The Strategic Planning Process

In this post, I am going to cover the approach that I have used many times for formal strategic planning. This step-by-step approach takes you on a logical path through the process, which takes into account where you are now, where you want to be, the environment, making choices and executing on them.

In its simplest form, strategy is about thinking through two key questions (following a clear understanding of your purpose and goals) – where are you going to compete as a firm and how you will win where you decide to compete? The ‘where’ will concern such things as geographies, markets, capability areas and also, importantly, where you will not compete. The ‘how’ concerns being able to win along a different path to your competitors – unique should be the goal.

Step 1 – The operating context

The first step is to spend some time thinking about the current operating context of your firm. For this I tend to use what I call my ‘5 areas of never-ending improvement’. See following link:

These are your existing strategy, your approach to looking after and developing your people, your capabilities, your approach to clients and your operations.

Reviewing how you are doing in each of these, can be useful in understanding your current operating context, which in turn helps you to think through particular strategic issues or questions for the process.

Step 2 – Strategic issues and questions

Step 2 consists of developing a set of useful issues or questions to help frame the planning process. These can provide focus for the process – but beware not to constrain thinking too much that it stifles creativity. Useful questions might be along the following lines:

  • What are the big strategic issues that we are facing as a firm/business unit?
  • Have we been over reliant on yesterday’s business models?
  • How long will the current game that we are in last?
  • How can we achieve an X% improvement in profit or revenue through this process? Where do we think the growth might come from?
  • What new markets could we move into that fit our capabilities?

In-depth interviews might be beneficial to identify what people see as the most important strategic issues the firm is facing.

Step 3 – Looking out of the window

Step 3 is concerned with understanding the environment at both macro and micro levels and seeking answers to questions like those outlined below:

  • How is our competitive environment changing and what is the stimulus for this?
  • What are the trends and what do we think will happen in the future?
  • What might be the different scenarios?
  • What are our clients’ needs and how are these changing?
  • What were our forecasts in the past and how right or wrong were they?

There are various tools that can be helpful in performing the analysis to answer the questions above. These would include tools like scenario planning, competitor analysis, industry analysis and PESTLE analysis. It can also be useful to appoint teams tasked with specific questions to go away conduct some analysis and report back.

Step 4 – Looking in the mirror

Step 4 is all about self-reflection and can build on some of the themes that come from the areas in step 1 namely, our people, our capabilities, our client approach and our operations. Questions here might be along the following lines:

  • How has our financial performance been?
  • Where do we make money?
  • What has been our basis for competitiveness?
  • What are our distinctive capabilities?
  • What is the value chain for our type of firm?

Like step 3, it can be helpful to appoint teams to deep dive aspects of this or to go away and explore what new capabilities might be desirable for clients (as an example).

Step 5 – Bringing it all together to identify the path to winning

In this step, you are bringing the analysis together to start to evaluate all the different ways you can win. A modified version of a SWOT analysis can be helpful here. Step 3 ‘looking out of the window’ should have helped you to identify opportunities and threats and Step 4 ‘looking in the mirror’ should have helped you to identify your strengths and weaknesses.

The opportunities, threats, strengths and weaknesses are populated in the model and then you can cross compare each element i.e. what opportunities are there in the market which would play to our strengths. These help you to develop a list of strategies for evaluation and represent a number of potential paths for winning.

Step 6 – Making choices

With a range of potential strategies identified, now is the time to make some choices. These should be as much about what you are not going to do in the future as what you are. A range of questions should be used to test each strategic option:

  • Does it fit with our purpose and goals (i.e. is it a suitable strategy)
  • Would we be able to pull it off?
  • Would our stakeholders accept it?
  • Does it build on our distinctive competitive strengths?
  • How would this strategy be different to those of our competitors? How will they respond if we execute this strategy?

It is also important to reflect on how value is generated by each strategy. For example, if we are looking for growth, we need to have some sort of advantage or be competing in a particularly attractive sector. In terms of advantage, we are using this to charge more than our competitors (through an increased price or sales volume) or we are able to keep our costs lower. Alternatively, we are in an attractive sector where competition is low (due to fewer competitors) or the market is experiencing significant growth.

Step 7 – Implement and learn

Step 7 is critical and involves creating plans to deliver the strategies and realise the benefits. Without proper implementation, the strategies will deliver no value. You will need a clear execution process and monitor its progress closely. You will need to ensure that the firm is learning over time and adapting to any changing circumstances. Changes in the competitive environment must be monitored to ensure that the strategy implementation process will still deliver the required benefits for the firm.

In this process, you will need to ensure that that the operating context (your people, capabilities, approach to clients and operations) are all aligned to the strategy.


In summary, the 7 steps should provide a useful framework for strategic planning, It is, of course, not the only approach but is one that I have found useful to structure strategic thinking.

See also:

The three words that could be key to your competitive advantage