Many businesses and nonprofits have operated successfully for a long time without having a written strategic plan.
But now you need one. Our guess is that you need it because a third party, maybe your lender, a new director or business partner, or even a new employee, is putting pressure on you to prepare one.
But you are nervous about getting into a strategic planning process. We don't blame you. They are all about developing new strategy and maybe your business or nonprofit doesn't need any new strategies.
Stop and think for a moment about what it means that your company has been able to operate successfully without a written strategic plan. It means that there is a strategy system already in place and being implemented. You need to make sure there is consensus on the description of the present system or you could be changing strategy for no good reason.
8 strategies are common to every kind of business
To get started on documenting your current strategic plan, use our definition of strategy: "Strategy is a choice of action".
Our research finds there are 8 strategies (or choices of action) common to all for-profit and nonprofit businesses. Using this definition of strategy, strategic planning becomes a review of the eight choices already made.That review is made by considering those choices against the factors in the external environment that would most impact the performance of each.
Let's look at the content of each of the eight.
The Eight Strategies Common to Every Organization
Business Definition (called Mandate in nonprofits): This strategy is also known as the “mission” statement, although done properly, it is just a succinct description of the business and how it is positioned in the competitive environment relative to similar businesses. If your company has audited financial statements you'll find this strategy described in the notes to those statements.
Financial Management: How the organization sources, allocates, and manages capital and manages its revenues and expenses.
Risk: How the organization identifies and manages events, which if they occurred, would have unacceptable consequences.
Marketing/Sales/Communications: (called “communications” in many nonprofits): How the organization identifies and captures customers/users/clients and manages stakeholder relationships
Growth: How the organization is trying to getting bigger, smaller, or stay the same size
Organization Management: How the human resource needs are sourced, allocated, and managed. (Note: the 8 strategies are also the basis of all organization design)
R&D/Technology: How the organization develops and/or uses intellectual capital
Service Delivery/Manufacturing/Production: How the organization fulfills the marketing/sale or communications promise of value delivery
It's not good enough for you to understand your strategies if you can't describe and explain them to others
Good descriptions of what is being implemented within each of the eight strategy categories together with as much information as is useful to explain the hows, whys, and metrics of the implementation of each will give you a great story on how your business or nonprofit works today.
The exercise will inform everyone on how the company actually works. This in itself could lead to noticeable improvement in performance of some or all of the eight strategies. After all, the purpose of a strategic plan is communication of strategy. Better communication produces better performance. It's not good enough for you to understand your strategies if you can't describe and explain them to others.
The exercise may even point to strategy you want to study further because changes in the external reality are beginning to impact its performance.
Now you have a written strategic plan. No need for a planning process to produce it. No need for fancy jargon. Your strategic plan was created by carefully documenting what is already in place. This always has to be the first step in preparing a strategic plan. Strategic planning often fails because the assumption is made that everyone has the same understanding of current strategy.
Your next step is to keep reviewing the plan (i.e. the choices of action that have been made) against the realities of a changing external environment. If you don't, the plan and its preparation simply becomes an academic exercise when it could be the agenda for much more powerful management and board discussions on strategy.
With everyone around the table agreeing on what is in place now, those strategy review sessions should become much more productive. Instead of looking back at past performance, you will be peering into the future trying to predict what might happen and how to be ready for it.
For more on strategy, see The Alpha Strategies, Understanding Strategy, Risk, and Values in Any Organization