Corporate Performance Management: Strategic Planning

In an earlier post I describe corporate performance management (CPM) as the monitoring and analysis of a company’s performance goals.  In that post I describe CPM as a step-by-step approach that involves core functions such as strategic planning, benchmarking, budgets and the Balanced Scorecard.  I’d like to delve further into the first step in the CPM process: strategic planning. 

Strategic planning is an organization's process of defining its strategy, or direction, and making decisions on allocating its resources to pursue this strategy.  It provides guidance regarding what an organization needs to do throughout its operations. 

Planning is the first activity that management must undertake when making the critical decisions that will affect the future.  A company’s plan serves as a guide or compass for the activities and decisions made by individuals throughout the entire organization.  It defines the company’s goals and objectives, and sets the stage for prioritizing how to develop, communicate and accomplish those goals and objectives.

Strategic planning is the formal consideration of an organization's future course. All strategic planning deals with at least one of three key questions: "What do we do?"  "For whom do we do it?"  "How do we excel?"

Once a company has defined its strategy by answering these questions, the next step is to strive towards meeting those strategic goals and objectives.  Company’s use a combination of project, programs and portfolios to implement their corporate strategy, and then use benchmarks and budgets to measure their performance against their strategic objectives. 

Strategic planning is not a one-time effort, however.  While strategic planning may be used to effectively plot a company's longer-term direction, one cannot use it to reliably forecast how the market will evolve and what issues will surface in the immediate future. Therefore, strategic innovation and tinkering with the "strategic plan" have to be a cornerstone strategy for an organization to survive the turbulent business climate.