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Operational and

strategic planning
We need to keep operational and strategic planning clearly distinct in our thinking and discussion of
planning in organizations.
Operational and strategic planning are linked decision processes, which should be designed to inform
and support one another for effective management of strategies to improve overall performance of the
organization, whether business or non profit.
At Simply Strategic Planning strategic planning refers to a systematic, formally documented process
for deciding the handful of key decisions that an organization, viewed as a corporate whole, must get
right in order to thrive over the next few years.
In contrast, operational planning or tactical planning is a short-term, highly detailed plan formulated
by management to achieve tactical objectives. Operational or tactical planning involves a systematic
determination and scheduling of the immediate or short-term activities required in achieving the
objectives of strategic planning.
Clearly the time horizon of the decisions involved is a key difference between operational and strategic
planning. However, the difference between operational and strategic planning is more than a matter of
short or long term planning horizon.
Operational and strategic planning differ according to the decisions involved
In my view the number, scope and time span of the decisions involved are at the heart of the definition of
strategic planning. Operational and strategic planning are distinguished primarily by the number, kind and
time span of the decisions involved, as summarized in this table.
If you see something that purports to be a strategic plan, and it has a list of 40 objectives for only one
year with no overall corporate performance indicator to guide evaluation of the overall implementation
of the plan you are not looking at a corporate strategic plan, and it is probably some kind of
operational plan.
You can think of a strategic plan as a written long-range plan, which is founded on an enduring
corporate purpose, and including a small set of corporate strategic objectives. A corporate strategic
plan includes brief statements of a handful of strategies indicating how to achieve the corporate
strategic priorities. Strategic planning also provides the indicators for assessing and controlling
performance of the organization as a corporate whole.
We define operational planning, on the other hand, as the setting of short-term objectives for specific
functional areas such as finance, marketing, and human resources. Performance is monitored and
controlled using management performance indicators (MPI) or Key Performance Indicators (KPI)
rather than Corporate Performance Indicators (CPI) or Beneficiary Performance Indicators (BPI). This
latter is a tool unique in the Argenti Strategic Planning Process.
Strategic plans tend to be more general, and have longer time horizons than do operational plans.
Strategic plans normally cover a three-to-five-year and longer planning horizons, while most
operational plans usually cover periods of something less than a year. Operational and tactical plans
are more concrete and expressed in practical day-to-day terms. Operational plans might include
written manufacturing capacity plans, inventory, and sales forecasts; and financial, human resource,
and advertising budgets, for monthly or quarterly periods.
Operational and strategic planning are linked

Despite the clear distinctions we are making it is also important to understand that operational and
strategic planning are interrelated and complementary decision processes, which must link to each
other, inform and support one another for effective management of strategies.
Operational planning is the day-by-day, week-by-week, and month-by-month planning for a myriad of
local and functional activities; strategic planning sets the overall direction of your organisation as a
whole, its destiny if you will. The decisions that constitute the strategic plan include what the
enterprise is not currently doing, but should be doing. The choices of what to do imply other things
that the organization deliberately chooses not do. The strategic plan embodies very big decisions with
major consequences for the overall performance.
Strategic and tactical planning are different in kind. The two forms of planning must be linked, and
integrated, and must not be confused.
Avoid confusion between operational and strategic planning
Summarizing - strategic planning is not a lot of things it is often confused with:
It is not marketing, product planning, market research, marketing strategy, business model
designing, IT strategy, or planning for any other particular part or function.
It is not long-range planning, business planning or budgeting.
It is not forecasting.
It is not finance planning, cash flow planning, human resources planning, production planning,
project planning
It is neither co-coordinating nor operational planning.
It is neither sophisticated nor advanced. It is essentially simple. However, that does not mean is it
easy!
Regrettably, I believe that much of the usual commentary on operational and strategic planning falls
into one or more of these unhelpful answers to the question what is strategic planning? They are
misconceptions, and they sometimes arise from a deliberate tactic by academics, writers and
consultants in this field people like me, in other words! Our problem is that, correctly defined and
properly practiced, corporate strategic planning is an embarrassingly small subject area. In practice, a
strategic plan, crucially important though it is, is a modest document of just a few pages. It is easy to
see why academics and consultants need to expand the definition of corporate strategic planning in
their books and assignments. They need to throw in anything remotely relevant, such as business
planning, marketing and product development, strategic management, portfolio analysis, research into
new markets, financial planning and raising capital, acquisitions and mergers planning, action plans,
restructuring the management, managing the research function.

Many of these may need to come at the end of the corporate strategic planning process. This is how
the strategic plan gets translated into action. Operational planning and strategic planning link in this
practical fashion; to include them both into a definition of strategic planning is quite misleading.
Operational and strategic planning are linked as a guide to action which flows from a way of thinking.
The key elements of the strategic plan should govern the behavior of everybody responsible for
operational planning. It enables organisations to think through and document what they are doing, for
whom they are doing it, and why.
Operational and strategic planning contrasted
A corporate strategic plan, then, consists of a very few but momentous statements about the long-term
future of the organization as a whole.
'We will merge with a competitor' is a message of the utmost simplicity but of huge importance for any
business - if they do merge life will never be the same again. Notice the stark simplicity of this statement;
contrast its half-dozen words with, say, a hundred-page report on a new product.
Contrast it, too, with the alternative: 'We will not merge.' Surprisingly often the issue in corporate planning
seems to boil down to deciding between diametrically opposite strategic directions. A parting of the ways;
the company at a crossroads; the horns of a dilemma; reassessment of its roots; diversify or, on the
contrary, trim back to the core; cut manufacturing costs or, on the contrary, increase them to add value;
gain share in the home market or, on the contrary, go for exports; go public or stay private.
You may be surprised how bluntly these choices can be presented to managements when they really get
down to fundamentals. Issues that executives used to fight over, sometimes for years, problems that have
been examined by committee after committee, pale into insignificance when the real strategic problems -
the truly elephant sized corporate issues - are finally identified, simply and starkly. The focus of the top
managers' thinking switches abruptly into the true area of concern.
Every company of every size and type occasionally has to make a big decision, the sort of decision that
affects its entire destiny for years or even decades into the future, decisions which change not just parts or
departments or sections of the company but which alter its whole structure and the very nature of the
company itself. They are the sort of decisions that the company and its employees will look back on in years
to come and say, 'that was the year when

By contrast, operational planning may involve many detailed calculations. Working out the capacity
needed to produce a new line of products using materials different to ones previously employed, with
the associated transport, storage and other logistics implications can be a very large complex and
taxing effort.
However, we hope that the decision to go with this new line of products has been taken at the right
level where its organization wide implications could be assessed. That is the job of the strategic
planning process.
To find out more about the unique features of strategic planning look at theArgenti Process.

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