental not only to the competitive advantage, but also to the sustainability of
that advantage.
The biggest threat to strategy is the desire to grow. Trade-offs set by the strategy
seem to limit growth. Trying to compete at numerous levels at once create confusion
and undermine organizational motivation and focus. The solution is to grow by
deepening the strategic position. This means making the activities even more
distinctive, strengthening fit, and communicating the strategy to new customers.
What is strategy when we look at organizations in general?
Helpful as the Porter insights can be in strategic planning discussions and decision-making
about a company’s marketing strategy, it may not provide the comprehensive
answer to the question what is strategy required for all organizations.
Elsewhere I have defined strategic planning as a systematic, formally documented
process for deciding the handful of key decisions that an organisation, viewed as a
corporate, whole must get right in order to thrive over the next few years. The
process results in the production of a corporate strategic plan.
A set of statements describing the purpose and ethical conduct for an organisation
together with the specific strategies designed to achieve the targets set for each of
these.
So there we have it - strategic planning, and strategic plan defined.
Note that the definition does not confine itself to the kind of ‘key decisions’. They are
not specified as only marketing decisions. So this definition of strategic planning is
applicable to non-business organizations, as well as to business enterprises. It also

26. allows for the fact that not all strategic decisions faced by a company necessarily fall
into the market strategy basket. ’
So now let me offer an alternative answer to the ‘what is strategy’ question.
What is strategy?
Let us distinguish between 'A strategy' and 'A Strategic Plan'. To do this I see the
need for these 5 criteria.
A strategy has 5 essential elements which distinguish it from all other planning types
including, of course, operational, budget, business, project....
A strategy is 'a decision which will make a substantial difference to the long term
performance of an organization. Inevitably, therefore, it can be determined only by a
very senior member of management. Moreover, because it takes effect over a long
time horizon, a statement as to its risk to an organization is an essential
concomitant.'
In other words, any decision which is approved by a very senior manager, has
effects that are substantial and long term and is accompanied by an integral risk
analysis is strategic. The absence of any one of these suggests it is not strategic.
Five essential elements of a strategy
A Strategic Plan consists of a very small number of strategic decisions which, taken
together, are intended to have a very substantial effect on the long term performance
of an organization. Such a plan will contain an integral risk analysis and can only be
approved by the organization's CEO, and in some cases the governing body.

27. You may be bothered by 'very small number'. I suppose it is a judgment thing: a
strategic plan containing 20 strategies could be partially strategic but must surely
contain a large number of non-strategic decisions. Why? Because, by the above
definition, the strategies in a strategic plan, are intended to have 'a substantial
effect...' and it is not practically conceivable for a strategic plan to embrace 20
individual strategies all of which have a 'substantial effect' on overall performance.

28. Strategic Planning Principles
Recognizing, understanding and being guided by a few key strategic planning
principles will improve the development and implementation of corporate strategic
plans. Below I will outline a few of the planning principles I havefound mosr useful.
Accountability for strategic planning
The first and foremost of the strategic planning principles is that
strategic planning is a managerial accountability inherent to top
management roles.
Strategic planning is central to top management stewardship of the
organization entrusted to them. Responsibility and accountability for
strategic planning is not an optional extra. It is a responsibility that top managers
may seek support and assistance with. However, it is not a responsibility that can be
delegated away to ‘planning departments’, even if they are headed up by someone
called a Chief Strategy Officer (CSO), who reports directly to the Chief Executive
Officer (CEO).
Nor can the responsibility for strategic planning be given away to a ‘strategy
consultant’. No matter how prestigious or how high their fees the strategy consultant
cannot be held accountable by the governing body for the strategic plan of the
organization. This does not rule out using external assistance for aspects of the
strategic planning process. In many situations it is very helpful to have an
independent person facilitating the process. But the ownership of the plan content,
which means the decisions and commitments to action, belongs to the CEO and
other managers.
Corporate strategic planning
The second of the strategic planning principles has to do with the level of he
organization that strategic planning relates to. When I refer to strategic planning in
this context it means corporate strategic planning. This planning principle asserts
that corporate strategic planning is concerned primarily with the performance
of the organization as a corporate whole, and not with planning for functions or
parts of the organization.
It follows from the first of the principles of strategic planning that, if it is an
accountability of the corporate managers, then it is essentially ‘corporate planning’.
In fact at some stages in its history, and still in some contexts, the process we are
focused on was, and occasionally still is, called ‘corporate planning’.

29. However, I believe it is the planning for improving the long run performance of the
organization as a whole that is the essence of this second of the strategic planning
principles, and not the naming of the process that is our concern.
For a fuller explanation of what we mean by corporate strategic planning go to -
What is strategic planning?
Tracking corporate performance
Because strategic planning is planning for the long run risk adjusted performance of
the organization as a whole, strategic planning requires performance metrics
that track the progress of the organization as a corporate whole.
Another of our key planning principles which follows on from this is the secret to
unlocking appropriate overall organizational performance metric. This principle is to
define the purpose of the organization in terms of delivering a clearly defined
benefit to a level satisfactory to the intended beneficiaries of the organization.
This is the way to define the fundamental purpose of the organization.
This is the third of our strategic planning principles. This is part of the larger and
crucially important subject of corporate objectives.
Principles of strategic planning relating to strategic decision making
In light of the two previous planning principles regarding corporate performance
measurement and clarifying organizational purpose, we can say that corporate
strategic planning involves deciding on strategies that have a high probability
of achieving satisfactory performance at a very low risk of organizational
failure.
So we see risk management as inherent in the strategy making process.
Corporate strategic planning almost always requires that top managers make hard
choices from among many apparently desirable options. The desirable opportunities
available to many organizations appear almost without limit, and they seem to
present themselves very frequently. Therefore, it is vital that the strategic planning
results in decisions that are so robust, and solidly committed to by the organization’s
leadership, that they are confident to make a range of other choices. These other
choices may be the making of hard decisions about what not to do as well as what to
do. We regard this as another of our strategic planning principles. Strategic
decisions should make it clear what the organization is rejecting, as well as
what it is committing to.

30. This is not to rule out all opportunities that arise outside the scope of
its current strategic plan.
“…chance favors only the prepared mind.”–Louis Pasteur.
Planning is partly about being ready to take advantage of real
opportunities. Opportunity, by its nature is something that may be
better than our current intentions. However, without sound plans,
resulting from a thorough planning process, we would find it hard to recognize,
evaluate and judge whether the opportunity should be taken seriously opportunity.
This is why a systematic evidence-based SWOT analysis is so important in the
strategic planning process.
This suggests another piece of advice to include among our strategic planning
principles.
The strategic planning process should be formal enough to enable the tracing
of the decisions to information and evidence on which the decisions were
based.
This information also provides a reference point against which to monitor the
execution of the plan over time.
I would like to say the following is among the principles of strategic planning. Keep it
simple. However, I think it would be preferable to say, although less easy to use a
strategic planning principle like ‘keep it requisite’. While urging the use of solid
evidence to clarify strategic issues, we need also to avoid analysis paralysis. And we
need to avoid reducing the analysis to a simple sharing of current fashions in
strategy.
A useful rule of thumb, rather than a full member of our set of strategic planning
principles, is to limit the strengths, weaknesses, opportunities, and threats in the
strategic analysis to no more than six in each, or a maximum total of twenty four.
Limiting the number of elephant sized strategic issues to half a dozen each cell of
the SWOT analysis chart will reduce the possibility of the corporate strategic
planning exercise will becoming an operational planning exercise, in which the team
will attempt to attend to every tiny detail and thus miss the whole purpose of the
strategic planning process.
Engagement in the process

31. The final of this set of strategic planning principles has to do with participation in the
process. Although the first of our strategic planning principles indicated that
responsibility for strategic planning lay with the top managers of the organization,
this does not mean that only they do the planning. For example, the more people
involved in these SWOT appraisals the better. The knowledge and experience of the
participants contributes a richer picture of the required strategic requirements, and
their biases tend to cancel each other out.
Go to Strategic Planning Process for more information on how the strategic planning
process is conducted and who should be involved.

32. Operational and
strategic planning
We need to keep operational and strategic planning clearly distinct in our thinking
and discussion of planning in organizations.
Operational and strategic planning are linked decision processes, which should be
designed to inform and support one another for effective management of strategies
to improve overall performance of the organization, whether business or non profit.
The Argenti Strategic Planning Process can improve the Performance of Your
Organization by helping you to find Strategic Elephants!
At Simply Strategic Planning strategic planning refers to a systematic, formally
documented process for deciding the handful of key decisions that an organization,
viewed as a corporate whole, must get right in order to thrive over the next few
years.
In contrast, operational planning or tactical planning is a short-term, highly detailed
plan formulated by management to achieve tactical objectives. Operational or tactical
planning involves a systematic determination and scheduling of the immediate or
short-term activities required in achieving the objectives of strategic planning.
Clearly the time horizon of the decisions involved is a key difference between
operational and strategic planning. However, the difference between operational and
strategic planning is more than a matter of short or long term planning horizon.
Operational and strategic planning differ according to the decisions involved
In my view the number, scope and time span of the decisions involved are at the
heart of the definition of strategic planning. Operational and strategic planning are
distinguished primarily by the number, kind and time span of the decisions involved,
as summarized in this table.

33. If you see something that purports to be a strategic plan, and it has a list of 40
objectives for only one year with no overall corporate performance indicator to guide
evaluation of the overall implementation of the plan you are not looking at a
corporate strategic plan, and it is probably some kind of operational plan.
You can think of a strategic plan as a written long-range plan, which is founded on
an enduring corporate purpose, and including a small set of corporate strategic
objectives. A corporate strategic plan includes brief statements of a handful of
strategies indicating how to achieve the corporate strategic priorities. Strategic
planning also provides the indicators for assessing and controlling performance of
the organization as a corporate whole.
We define operational planning, on the other hand, as the setting of short-term
objectives for specific functional areas such as finance, marketing, and human
resources. Performance is monitored and controlled using management
performance indicators (MPI) or Key Performance Indicators (KPI) rather than
Corporate Performance Indicators (CPI) or Beneficiary Performance Indicators (BPI).
This latter is a tool unique in the Argenti Strategic Planning Process.
Strategic plans tend to be more general, and have longer time horizons than do
operational plans. Strategic plans normally cover a three-to-five-year and longer
planning horizons, while most operational plans usually cover periods of something
less than a year. Operational and tactical plans are more concrete and expressed in
practical day-to-day terms. Operational plans might include written manufacturing
capacity plans, inventory, and sales forecasts; and financial, human resource, and
advertising budgets, for monthly or quarterly periods.
Operational and strategic planning are linked

34. Despite the clear distinctions we are making it is also important to understand that
operational and strategic planning are interrelated and complementary decision
processes, which must link to each other, inform and support one another for
effective management of strategies.
Operational planning is the day-by-day, week-by-week, and month-by-month
planning for a myriad of local and functional activities; strategic planning sets the
overall direction of your organisation as a whole, its destiny if you will. The decisions
that constitute the strategic plan include what the enterprise is not currently doing,
but should be doing. The choices of what to do imply other things that the
organization deliberately chooses not do. The strategic plan embodies very big
decisions with major consequences for the overall performance.
Strategic and tactical planning are different in kind. The two forms of planning must
be linked, and integrated, and must not be confused.
Avoid confusion between operational and strategic planning
Summarizing - strategic planning is not a lot of things it is often confused with:
 It is not marketing, product planning, market research, marketing strategy,
business model designing, IT strategy, or planning for any other particular part
or function.
 It is not long-range planning, business planning or budgeting.
 It is not forecasting.
 It is not finance planning, cash flow planning, human resources planning,
production planning, project planning
 It is neither co-coordinating nor operational planning.
 It is neither sophisticated nor advanced. It is essentially simple. However, that
does not mean is it easy!
Regrettably, I believe that much of the usual commentary on operational and
strategic planning falls into one or more of these unhelpful answers to the question
‘what is strategic planning?’ They are misconceptions, and they sometimes arise
from a deliberate tactic by academics, writers and consultants in this field — people
like me, in other words! Our problem is that, correctly defined and properly practiced,

35. corporate strategic planning is an embarrassingly small subject area. In practice, a
strategic plan, crucially important though it is, is a modest document of just a few
pages. It is easy to see why academics and consultants need to expand the
definition of corporate strategic planning in their books and assignments. They need
to throw in anything remotely relevant, such as business planning, marketing and
product development, strategic management, portfolio analysis, research into new
markets, financial planning and raising capital, acquisitions and mergers planning,
action plans, restructuring the management, managing the research function.
Many of these may need to come at the end of the corporate strategic planning
process. This is how the strategic plan gets translated into action. Operational
planning and strategic planning link in this practical fashion; to include them both into
a definition of strategic planning is quite misleading.
Operational and strategic planning are linked as a guide to action which flows from a
way of thinking. The key elements of the strategic plan should govern the behavior of
everybody responsible for operational planning. It enables organisations to think
through and document what they are doing, for whom they are doing it, and why.
Operational and strategic planning contrasted
A corporate strategic plan, then, consists of a very few but momentous statements
about the long-term future of the organization as a whole.
'We will merge with a competitor' is a message of the utmost simplicity but of huge
importance for any business - if they do merge life will never be the same again.
Notice the stark simplicity of this statement; contrast its half-dozen words with, say, a
hundred-page report on a new product.
Contrast it, too, with the alternative: 'We will not merge.' Surprisingly often the issue
in corporate planning seems to boil down to deciding between diametrically opposite
strategic directions. A parting of the ways; the company at a crossroads; the horns of
a dilemma; reassessment of its roots; diversify or, on the contrary, trim back to the
core; cut manufacturing costs or, on the contrary, increase them to add value; gain

36. share in the home market or, on the contrary, go for exports; go public or stay
private.
You may be surprised how bluntly these choices can be presented to managements
when they really get down to fundamentals. Issues that executives used to fight over,
sometimes for years, problems that have been examined by committee after
committee, pale into insignificance when the real strategic problems - the truly
elephant sized corporate issues - are finally identified, simply and starkly. The focus
of the top managers' thinking switches abruptly into the true area of concern.
Every company of every size and type occasionally has to make a big decision, the
sort of decision that affects its entire destiny for years or even decades into the
future, decisions which change not just parts or departments or sections of the
company but which alter its whole structure and the very nature of the company
itself. They are the sort of decisions that the company and its employees will look
back on in years to come and say, 'that was the year when …’
By contrast, operational planning may involve many detailed calculations. Working
out the capacity needed to produce a new line of products using materials different
to ones previously employed, with the associated transport, storage and other
logistics implications can be a very large complex and taxing effort.
However, we hope that the decision to go with this new line of products has been
taken at the right level where its organization wide implications could be assessed.
That is the job of the strategic planning process.
To find out more about the unique features of strategic planning look at the Argenti
Process.
Strategic choice
is central to strategy making
An effective strategic choice process positions an organization for making
sustainable strategic decisions.

37. At the heart of effective strategic planning lies the ability to surface the truly
important issues and to make good choices, in the process of deciding how to
address these issues.
I define strategic planning as a systematic, formally documented process for
deciding the handful of key decisions that an organisation, viewed as a corporate
whole, must get right in order to thrive over the next few years. The process involves
choosing strategically and results in the production of a corporate strategic plan.
Strategic decision making is a manager’s responsibility
In general management strategic choice refers to the view that, because of the
power relationships in various organizational contexts, people in roles with
managerial accountability are not simply restricted by obvious contextual factors
such as technology available or environmental factors such as market demand, but
they exercise sometimes considerable discretion.
Suggesting that organizational executives have
a considerable degree of choice is in contrast to
some extreme versions of a contingency
interpretation of managerial work. It is
sometimes suggested that managerial behavior
within organizational structures is ‘contingent’ on
these various contextual factors, like size,
technology, and environment trends.
I take the view that managers are in fact to
become aware of what choices they can exercise, even where the context seems to
constrain them to a great degree. Strategic planning is a key process or tool to
enable them to do this.
The thorough exploration of any possible strategic options can also prepare
managers for the inevitable departures from plan that life will throw up. Strategic
decisions and contingency planning for these circumstances go together.
The process of strategic planning creates a corporate strategy for the organization.
The process involves exploring a variety of strategic options on the road to isolating
the hand full of major strategic decisions that become the essence of the corporate
strategy.
These choices may be about such things as a business choosing when and where to
compete, or how to win against the competition in the industry segments it has
chosen.

38. For a nonprofit like a school it may involve choices about the student groups to be
educated.
What kinds of choices might we face in a strategic planning process?
Those responsible for the planning process are engaged in a process of surfacing
the really important strategic issues. Then, in the face of a range of uncertainties,
they need to explore the shape of the issues, the relationships among them,
comparing their relative potential effects on organizational performance, With the
strategic issues understood arrayed before the planning team, they can explore the
strategies in the 'choice space' open to them to address the issues or strategic
elephants.
The full process of strategic planning will be dealt with elsewhere. However before
setting out what is special about a choosing strategically, I will illustrate them with a
few examples.
The ultimate strategic choice
Right at the beginning of the process there is a need to agree
and state, or reaffirm, the fundamental purpose of the
organization. This is often set down in some founding charter
of some kind. It should include a clear definition of who are
the intended beneficiaries of the organization, and explain
unambiguously the kind of benefit they are entitled to expect
from the organization. To guide the management of the
organization in pursuing this purpose, they and the governors
of the enterprise will need some measure of performance.
These selections of intended beneficiaries, nature of benefit,
and indicator of delivering benefit to the beneficiaries, each
represent a most significant choice. The governing body and top management of the
organization in question need to be in clear agreement about each choice made in
defining the fundamental purpose of the organization.
Strategic choice and corporate performance
With these clear there is a need to set target levels of the overall performance in
terms of benefit to beneficiaries. Setting these levels in terms of deciding what would
be failure and what would be satisfactory performance each represent a major
choice.
Good corporate behavior is a choice

39. Setting the code of corporate conduct to be adhered to by the organization as it
strives to achieve the targets set for it may entail some other important strategic
decisions.
This does not mean having some generic and bland but oh so fashionable
statements about corporate social responsibility. Most of these statements do not
represent real choices, just empty slogans.
It does mean being very clear about what groups have a legitimate interest in the
way the organization performs to achieve its performance and how it behaves while
doing this. It also means as a minimum choosing to abide by the ‘no harm’ principle.
More proactively an organization could make the choice to engage constructively
and positively with these interest groups, and have them actively supporting the
organization in its pursuit of its purpose.
How to pursue the organizational purpose involves choosing strategically
In deciding a corporate strategy of major actions and projects to achieve the desired
levels of corporate performance, the corporate strategic planning team must
thoroughly analyze a number of key factors. These will include assessing the most
important capabilities of the enterprise, and honestly evaluating the shortcomings of
the organization. Additionally a review of the environment of the enterprise is called
for. This involves a search for trends likely to impact the organization, whether
positively or negatively. This analysis will be summarized in a short listing of the
most important strengths, weaknesses, opportunities, and threats for the
organization, or SWOT analysis.
The selection of what aspects of the organization and its environment to focus on
could involve significant choices.
Going back a few steps to the beginning of the process, the decisions on who to
include in or exclude from the strategic planning process could be another important
area of choice.
Jumping to nearer the end the strategic planning process, decisions on final strategic
plans will involve creating strategic options to address the strategic issues surfaced
through the preceding analysis. The task of exploring these choices to find the best
package of decisions is a creative and challenging one. The package of a few big
strategic decisions selected from the many possible options, is one that the
organization becomes committed to as the way forward for the next few years.
Having indicated some key points of the strategic planning process that could require
strategic decisionI will now talk more about the nature of these choices.

40. Learn the A B C of choosing strategically
Actually that is the A, B, C and D, as you will see
below.
I am strongly of the view that many strategic plans
suffer from those responsible formulating strategy
not having really faced up to the need for making
important choices during the planning process.
Sometimes this is because the planning team simply
does not know what they are looking for. So let me
list the key attributes of a strategic choice to help you spot the choices in the
sometime complex and shifting picture faced by those trying to decide the future of
an organization.
In the context of planning for the long term future performance of an organization a
sound choice is characterized by these four attributes:
Authenticity, Believability, Communicability and Deliverability.
Authenticity
Such choices must be authentic choices. For a strategic decision situation to be
authentic, it should be made from a number of, at least two, options which represent
viable alternatives. For these choices to be authentic they must stated so clearly that
it is obvious what an organization will do by following the options, and equally
important what it will not do.
The entity must choose who it exists to serve in some beneficial way. It must choose
what benefit tit will provide. For a business it must be clear which customers it will
cater to, and which markets it will not service. Authentic choices may also include
choosing the basis on which the business will compete, or how the firm will achieve
competitive advantage in the chosen customer segments of the market, and what it
will not do to compete.
An inauthentic choice does not plainly spell out what the organization will and won’t
do as a result. For example, many companies pride themselves on being committed
to a customer focus. Are we to honestly believe that any business would state in its
strategic plan that it will not focus on the customer, or even deliberately ignore the
customer? No genuine choice here.

41. I suppose that if the companies in question did find that their competitors were
choosing to deliberately follow the road not taken, that is, ignoring the customer, we
might reinstate the customer focus as a genuine choice!
If competitors take options rejected by particular organizations then we might say
that a strategic choice was authentic, was addressed, and taken.
Believability
A believable choice is one that can be traced back to some real basis in terms of the
evidence and commitments of the members of the team responsible for the strategic
planning.
Believable choices are based on relevant, representative, and trustworthy evidence
or are derived from such facts by sound logic. This stress on facts and logic does not
preclude some role for the intuition, emotional commitments, or personal beliefs and
values of the participants. However, it does acknowledge them, and their possible
influence on the strategic choice process.
In a well designed strategic planning process, the logic applied to the data can
traced, clearly stated, and be open to assessment.
Strategic choices and decisions flowing into the strategic plan from them will be less
believable, or convincing, to those required to implement them, if conditions are not
right. For example if strategic choices are perceived to be unduly influenced by the
relative political position of key players or their relationship with other participants in
the planning process, they will be less believable.
Anything that compromises the open and rigorous testing of strategic choices
through the planning process may undermine their believability, and the confidence
people have in the overall plan. For example, overuse of particular data to support a
prejudicial position may be as concerning as too little data.
Opinions, and apparent hunches, or just gut feelings may be useful inputs to
generating or discussing strategic choices. This is because they may be the product
of many years of relevant experiences and knowledge in the field under
consideration. A few decades of working in an industry subject to seasonal
fluctuations may give a manager a set of mental models of change in an industry that
can be a valuable and believable resource in considering a particular strategic
choice being considered by a planning team.
However rather than disregarding these ‘gut instincts’, and just like the ‘harder’ data
in the more formal accounting models, they need to be assessed for believability by
the planning team as a whole.

42. Communicability
A strategic choice may be authentic, and it may be believable, however, if it not in a
form that enables it to be effectively and efficiently communicated, it is a waste of
time. ‘Message received and not understood’. This is not simply a matter of the way
it is expressed or written. It is also about whether or not the choice is compelling.
When communicated through other forms of planning as well as the complex webs
of formal and informal communication channels required to get anything done in an
organization, any the choice made should be engaging to a variety of audiences.
These audiences include people who may have been remote from the formation of
the strategic choices. Yet these same people may be expected to implemented the
associated decisions, or at least adjust to their impact on them.
The communicability of the strategic choice becomes a kind of test of the
management team commitment. Members of the organization remote from the
decision making process, and yet with responsibilities for executing the strategic plan
will judge the enthusiasm of the management team by the way in which the top
managers communicate the strategic choice or choices. They will of course test the
logical sense of the strategic choice against their own experiences and, if found
wanting, the strategic choice will not have been fully communicated because it may
be rejected by the recipients. “Message received, understood, and not accepted’.
In addition to the factual content of the choice, the managers who have taken this
position need to also communicate their determination to make a choice to change
direction from current strategies. They also need to communicate their seriousness,
and willingness to do whatever it takes to help the organization through the transition
to this new position arising from the strategic choice made.
This brings us to the last major attribute of good a strategic choice, deliverability.
Deliverability
Surfacing the really important issues or strategic elephants, exploring choices
relevant to addressing these issues is all very well. Narrowing the choices to a small
number that meet the A, B and C already outlined is fine. However, a strategic
choice is not much use unless it can be executed.
That means the choice is not only Authentic, Believable
and Communicable. It must also be Deliverable, or Doable,
or…Executable. Enough with the alphabet block already!
Strategic choices that have been shortlisted for inclusion in
a corporate strategy need to be capable of being broken

43. down into a series of doable steps to be taken immediately, and can be further
broken down into medium and long-term achievable actions, with clearly stated
deliverables.
These larger authentic, believable, communicable corporate strategic choices must
also be able to be carried out in the real world. They must be capable of being
translated into clear budgets. Projects or action plans, with clearly assigned
accountabilities. They must be at least adequately resourced. As importantly they
must be planned with associated risk management practices in place to deal with the
inevitable obstacles that arise.
Structure of the strategic choice space
There are five main sets of procedures in the approach to strategic planning followed
here at simpley-strategic-planning.com. They are-
 Engaging commitment
 Setting long term strategic objectives for improved performance of the
organisation
 Generating strategic options
 Evaluating and deciding on strategies
 Monitoring implementation of the strategies against the long term objectives.
In terms of decision processes within this set of activities there are three key
components of the strategic planning process which generate the space in which
sound strategic choice may be made. They are-
 The strategic intent or objective set to improve the long term performance of
the organization
 The strategic issues distilled from the analysis of key factors relevant to the
overall situation of the organization in its environment, and
 The strategic options generated by the planning team.
The strategic choice space is in the area of overlap among these three components,
as depicted in this diagram. The shaded background suggests the pervasiveness of
contextual influences on the process.

44. Consideration of the other overlaps between pairs of components may stimulate
discussion and possible other thoughts to clarify what are the really important
elements in any decision about strategy.
Between intent and issue analysis there may be no feasible options apparent. Before
giving up it may be worth looking to see if the alignment between factors raised in
the analysis which seem relevant to objectives have been misread, or are alternative
forms of issues already aligned in the central strategic choice space.
Between intent and options it may be possible to identify early on that some options
are just not feasible.
There will of course be options thrown up that seem feasible, and to fit the issues
raised to some extent, and yet do not align well with the objectives. They may be
overly risky, or not align with the code of corporate conduct of the organization.
However, it is only in the space created by all three component circles overlapping,
that we find any logical candidate strategic choice for inclusion in the final corporate
strategy.
Honest and evidence based exploration of this space enables a reasonable and
possible set of strategies to emerge as if by magic. The ‘magic’ is that which comes
with of systematic hard work, and honesty in facing up to the really big challenges or
strategic elephants facing the organization, in its pursuit of longer term sustainable
performance.
When managerial ego becomes involved, or a deep rooted organizational culture is
at play, it may be very difficult to follow the logic as presented.

45. It will be tempting to argue for a change in strategic intent in order to get in a favored
strategic option.
A suggested but infeasible strategic choice which seems very attractive might have
influential supporters, so the evidence regarding its feasibility needs to be sound and
fully available to the planning team may need to be carefully argued with clear
evidence in support. Choosing what not to do, is as important to agree and record as
part of the planning process, as the finally agreed strategic choices.
Nonprofit organizations and the Strategic Choice Approach
An alternative view to the approach mostly taken at simply-strategic-planning.com is
that of the Strategic Choice Approach (SCA) to planning.
The SCA builds on action research work initiated in the1960s at the Tavistock
Institute for Human Relations in London. The early projects focused on policy-making
in local governments, employing teams of operational research and social
scientists. Their work questioned the then conventional views of how public policy
work should be done. Despite how rule ridden these environments are, these
pioneers of SCA demonstrated the vital importance of informal networks of
constructive cooperation in achieving pr0gress in decision making in very complex,
uncertain, and often highly politicized environments.
Much of this centered on practices designed to reduce various forms of uncertainty
about the working environment, about values and about other behavior of a range of
players external to the immediate decision situation. Unlike many other workers who
focus primarily on the disposal and use of power in these situations, the SCA
focused on processes for achieving improved understanding across the usual battle
lines in building consensus about what is feasible an desirable in the way of
decisions that move to getting things done, while not closing off options for future
action, leaving some scope for people to change their minds, and rake advantage of
new and usually unforeseen opportunities for making improvements.
The progressive expansion of the empirical evidence base of this work led to a set of
methods for facilitating decision-making in complex situations.
In the Strategic Choice Approach, planning is seen as a continuous
process of adjustment, and involving a fair amount of reflection on the
nature of the decision making process itself. It is a process of a
process of reflecting on and clarifying the strategic choices available at
any given time, and building commitment to moving forward with a
small number of feasible solutions in the form of ‘commitment

46. packages’. The use of the term "strategic" refers more to the way in which decisions
are developed and communicated for commitment to action rather than being
focused at say the corporate level of an enterprise. So it is not strategic planning in
the sense used here.
The most useful explanation of this Strategic Choice Approach is that of Planning
Under Pressure, by J. Friend, and A. Hickling.
Strategic planning issues are fundamental to understanding corporate strategic
planning
Corporate strategic planning should aim to surface strategic planning issues.
Strategic issues are fundamental to the process of corporate strategic planning. As
explained at this site, strategic planning is a systematic procedure for identifying the
top most key issues - the half-dozen that every organization must get right if it is to
prosper over the next few years.
A formal definition of this kind of strategic
planning would probably include the
phrase 'identifying and addressing the
Unresolved Key Issues' (UKI). As UKI is
so close to YUKI I will not call these really
big Strategic Planning Issues UKIs or
YUKIs I did do this when I was teaching
strategic planning years ago. However I
realized that this gave an unbalanced
view of strategic issues as being only
negative. Some of them are not at all
frightening or horrible. Some of the truly
strategic issues facing organizations are
positive.
Strategic Issues as organizational
elephants
John Argenti, developer of the Argenti
System of Strategic Planning, refers to
the process of unearthing strategic issues
as an 'elephant hunt'. It is a process of
looking for ‘strategic elephants’ in the
organization's undergrowth, identifying
them, then corralling them in one place so
everyone can see all of them together and
can note the sum total of the
organization's strategic situation. It is very
important to see these elephants against
What are strategic planning issues?
Let us avoid the following confusion on
this point. An organization can have
issues or problems with its strategic
planning process. Or it can have issues
facing the organization that the strategic
planning process can help the managers
to understand and address. It is this
second sense of big challenges facing the
organization that I call Strategic Planning
Issues or simply strategic issues.
Issues with the planning process itself are
dealt with by having a sound process, one
which meets the criteria we have stated
elsewhere on this site. You could start
with Strategic Planning Process.

47. a very broad, panoramic, background and
then to deal with all of them at once in
one major, holistic, strategic review.
Every organization I have ever worked in as an employee, or worked with as
consultant, has had one or more of these elephant sized 'strategic planning issues'.
Examples of Strategic Planning Issues
Want to have some illustrations of these strategic elephants? Glad you asked!
Type of organizational situation- the big product elephant
A manufacturing business has two main product lines, one with sales revenue of
$6m, and the other with sales of $12m. Both make about 20 per cent contribution to
overheads and profit. The larger $12m product is made under a licensing
arrangement with an international firm.
Strategic Planning Issues
The plant facilities used to make the larger volume product are designed to make
only this product and are not easily reconfigured for other work. The license is
renewable on an annual basis following a review by both parties to the arrangement.
The firm offering the license is showing an increasing tendency to shift work to
lowest cost producers.
Why the issue is a strategic issue
The risk of losing a contribution to profits of about 20% definitely marks out this
dependence of a large customer as a strategic planning issue. The difficulty of
redeploying the assets involved simply adds to the significance of this as a strategic
elephant.
Type of organizational situation- having to go on a capital diet
A British subsidiary of a US conglomerate has been producing five products for
many years. The time has come to upgrade the production plant, and to ensure the
company keeps up with the market's increasing demands for quicker service, lower
maintenance costs and higher quality, will require the expenditure of £50m over the
next five years.
Strategic Planning Issues
This company's parent has told them they may spend only £21m.

48. Why the issue is a strategic issue
A judgment would need to be made whether the available capital could be used in
way that would enable improved production fast enough to keep up with the changes
in the market. These risks would make this matter to be kept on the short list of
strategic planning issues.
Type of organizational situation- letting go of yesterday to pay for tomorrow
A diversified group of clothing and footwear companies has seven divisions. The
largest subsidiary is a maker of work clothes with a long established reputation for
quality. It makes a moderate and slowly declining return on capital although nothing
like as high as the other six smaller subsidiaries. These are engaged in specialized
footwear for people in dangerous occupations, like firefighters, safety gear like
harnesses for electrical linesmen, and so on. These smaller companies have steadily
expanded in recent years, and have arranged their manufacturing off shore, turning
themselves into design and marketing companies.
Strategic Planning Issues
They are emerging as leaders in their respective fields, which are less and less
related to the manufacturer of general purpose work clothing, which is facing
increasingly fierce competition from cheap imported products. The smaller
companies are seeking additional capital for expansion into other markets. A debate
is brewing about the need to sell the older traditional manufacturing division of the
firm to raise the capital required.
Why the issue is a strategic issue
The planning team would have to look at the relative size of the contribution from the
manufacturing business compared with the other areas of the enterprise, and the
point at which the decline in the former would be overtaken by growth in the latter.
Also given the decline, a judgment on the quantum of capital that might be realized
by the sale could be significant in timing the sale. This is a strategic planning issue
because of the potential size of the impacts and the time horizon over which this may
impact the business.
Type of organizational situation – when the world doesn’t care about the carer any
more
A long established nonprofit organization, has for more than 70 years gained a
reputation for integrity and caring relationships with its community, donors and
relevant government agencies.

49. Strategic Planning Issues
Despite good relationships with its donor base and other stakeholder groups,
because of severe economic recession, donor income is starting to slide. The Chief
Finance Officer estimates that the income could decline between 40 and 50% over
the next five years, while expenses have begun to drift upwards at about 3% above
inflation in recent years. This is bad enough, but this is a warning sign that its original
purpose, set 60 years ago, is becoming less relevant in the current situation with
other agencies undertaking the work in more cost effective ways.
Why the issue is a strategic issue
While the cost donor income gap is obviously a strategic elephant, perhaps of even
more significance is the fact the founding purpose of the organization may no longer
be valid. If not addressed the very existence of the organization is called into
question. There are profound strategic planning issues to be addressed by this
organization.
Type of organizational situation –death and taxes
A large university restructures to support growing thrust in research and industry
related consulting and training. The university commercial subsidiary restructured to
parallel the parent organization, into four new separate companies and align
company staff more effectively with relevant schools of the university.
Strategic Planning Issues
The single company previously enjoyed tax exempt status as a unit within the
nonprofit university. After the restructure two out of the four new subsidiary
companies lose their tax exempt status and are subject to full corporate taxation.
They happen to be the least profitable of the four companies!
Why the issue is a strategic issue
The possibility arises of the collection of businesses going into a net loss position.
The taxation issue appears to be a strategic planning issue that was missed in the
process leading up to the decision to restructure the businesses. It may also be the
case that the previous set up was masking some poor performance that should have
been addressed.
What we know about strategic elephants

50. You will notice that in all of these examples financial numbers associated with the
situation are an important input to the strategic planning deliberations, these
strategic issues are very much about judgment, anticipating the likely impact on the
organization as whole, and the length of time over which the impact will occur.
Having worked on strategic plans for many organizations over more than forty years
I think we can say some things about the patterns that emerge with strategic issues
of the very large or elephant variety I have been referring to.
Practically every organization has at least one of these elephantine strategic issues
lurking in the organization, which has not been dealt with, and needs to be
addressed.
In a very few cases there will be only one major strategic elephant. It is more usual
for there to be a few, perhaps up to a handful. In only one case we counted six. I
have never seen more than six listed.
I have certainly seen long lists of fifty or sixty issues that were judged to be major or
key issues for the organization at the commencement of a strategic planning
process.
However, when tested against the criteria of likely impact on the overall corporate
performance being impacted by 10, 20 or more percent, most of these ‘key issues’
fell off the lists, or were seen to be symptoms of a larger underlying strategic issue
we have described as being ‘strategic elephants’.
In some cases the alleged corporate strategic planning issues were clearly of
significance to a part of the organization, but not of corporate significance. This may
sometimes be a misunderstanding. In other cases it may be a case of ‘empire
building’.
No shades of grey among these elephants.
These strategic issues or major themes
stand out like the proverbial sore thumb
once they are acknowledged. These
strategic planning issues are those
factors, trends, obstacles or other matters that have the potential to affect the shape
and performance of the organization for quite a few years.
It may run counter to the intuition of most people, but it is my experience that the
issues surfaced during strategic planning do not fit a neat, smooth, or gradual

51. ranking in severity or importance. Generally speaking either an issue is clearly a
strategic planning issue or it is clearly not.
How could you miss seeing an elephant?
You will have noted in the example of the university
commercial subsidiaries above that the issue of taxation was
completely overlooked. Organizational management teams
that have completed conventional business planning and
budgeting, or revised their ‘marketing strategies’, or carried a
review of organizational structure, sometimes believe they have d also ‘done
strategic planning’, yet they often miss one or more of these truly strategic planning
issues altogether!
None of these exercises is really designed for the purpose of surfacing and
addressing the strategic planning issues that are of significance to the long term
future of the enterprise as a corporate whole.
Sadly, even organizations with professional corporate or strategic planning
departments which engage in exercises called ‘strategic planning’ can also miss
these elephant sized strategic planning issues!
Why is this? Because usually the staff in these strategic planning units are
insufficiently experienced in management, or too specialized in their expertise to
identify these strategic planning issues, let alone be able to address them.
Strategic issues are not all bad news
Before you think it is too difficult to get agreement on these strategic
issues or elephants because they are too difficult to acknowledge,
you should realize they are not all bad news!
Possibly about one in three of the strategic issues that are surfaced
will be good news, e.g., such as the charitable organization that finds
its donations rising at a rate 30% faster than they had projected in
their budget.
Of course the bad news is the bad news; one third of strategic planning issues being
good news leaves about two thirds of all major issues are bad news. The main
product line is fast becoming obsolete, the governing board is elderly, but through
shareholding has a lock on changes to the board, and so on.

52. Because these strategic elephants have not been addressed, and left to undermine
organizational effectiveness for perhaps years, there will be a chain reaction through
the enterprise of myriads of smaller troubles that absorb management attention and
other resources in unproductive ways.
Untamed
The metaphorical idiom, ‘elephant in the room’ is commonly used to refer to an
obvious, but ‘inconvenient truth’ that is being ignored or goes unaddressed. The
expression also applies to an obvious problem or risk no one wants to discuss. Of
course the expression embodies the notion that an elephant in a room would be
impossible to avoid, so that, people in the room who pretend the elephant is not
there have chosen to avoid dealing with the biggest issue.
Some of these strategic issues or strategic elephants will have been present,
untamed, in the enterprise for many years. Some of them will be known to nearly
everyone in the company but no one will have tackled them, partly because, as
explained above, they have no systematic planning system for raising and
addressing such major interlocking strategic issues.
Strategic planning and strategic issues
Corporate strategic planning is planning for the corporate whole, not for its parts. It is
not business planning, production planning, strategic planning or any other type of
partial planning, and it certainly is not marketing. It is not coordinating, forecasting or
budgeting. It is a process designed to yield a corporate plan - a statement of
strategies designed to affect the organization as a corporate whole.
The small number and the great impact of the decisions are
two of its notable features. Because these are not complex
and because they are highly judgmental in character
advanced planning techniques are not often helpful and may
actually hinder a clear, simple conclusion.
Clear insight into the organization in its environment, and the
courage to face the big strategic planning issues are more
important than excessively detailed numerical analysis of the organization.
The purpose of the corporate planning process described at this site is to reach an
consensus among the top executives in an organization as to the very few really
significant strategic planning issues facing the enterprise, and then to commit
enthusiastically to the half-dozen actions that they have to take in order to place their
organization in a strong position to face the long-term future.

53. Return from Strategic Planning Issues to Definition of Strategic Planning.