What’s the purpose of a strategic plan?

There are some classic management themes that simply do not tarnish with age, and while strategic planning has recently been considered de rigeur for board involvement, in many instances the process has overtaken its true purpose.

A classic article from business legend McKinsey Quarterly, first published in 1973 and recently re-published, clearly shows how strategic planning was embraced from the early 60s to become a main task of the CEO

Of course, 50 years later there is some debate that strategic planning is now a key task for the board. In some cases strategic planning has however become a task in which the process becomes the focus, rather than one that leads to action. In any case, the McKinsey article provides clarity of thought to enable directors and the CEO “to make the crucial leap from plans to decision”.

It states that much strategic planning results in a five-year plan, starting with a much expanded mission statement, five-year financial plan and five-year market share graphs. However, these rarely produce true growth or change.

The fundamental purpose of strategic planning, it says, is to come up with the strategic decisions that need to be taken now.

Boards need to ask: “What do we need to do now as a result of this plan?” If there are few or no decisions to be taken, then it is probable the document is more a budget that a strategic plan.

For a copy of the article please click here.