Strategic Plan: First Important Step with the Balanced Scorecard
The foundation for Balanced Scorecards resides in a complete understanding of what is important to the future success of your organization. Critical success factors are identified through strategic planning. Strategic planning is a formal process whereby you prepare your organization for the future. Building a strategic plan is like building a pyramid from the top down. You start at the top with your mission statement and work your way down to the bottom by completing an Operating Plan. The layers in between represent strategic objectives and goals.
The overall process for building a strategic plan usually requires that you assess your current situation. A SWOT approach is quite common - Strengths, Weaknesses, Opportunities and Threats. Due to the enormous changes now taking place, I like to add a fifth area which I call Emerging Trends. Next you will isolate critical issues and categorize issues according to their probability of occurrence and significance to the organization. The following format can be used:
Place each critical issue within a grid according to Probability of Occurrence and Degree of Impact to Organization. Use three levels: High, Medium, and Low. Critical issues that are placed as High Probability of Occurrence and High Degree of Impact to the Organization must be addressed within the Strategic Plan.
You now have to reach agreement on how you will address these critical issues. This can involve scenario playing or simply establishing strategic goals. Some organizations will restructure the organization in order to meet critical issues. In any event, the end result is a draft strategic plan that clearly communicates direction and vision. Sometimes more critical issues will pop up when participants have a chance to read draft copies of the strategic plan. So make sure you encourage a flexible and open process. Strategic planning is very dynamic.
As a minimum, your organization should develop a strategic plan once a year. And you need to think strategically on a continuous basis. If you are new to strategic planning, a good place to start is with an understanding of SWOT - Strenghts, Weaknesses, Opportunities and Threats. The SWOT framework is the most popular approach for developing a strategy. Go to article on SWOT.
Written by: Matt H. Evans, CPA, CMA, CFM | Email: email@example.com | Phone: 1-877-807-8756
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