By: Todd Ferguson
Each level of the organization needs processes to achieve strategic, long-term, and short-term goals for a business to succeed. These different goals require clear and set processes to achieve success. While strategic goals focus on the 5-10-year goals of the business, accomplishing the long-term goals (24+ month rolling horizon) can be set using the process of Integrated Business Planning (IBP), and the near-term goals using the process of Integrated Tactical Planning (ITP) to hit targets. IBP connects the strategic, long-term, and short-term goals in a monthly meeting cycle held by the product, demand, supply, and finance teams that roll up to the executives.
Sometimes needing clarification within the planning strategy are two types of plans that play a role in the IBP process: the strategic plan, which is the organization’s overall goal, and the tactical plan, focusing on short-term plans to meet the strategic goal.
Defining Strategic Planning
The strategic planning process begins at the senior management level of the organization. Once there’s a vision, the strategic plan begins to evolve. Part of the strategy becomes the ability to identify possible operational plan gaps. It is built into the long-term planning horizon and enables effective and quick decisions to become more straightforward if underlying factors are recognized that could hinder the plan. A byproduct of the strategic plan is having an effective way of communicating throughout the organization.
The strategic plan determines how the organization will stay in control of the strategy. Oliver Wight alum, the formidable George Palmatier wrote in his white paper, Strategic Planning: An Executive’s Aid for Strategic Thinking, Development, and Deployment, “Strategies are paths to a goal. A strategy without a goal is a path to nowhere. From the top down, an organization needs to set a combination of goals with strategies to meet them.” The strategic goal within the IBP process is to manage the plan to meet the goals. Specifically, the strategy is how you integrate plans to stay in control.
Oliver Wight has a proven method for mapping out the strategic plan based on an eight-stage program. Each stage empowers employees to weigh in, resulting in synergy within the planning process team.
Here is a summary of the eight steps:
- Information gathering.
- Vision and mission.
- Developing the strategic plan.
- The driving strategies and the supporting strategies.
- Tactical programs.
- Projects and tasks.
- The deployment process.
- Continuous deployment and review.
Details of each industry’s requirements may vary, but these steps are a proven methodology that gives the organization a format for a successful strategy.
Defining Tactical Planning
Tactical planning is an essential method of keeping plans on target. It works in the short term and sets to routinely re-align and reoptimize other core processes. Over a 13-week horizon, the tactical plan consistently reviews the near-term goals to ensure the success of the long-term strategy. It is a more efficient way for cross-functional teams to manage near-term operational changes to the plan. As a middle-management process, it keeps “firefighting” away from senior management.
When done correctly, tactical planning helps teams solve problems quickly to keep the strategic plan on course. The product, demand, supply, and finance teams work together in decision-making for the organization’s benefit.
The tactical planning process is proactive. It helps identify a potential crisis and adjusts the plan according to new information.
What are the benefits of each plan type?
Both strategic and tactical plans have their place in propelling your business toward success. Because of this, it’s valuable to understand each process’s benefits. The strategic plan is high-level, while the tactical plan controls the details.
Strategic planning addresses long-term goals utilizing forecasting and scenarios within the Integrated Business Planning process to create a more efficient organizational strategy. It is a valuable tool for every organization in setting long-term goals.
Integrated Tactical Planning (ITP) focuses on the short-term planning horizon.
It’s a vital tool that keeps all planning processes on track despite supply and demand problems. ITP helps to re-align and reoptimize the short-term plans within the long-term strategy. It empowers middle management to handle potential problems without involving the executive team in the details of day-to-day decisions.
How to apply each method effectively
Implementing either strategic or tactical planning may seem daunting. Both practices are necessary for success. Integrated Business Planning is the long-term planning process that most successful companies have implemented. Utilizing these processes will ensure you can achieve more efficient results across the entire organization.
In most cases, a professional could help evaluate your business needs and advise where there are gaps.
Learn more:
Integrated Tactical Planning Course
Book – Integrated Tactical Planning: Respond to Change, Increase Competitiveness, and Reduce Costs