Strategic planning models can make a big difference to your organization. That remains true whether you’re a startup developing an overall strategy or an established business fine-tuning internal processes.
But there are many strategic planning models, and it’s vital to pick one that suits your purpose and needs. The right framework will help you streamline processes, drive alignment, and propel your business.
To help your research process, we’ve compiled a list of the most effective strategic planning models and their top use cases. Let’s take a look.
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A strategic planning model is a framework that allows organizations to map out their short- and long-term business plans. They can help:
And you don’t have to limit your organization to one strategic planning model. Businesses can benefit from using multiple approaches, even simultaneously. But different strategic planning models are best suited for different situations, so make your choice based on your business type, growth stage, priorities, and goals.
These are some of the most popular strategic planning models. Our list covers a definition of each model, an example of it in action, and which use cases it works best for.
OKRs are a popular goal-setting framework that organizations, teams, and individuals use to define long-term objectives and track progress. To better understand the meaning of OKRs, let’s unpack the acronym:
When establishing your OKRs, create quarterly objectives for all company levels — Leapsome has a free OKR template to help you get started. Then, revisit your OKRs regularly to monitor your progress and make adjustments if necessary. You can also introduce regular OKR meetings to your organization’s internal processes.
Here’s an example of an OKR for a B2B SaaS company:
Objective | Significantly scale our customer base and deliver our great product to more people
OKRs work best for organizations that want to create more alignment behind their goals. By breaking down company-wide objectives into smaller, more manageable tasks, OKRs ensure everyone works toward a common purpose.
OKRs also show employees how their work contributes to the big picture, giving them a sense of purpose and boosting employee engagement. Research by Gallup links engaged employees to lower turnover rates, better work performance, and a thriving work culture. Consequently, OKRs help companies build successful workplaces.
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SWOT stands for strengths, weaknesses, opportunities, and threats. Use the SWOT model to define internal and external factors affecting your business. Then, compare the different factors to assess the risk of a potential strategy.
For example, if your organization’s strengths match opportunities in the market — say, you have a lot of capital, and your competitors don’t — you know you have a competitive advantage. In that scenario, you can take an offensive business strategy with relatively low risk.
Here’s a SWOT example for a sales-based organization:
Based on this SWOT analysis, our example organization isn’t in a strong strategic position. There’s a risk they won’t produce or distribute enough of their product to meet demand, and their competitor has the potential to outperform them. They should prioritize optimizing their product offering and solving supply chain issues over generating leads or working on an aggressive marketing campaign.
Any business can benefit from SWOT analysis. However, it’s best to use it at the beginning stages of a new strategy and with a specific goal in mind. You could try a SWOT approach when deciding priorities, like implementing new technology or restructuring your organization.
PEST analysis focuses on external factors that can affect your organization. The letters stand for:
And depending on your industry, you might add legal and environmental factors to make PESTLE.
Here’s an example of a PESTLE analysis for a multinational confectionery company:
PEST analysis lets you assess the business environment for a product or service, so it’s best used during the beginning stages of a project.
The Balanced Scorecard framework lets you take a holistic approach to business planning that doesn’t just focus on economic performance. Instead, you look at four perspectives:
Then, create objectives and define measures to track your progress for each perspective. Those measures will support you in planning and executing initiatives to achieve your goals. And as you carry out this strategy, you can update your scorecard to show your progress.
The management at ECI (Electronic Circuits Inc.) wanted to improve their delivery times. But when they talked to customers about the issue, the organization received unreliable feedback — different people had different definitions of being ‘on time.’
Using the Balanced Scorecard framework, managers shifted focus to their operations and checked the efficiency of their manufacturing process. They discovered ways to optimize the business’s cycle time, yield, and costs.
Despite not having a reliable customer perspective, the Balanced Scorecard’s comprehensive overview of the ECI organization provided a versatile solution for reducing delivery times and streamlining the business’s overall operations.
The Balanced Scorecard framework is best for understanding your business health and creating alignment across your company.
Porter’s Five Forces is an approach that lets you assess your product or service’s competitive advantage in the market. Identifying potential threats can guide your organization in developing a more dynamic strategic plan.
The ‘Five Forces’ that may affect your product are:
Let’s take the example of a cosmetics company planning to release a shampoo with SPF 50:
Porter’s Five Forces are best for evaluating your product or service after development but before entering the market. It’s also helpful for assessing an organization’s overall competitive position.
The VRIO framework helps organizations determine whether they can turn a resource into a competitive advantage. These can be physical resources like inventory, tools, and technology, or nonphysical ones like patents, skills, and work culture.
Let’s break down the VRIO acronym to understand how to evaluate each resource:
Here’s an example of a delivery company determining whether they can exploit their resource — distribution centers — to gain a competitive advantage:
The delivery company could have a temporary competitive advantage, but they’re not exploiting this resource. Management needs to address whatever stops delivery drivers from using the fastest route before rival delivery companies copy and control the same resource.
The VRIO framework works best for businesses deciding how to launch a new product or service or determining how to improve their existing business model.
Specifically, the organizational metric shows how efficiently your organization uses its resources. If you have a high score for the first three metrics but consistently fail to capture the value of your resources, it’s a sign you need to improve your internal processes.
Combine the VRIO framework with Porter’s Five Forces for a clear strategic direction when launching a new product.
The Hoshin Planning framework is mainly a top-down approach. This method outlines seven strategic planning stages, which are:
It’s worth noting that the Hoshin Planning framework doesn’t have to be strictly top-down. Another core idea behind this method is that managers should ‘play catch ball’ — that is, bounce ideas between management, department heads, and team members during the first four stages.
Here’s how a car manufacturer might implement the Hoshin Planning framework:
Companies with complex processes — like manufacturing and tech businesses — are more likely to use the Hoshin Planning framework. Their operations benefit from the ‘catch ball’ idea because it’s easier to spot problems when you filter them through diverse teams.
The Hoshin Planning Framework is also ideal for creating alignment within your company. Consider it for a larger organization that’s experienced project issues and bottlenecks.
The Theory of Change model involves establishing long-term goals and working backward. Start with your desired outcome and go through all preconditions necessary for it to become a reality. During this process, you determine what needs to change to reach your objectives.
Nonprofit organizations with specific missions often use the Theory of Change model. Take adult literacy, for example. The project team would start with an ideal situation — like their country having a 100% literacy rate — and work backward to find out what’s preventing them from achieving that aim. The issues might range from a lack of funding to a need to increase awareness about resources that are already available. Then, the nonprofit team could start addressing the issues they identified.
Any organization can benefit from the Theory of Change framework. Still, it works best for specific projects, like expanding your company abroad or opening a new department, as it involves scenario planning.
The Blue Ocean strategy is a strategic planning model that’s become popular recently. Developed in 2004, this method assesses whether your organization operates in a saturated market. If so, the underlying assumption of the Blue Ocean strategy is that it’s better to create new demand.
In the strategy, the ‘ocean’ is a metaphor for the market. The ‘red ocean’ is full of predators (large companies) competing for food (customers) and turning the water red, whereas the ‘blue ocean’ is deep, unexplored water that’s full of potential (uncontested market space). Here’s a list of indicators that you’re in a ‘blue ocean’:
Apple is a famous example of a business that operates in a ‘blue ocean.’ Although it’s one of the leading technology companies in the world, the Apple team still prefers to innovate new products rather than beat the competition.
The Blue Ocean strategy is ideal for small businesses and start-ups trying to establish themselves among larger organizations. Established companies in dynamic industries like tech can also use it to stay ahead of their competition.
Once you’ve set up your strategic plan, you’ll want to utilize it to its full potential. Here are some tips to make sure your strategy goes into action.
There are many strategic planning models to choose from, and your organization can only implement so many. Although all of them have pros and cons, none are necessarily better than the others. So, choose the strategic planning models that reflect your organization’s values. That way, it’ll be easier to introduce your strategy and get all team members on board.
If you’re a people-first organization, OKRs are an ideal choice. OKRs involve your employees in company initiatives, make internal decisions more transparent, and give everyone a sense of purpose.
Strategic planning is like any other task: It requires resources like funding, time, and research. You should have a budget and schedule for every part of the process.
The employees helping you with strategic planning and implementation are also vital assets — offer them training and consistent support. Free up their schedule for strategic planning and create a timeline for the entire process to set your team up for success.
Aside from planning and implementing your strategy, you’ll need to check on your progress regularly. That means monthly and annual reviews at all levels.
Many strategic planning models already have reviews built into their stages. But even if they don’t, you should reevaluate at regular intervals. You can define some key performance indicators (KPIs) to measure the success of your initiatives and your overall business health. Popular KPIs include revenue growth, client retention rate, and employee satisfaction.
As the saying goes, even the best-laid plans often go awry. You may find that conditions change as you implement your strategic plan or that you didn’t predict certain issues. The key isn’t necessarily to strategize better, but to have a dynamic strategy. This will allow you to adjust your plan and deal with problems as they arise.
For instance, you might opt for the PEST analysis, but be open to considering important legal and environmental factors when they come up. You can try to predict what new legislation or world events may affect your industry. Then, if any conditions arise that affect your business, you’ll be able to pivot your strategy without too much additional effort.
Strategic planning models help you assess the current state of your organization, decide which direction to take in the future, and communicate your plans to your employees. They can be the difference between your business merely sustaining itself and thriving.
If you’re wondering how to implement a new strategic planning model, Leapsome can offer professional support. Our Goals and OKR Management Software provides an adaptable framework for your chosen strategic model.
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