Strategic Planning Tools for 2024

Ever feel like your small business is navigating a never-ending maze of decisions, deadlines, and daily demands? You're not alone. Small and midsize businesses (SMBs) struggle with many issues, like being short-staffed, having limited resources, and more. In this environment, making the right decisions and keeping things running can seem like monumental tasks.

But they don't have to be. Strategic planning can help you conquer this chaos. It's not a magic wand, but it's a structured step-by-step process that enables you to define your vision, set achievable goals, and chart a course for growth.

What is strategic planning?

Strategic planning is the process of laying out a clear path for your business. It's about defining what you want to achieve, how you'll get there, and what steps you need to take along the way. Think of it as a map that guides you from where you are now to where you want to be.

SMBs often grapple with many challenges, including limited resources and fierce competition. Strategic planning is the antidote to these challenges. It's not just a theoretical exercise but a practical solution that allows you to identify, prioritize, and tackle the hurdles obstructing your path to success.

What are the benefits of strategic planning?

Strategic planning can unlock tangible benefits for your business by removing the obstacle of uncertainty and opening up a path to smoother, more efficient growth. Here are just a few of the benefits:

• Sharper focus and increased clarity: By defining your core values, long-term goals, and target audience, you give everyone in your organization a shared understanding of where you're heading.

• Improved decision-making: Strategic planning facilitates important big-picture conversations among leadership about capabilities, market forces, and scenarios. This aligns everyone on where they should be heading in the future.

• Increased productivity: Strategic planning provides a roadmap for action, streamlining your workflow and maximizing your team's potential.

• Better motivation and improved morale: By creating a shared vision and purpose, you give your team a reason to feel invested in the business's success, leading to a more engaged and productive workforce.

• Greater adaptability: Strategic planning equips you with the tools to anticipate change and adapt quickly. By identifying potential risks and opportunities early on, you can develop contingency plans and adjust your course as needed.

Types of strategic planning tools

There are many tools for strategic planning, each offering a unique perspective and approach. These tools serve as the strategic gears that set your business in motion toward its envisioned future.

According to Gartner, “CIOs should use strategic principles to provide a framework that ensures all decisions made when creating and executing strategy are aligned with the enterprise's objectives, goals, and strategies.” [1]

Strategic principles come first, and they guide how you use strategic planning frameworks. Here are some common strategic planning tools, along with strategic plan examples.

SWOT analysis

In SWOT analysis, strategic planning teams brainstorm to come up with several strengths, weaknesses, opportunities, and threats for their business and list those items in four quadrants.

Teams identify connections between the quadrants—especially connections between strengths and opportunities—to inform their strategy. The thing about SWOT analysis is that you can use it for annual strategic planning or everyday decision-making. Adapt SWOT analysis to a rapidly evolving market by using it at the individual project level.

For example, say your office cleaning service is considering expanding. Using SWOT, you could come up with the following assessment:

• Strength: Efficient, established cleaning teams

• Weakness: Limited client base

• Opportunity: Expand services to home cleaning

• Threat: Market is nearly saturated with existing home cleaning services

In this case, the business could match its strength to the opportunity to expand and leverage its experienced teams to make headway in an already competitive market.

OKRs

OKRs work by establishing a clearly defined goal (the objective) along with a handful of key results—that is, measurable checkpoints that are designed to achieve the target goal. Here is how it works:

1. Define your objective: Articulate a clear and inspiring goal that captures your team's aspirations.

2. Identify key results: Establish three to five measurable outcomes that, when achieved, will demonstrate meaningful progress toward your objective.

3. Track and adapt: Regularly assess your progress for each key result, typically on a quarterly or monthly basis.

The key to OKRs is their adaptability. They empower you to respond to shifts in market conditions, seize emerging opportunities, and pivot strategies when needed. An example is adapting to the Great Resignation:

Original objective: Achieve a 95% employee retention rate

By adjusting key results, the company can tackle the challenges of the Great Resignation head-on, fostering a more engaged and resilient workforce.

PEST analysis

With PEST (political, economic, socio-cultural, and technological) analysis, strategic planning teams weigh socioeconomic factors into their business forecasting. PEST analysis can also include legal and environmental factors (PESTLE analysis). For PEST analysis to be used effectively, it helps to have representatives on the strategic planning team with a working knowledge of the component factors.

PEST analysis is somewhat complex due to the breadth and depth of the factors it accounts for. On one hand, this necessitates an experienced strategic planning team to use PEST analysis effectively. On the other hand, this makes PEST adaptable to changing conditions. Think of each of the factors that make up PEST as levers. When the market changes, you may have to pull one or more of those levers to adjust your planning.

Here is an example of PESTLE analysis on the rise of electric vehicles:

• Political: Government incentives for EV adoption

• Economic: Fluctuations in oil prices

• Social: Growing awareness of climate change

• Technological: Advancements in battery technology

• Legal: Intellectual property rights for battery technology

• Environmental: Impact of lithium mining on natural resources

Balanced scorecard

Balanced scorecard is a strategic planning model designed to incorporate both financial and non-financial (customer, internal, innovation) measures.

Teams should answer those questions in four quadrants, linking them together where possible (similar to SWOT analysis), then translate those answers into operational strategy, individual performance goals, and business planning.

Here is an example of balancing financial goals with non-financial measures using this model for a small independent bookstore:

• Customer perspective: Achieve a 95% positive rating on online review platforms.

• Internal process perspective: Train staff on hosting author talks and literary workshops to create engaging experiences.

• Growth and learning perspective: Invest in staff development by sponsoring book club memberships and industry conferences.

• Financial perspective: Increase revenue year-over-year by 5% through diversified income streams from events and merchandise.

Hoshin planning

Hoshin planning guides your organization toward long-term goals through a collaborative, step-by-step process. Its core lies in a top-down vision, where leadership sets ambitious company-wide objectives. These goals then cascade down through the organization, transforming them into smaller, achievable objectives customized for each department and team.

Through open dialogue and feedback, every level of the organization participates, fostering understanding, buy-in, and a shared sense of ownership. Visual management tools, like strategic boards, become the canvas upon which progress is tracked, keeping everyone on the same page and celebrating victories along the way.

Here's an example of Hoshin planning in a manufacturing company that wants to increase production by 20%:

• This vision cascades down to departments and goals like reducing setup time by 10% and minimizing waste by 5%, which become part of it.

• Each department then creates action plans to achieve its objectives.

• Regular meetings facilitate communication, address roadblocks, and ensure alignment.

• Progress is visualized on Hoshin boards, motivating teams and celebrating success.

• Throughout the process, the company learns from setbacks and adapts its strategies for continuous improvement.

Which strategic planning method is right for your business?

Selecting the ideal strategic planning techniques requires considering your unique needs and goals. While each tool offers valuable insights, its strengths and complexities cater to different business types. Here's a quick guide to finding the best match:

Common mistakes to avoid during strategic planning

Once you choose a strategic planning method, make sure to steer clear of these pitfalls:

• Going solo: Strategic planning thrives on collaboration, with perspectives from different levels of the organization. According to Gartner, CIOs should work with key stakeholders to develop strategic principles to provide a shared view of business goals. [1]

• Vagueness: Set clear, measurable goals with concrete timelines and actionable steps.

• Data blindness: Back up your decisions with data and insights to avoid guesswork and ensure evidence-based planning.

• Ignoring reality: Be realistic about your resources, capabilities, and market conditions. Don't set yourself up for failure with unrealistic goals.

• Static vision: The world is constantly changing. Be flexible and adaptable, revisiting and adjusting your plan as needed.

Charting your course

Navigating the ever-changing business landscape doesn't have to be a guessing game. By exploring the diverse world of strategic planning processes, you can identify the perfect map for your specific journey. From the adaptable flexibility of OKRs to the comprehensive foresight of PESTLE analysis, there's a tool perfectly suited to help you achieve your vision.

Now it's your turn to:

• Evaluate your business context and goals to identify the tool that best fits your size, stage, and industry context.

• Involve key stakeholders, gather diverse perspectives, and leverage the collective intelligence of your team.

• Regularly revisit and adapt your strategic approach and embrace the mindset of continuous improvement.