Strategic Planning: Principles, Types, and Process

Posted on Feb 10, 2025 in Business Administration and Innovation Management

Strategic Planning

Planning bridges the gap between where we are and where we want to be. It makes possible things that otherwise would not have happened. While some things may happen by chance, planning involves:

  • A process requiring intellectual effort.
  • Consciously determining courses of action.
  • Basing decisions on goals, knowledge, and well-studied estimates.

Basic Principles of Planning

  • Contribution to Objectives: Supporting the achievement of company objectives.
  • Primacy of Planning: Planning precedes all other administrative functions.
  • Efficiency of Plans: Measured by its contribution to the purpose and objectives.
  • Limiting Factor: The higher the accuracy in recognizing limiting factors, the easier it is to select the correct choice.
  • Commitment: To comply with the commitments involved in the decision.
  • Flexibility: A flexible plan reduces the risk of losses, but the cost must be weighed against the advantages of flexibility.
  • Change in Direction: The more planning decisions commit people to a future path, the more important it is to periodically assess events and expectations and redesign plans to maintain the course toward a desired goal.

Types of Plans

  • Mission/Purpose: Identifies the basic function or task of a company, institution, or any part of it.
  • Objectives or Goals: The ends toward which activity is directed (address and control).
  • Strategies: Identification of core long-term objectives of an enterprise and the adoption of courses of action and allocation of resources to achieve them.
  • Policy: General statements or understandings which guide or channel thinking for decision-making.
  • Procedures: Plans that establish a standard procedure for future activities.
  • Rules: Describe clearly the specific actions required or that should not be carried out, without allowing freedom of action.
  • Program: A set of goals, policies, procedures, rules, task assignments, steps, resources to be used, and other elements necessary to carry out a given course of action; usually supported by budgets.
  • Budget: Statement of the anticipated results expressed in numerical terms. It can be expressed in financial terms, man-hours, units of output, machine-hours, or any other numerically measurable term.

Planning Model

  1. Detection of Opportunity
  2. Establishment of Objectives
  3. Development of Premises
  4. Determination of Alternative Courses of Action
  5. Evaluation of Alternative Courses of Action
  6. Selection of a Course of Action
  7. Formulation of Derivative Plans
  8. Numerical Expression of Plans Through the Budget

Decision-Making Process

  1. Identifying a Problem
  2. Identification of Decision-Making Criteria
  3. Assigning Weights to the Criteria
  4. Development of Alternatives
  5. Analysis of Alternatives
  6. Selection of an Alternative
  7. Implementation of the Alternative
  8. Evaluation of the Decision’s Effectiveness

Creativity and Innovation

The creative process is not simple and linear. It consists of four overlapping and interacting phases:

  1. Unconscious Scanning
  2. Intuition
  3. Insight
  4. Logical Formulation

Techniques to Enhance Creativity

  • Brainstorming: Developed by Alex F. Osborn, the “father of brainstorming.” The purpose is to improve problem-solving by finding new and unusual solutions. The rules are:
    1. Never criticize ideas.
    2. The more radical the ideas, the better.
    3. Emphasize the quantity of ideas produced.
    4. Encourage the improvement of ideas.
  • Synectics: Known as the Gordon technique.
    • Team members are carefully selected based on their ability to cope with the problem, potentially involving the entire organization.
    • The group leader plays a vital role.
    • Only the leader knows the specific nature of the problem.
    • The leader limits and carefully directs the discussion without revealing the real problem.
    • The leader’s function is to prevent the group from reaching a premature solution.
    • The system includes a complex set of interactions from which a solution arises (often the invention of a new product).