Five Ways Strategic Planning Builds Capacity and Capability

By Joe Evans

By September 2011, Borders Books closed their doors forever.

The company liquidated all of its assets and delivered pink slips to approximately 11,000 employees. Meanwhile, as a result of smarter strategies that recognized and accounted for changing dynamics in their marketplace, competitors like Barnes & Noble fared much better.

How can two such similar book store giants end up on such divergent paths? Examination of the downfall of Borders Books reveals strategic errors that arguably led to its demise. Such is often the result of ill-conceived strategies that failed to zig when the market zagged.

Harnessing the Power of Strategic Planning

Strategic planning helps identify market trends and customer preferences, then attenuates strategy to programs that address those trends and preferences accordingly. It establishes the correct architecture for fiscally responsible growth, and — second only to superb execution — is the single most important determinant to organizational success. Success largely depends on an entity’s ability to build internal capacity and capability as a result of having planned for it to occur.

Strategic Planning Does the Following:

1. It helps define strategies that further the mission of the organization with the capacity to grow successfully. A thorough strategic planning process identifies potential growth markets that can be investment opportunities for the organization’s resources. Such markets can become the next generation of revenue sources and replace those that are becoming saturated, undergoing fundamental changes that pose risk to the business, or may be experiencing decline.

2. It identifies the correct organizational priorities through structured analysis of initiatives and forces alignment of spending with those ordered priorities. For instance, as early as the 1990s, Barnes & Noble noted the growth and popularity of online book sales and e-books. The company adopted a strategy to become a player in online book sales and invested in programs to make it a major player in sales of books over the Internet. It paid off. Their early entrance into online sales arrived in time to capture market share and establish a beachhead. Likewise, Barnes & Noble developed the Nook to strategically position themselves with the market segment preferring to read e-books. Instead, Border Books ignored the market trend, outsourcing its online sales to competitor Amazon. That turned out to be a big strategic blunder for Borders. They also pumped money into physical plant capacity to support distribution of physical books, despite the declining market, and updated their retail store across their large network.

3. As described in the previous point, strategic planning aligns spending to programs that further the execution of the organization’s strategy. More subtly though, strategic planning relates to hiring decisions. Hiring practices must address needed capacity to support strategic programs by supplying the business with talent that is delivered at the right time and with the right skills. The operational plans, within the strategic planning umbrella, should spell out those requirements. Additionally, strategic planning yields the benefit of adding accountability into job performance and tying incentives to the completion of goal-related initiatives. Clarity regarding roles and responsibilities relative to plan goals requires people who have sufficient incentive and understanding to execute to that plan. Employees that understand what is being done, the reasons why, when to do what, and how they can contribute become empowered team players.

4. Almost everyone thrives on having structure in our lives, especially in our work. A strategic plan helps motivate management as well as employees by giving them structure and direction. Stronger line-level managers and employees benefit the entire organization by improving upon the execution within the business operations while being a major part of the many strategic “goal-supporting” initiatives the business relies upon for fueling the future vision.

5. Ultimately, strong strategic plans help strengthen culture with improved and channeled energy. Organizational performance indicators and metrics help provide the ability to control and manage, as they signal the need for evaluation and analysis early when corrections to implementation tactics can be made more easily with fewer cost implications. With proper management controls in place, this approach allows those closest to the action to respond quickly and appropriately when it is needed — always operating within predefined spheres of control and in concert with the strategic goals. This allows them to embrace the vision and fully participate in the tactical execution.
Originally published: Sep 13, 2011

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