Strategic Planning Process


Strategic Planning Process Defined

The purpose of the Strategic Planning Process is to develop a three- to five-year blueprint for the organization’s future. Strategic planning is a way to help an organization be more productive by helping guide the allocation of resources in order to achieve goals. Strategy is an art and science of formulating, implementing, and evaluating cross-functional decisions that enable an organization to achieve its objectives in competitive environments.

The Strategic Planning Process is all about:

  • Identifying an organization’s existing mission, vision, values and setting objectives followed by strategy formulation, implementation and evaluation
  • Choosing a set of strategies to pursue the mission and vision of the organization
  • Formal planning process by top management which involves strategy formulation, implementation, and evaluation as a non-ending process performed on a continuous basis
  • Top management’s major role is to identify strategies that the organization will pursue to attain goals

Following are the key steps in a Strategic Planning Process:

  • Step 1 - Review the Mission, Vision, Values, Goals and Objectives
  • Step 2 ‐ Carry Out an Environmental Scan
  • Step 3 ‐ Review and Update Strategic Goals
  • Step 4 ‐ Establish Strategic Objectives
  • Step 5 ‐ Establish Strategies for Each Strategic Objective Through Operational Planning
  • Step 6 ‐ Develop an Annual Action Plan and Finalize the Strategic Plan
  • Step 7 - Execution Review

Strategic Planning Process:


Step 1 – Review the Mission, Vision, and Values.

Although many organizations have created mission, vision, values, goals, objectives and strategies, these elements need to be reviewed on a continuous basis.  Because of the ever‐changing healthcare environment and the increased business constraints through government regulations, payors, competition, physicians, patients, vendors and other sources, healthcare organizations must be vigilant in reviewing the goals, objectives and strategies that support their mission, vision and values.

There is a hierarchy to these terms, where the mission tells the organization why they exist at the “foundation” level, the strategies tell the organization the things they need to do. It is important to envision the development of these key outputs from the top down. You should develop the overall mission statement first in order to know “why you exist”. Vision tells you “what you want to be” and values tell you “what you believe in”.  Then the goals, objectives and strategies tell you “what you need to do” to implement the mission, vision and values.  The development of these outputs should take place at each level of strategy.

Key Outputs of the Formulation Process:

Step 2 ‐ Carry Out an Environmental Scan.

The primary aim of strategic planning is to bring an organization into balance with the external environment and to maintain that balance over time. Organizations accomplish this balance by evaluating new programs and services with the intent of maximizing organizational performance. SWOT analysis (strengths, weaknesses, opportunities, and threats) is a preliminary decision-making tool that sets the stage for this work.

SWOT analysis is a structured planning method that evaluates these four elements of an organization. SWOT analysis groups key pieces of information into two main categories:

  1. Internal factors – the strengths and weaknesses internal to the organization
  2. External factors – the opportunities and threats presented by the environment external to the organization

The SWOT analysis may view the internal factors as strengths or as weaknesses depending upon their effect on the organization's objectives. What may represent strengths with respect to one objective may be weaknesses (distractions, competition) for another objective. The external factors may include macroeconomic matters, technological change, legislation, and sociocultural changes, as well as changes in the marketplace or in competitive position. 

Step 3 ‐ Review and Update Strategic Goals.

Strategic issues will be identified from the environmental scan with details indicating why each is strategic, including the benefits of addressing it and the negative consequences of not addressing it. These issues might involve a wide range of program or other issues.  Through this analysis numerous alternative Strategic Goals will be decided upon.  All these proposed goals should be formally entered in a document, without judgment regarding their feasibility or relevance, and where no idea is rejected without due consideration.

With this set of goals in place, the organization begins a process which classifies and groups them into more or less defined areas of action. These areas of action are also simultaneously identified and named depending on the type of goals they contain.

Based on the various discussions that have identified them, the Strategic Goal selection process is fine-tuned; some goals are discarded whereas some are linked to other goals, thus better defining the areas of action each time.

Step 4 ‐ Establish Strategic Objectives.

Once the Strategic Goals have been identified, Strategic Objectives are assigned to them.  Strategic Objectives are wide-ranging actions performed within a specific Strategic Key Goal.  The number of Strategic Objectives assigned to each Strategic Key Goal should not exceed 5, and like them, should be conceived in such a way that they are valid for the entire lifetime of the strategic plan.

The drafting of the Strategic Objectives should make relatively explicit the actual direction to be followed within the Strategic Goals. Its formulation is much more specific and recognizable in practical terms, although it still retains its strategic character.

The Strategic Goals and Strategic Objectives together in an organization constitute what is called its Strategy Formulation, which should only fill 1 or 2 pages and make explicit the strategy of the organization.

Step 5 – Establish Operational Strategies for Each Strategic Objective Through Operational Planning.

Now a plan must be developed to implement the chosen Strategic Goals and their respective Strategic Objectives. To be successful, you will need organizational ownership of the plan, which includes not only executive sponsorship, but also the active involvement of all staff members. Communicate the plan to all levels of the organization. Find champions in all areas. Define what is “in it for them.”

The aim of Operational Planning is to make each Strategic Objective absolutely specific, practical and recognizable. The way to do this is by assigning Operational Strategies to each Strategic Objective.

The Operational Strategies must be completely clear and specific such that the reader can identify exactly what is intended. Statements such as “increase the number of X by 10%” or “reduce the number of appointment errors below 21%” or “reduce delays on the waiting list to a maximum of 60 days” should be used and expressions like “strengthen”, “improve” or “coordinate” should be avoided.

The Operational Strategies bring together the following characteristics:

  • They must have a fixed and recognizable duration, always less than 1 year. Intermediate goals can be established to be carried out in different stages over time.
  • They should be clearly quantified. To track their degree of completion, indicators that measure this are frequently needed.
  • They should be challenging and keep the organization in a state of alert in order to achieve them.
  • As a qualification to the foregoing, the Operational Strategies should be achievable. It would be unreasonable to have Operational Strategies that are on their face unachievable, because the organization would slacken and decrease its efforts. An excessively demanding Operational Strategy has a contradictory effect and demotivates the organization.
  • Each Operational Strategy must have a designated person in charge, who really has the power to alter the performance of the unit or subunit.
  • Each Operational Strategy must have the funding and other resources (staff time, equipment, etc.) necessary to achieve the objectives.

Once all the Operational Strategies are formulated, the implementation of each has to be integrated with that of the others within a time-line of action that includes all of them and provides an overview of the links, timing and sequence of tasks, as well as the combined efforts that the organization has to perform at every stage.

A performance measurement system enables the execution of an organization’s strategy by translating it into operational terms that can be measured, communicated and used to develop analysis, reporting and decision-making at both the product line, organizational and institutional levels.  Many organizations are using the Performance Dashboard framework as an effective tool for developing a sound performance measurement system that may comprise a portion of an employee’s annual merit review or incentive compensation plan where appropriate.

Communication of Strategy:

The Performance Dashboard helps communicate the strategy to the organization and measures business performance aligned with strategic and operational performance targets.  It is an effective tool to bridge the gap between mission, vision, strategy and execution. Performance Dashboards are organized based upon the core goals and objectives that are measurable and can include patient satisfaction, community focus, employee relations, and financial stewardship among others.  The importance is that the Dashboard measures the strategy you have in place at your organization.  The use of balanced scorecards can have great value in this area.

Step 6 ‐ Develop an Annual Action Plan and Finalize the Strategic Plan.

Develop an action plan that addresses goals and specifies objectives and work plans on an annual basis.  Once the longer-term elements of a Strategic Plan have been developed, it is time to ensure a specific work plan to begin implementation. Strategic planning recognizes that Operational Strategies must reflect current conditions within the organization and its environment. Thus it is rare to attempt to develop detailed annual Strategic Objectives except for the first or perhaps the first and second year covered by the strategic plan.  However, annual action plans are needed. Annual Strategic Objectives should be time-based and measurable. The annual plan may be a part of the strategic plan or may be an annual addendum to it.

Developing objectives and annual work plans requires both Board and staff input, with staff often taking major responsibility for program-related goals and objectives once the Board has defined organizational goals, and the Board developing goals and objectives related to governance.

The organization should then finalize a written Strategic Plan that summarizes the results and decisions of the Strategic Planning Process. There is no set format, but it should include the outputs of each major step.  The Board must approve the Action Plan and the final Strategic Plan. This is an area of staff expertise, since implementation of programs and other strategies based on policies set by the Board is a staff function.

Quite often, once the strategic assessment and plan is complete, leadership may not be able to allocate or assign appropriate funding, staffing or other resources to specific Goals. The result of improper or inadequate budgets and staffing usually ends with failed strategic Goals. It is critical to receive leadership commitment on budget and resources before execution of the strategic plan.

Step 7 ‐ Execution Review.

One of the critical success factors for effective strategy deployment is constant and ongoing progress reviews. Appropriate reporting mechanisms must be included in the deployment.

If there are warnings that Operational Strategies grouped around a particular strategic plan are having to be systematically changed, one possible explanation is that the Strategic Goal itself has been poorly chosen.

The strategic plan should have the capacity to allow this change to occur, although the need for change should be compelling and the reason for change should be thoroughly documented. A Strategic Goal should only be changed after deviations have been regularly observed over 1 year, or when significant changes, unforeseeable during the initial planning stage, have occurred in the environment or in the organization.

Several Strategic Goals may undergo systematic failures in the same Strategic Action, leading to the possibility that the Strategic Action itself is incorrect or that it has been undermined by internal or environmental changes. Then and only then should the particular Strategic Action be changed. These changes should be made as a last resort.

When issues, challenges, deviations or obstacles are identified, decisions and remediation are necessary – some which may even change the strategic direction. Therefore, it is important to decide who is involved in the review process, and what exactly is reviewed.


There is a detailed planning process that can be used in developing the key outputs.  This process can take a considerable amount of time and effort and therefore should be started early.  The key components of the Strategic Planning Process are articulated below.

Strategy is doing the right things, and execution is doing those things right.  Having a well-designed Strategic Planning system in place is the basis for translating strategies into targeted performance, thereby protecting the financial viability of your organization and providing quality care to your patients.  In our experience, many organizations have no strategic planning process at all or use the annual budgeting process as their main focus on “strategic planning”.  Many CFOs operate under the “tyranny of the urgent” philosophy where they address the most pressing needs and issues at the time without taking a step back and looking at the whole picture over a number of years.

Organizations can learn to develop strategies that work by:

  • Developing the key outputs of the formulations process including:
    • Mission
    • Values
    • Vision
    • Goals
    • Objectives
    • Strategy
  • Implementing a planning process that drives strategic direction
  • Executing the strategic direction through
    • Communication
    • Alignment
    • Accountability
    • Feedback
  • The development and use of a Performance Dashboard

It should be clear that each of the elements of strategic planning is necessary and that they should not be developed in a vacuum, but should be considered in the whole.  This comprehensive process will lead organizations to successfully develop and achieve their strategies and meet the desires and expectations of their Boards, management, employees and patients.

Best Practices

  • Select the planning team
    • Pull together a diverse, yet appropriate, small core team of people to make up your planning team.
    • There should be between 6 and 10 leaders and managers who represent all areas of the organization.
  • Think big
    • Allow time for big picture, strategic thinking.
    • Use out of the box thinking tied to stretch goals supported by qualitative analysis to support your decision-making.
    • Emphasize external performance measures over internal financial measures to inform your decision-making.
  • Commitment
    • Get full commitment from key people in your organization.
  • Begin with the end in mind
    • Think about execution before you start. It doesn’t matter how good the plan is if it isn’t executed.
    • To have any chance at implementation, the plan must clearly articulate goals, action steps, responsibilities, accountability, and specific deadlines.
    • Everyone must understand the plan and their role in it.
  • Keep the plan flexible
    • Don’t write your plan in stone. Good strategic plans are fluid.
    • Don’t be afraid to change your plan as necessary.
  • Clearly articulate next steps after every planning session
    • Before closing the strategic planning session, clearly explain what comes next and who’s responsible for what.
    • When you walk out of the room, everyone must fully understand what they’re responsible for and when to meet deadlines.
  • Integrate the planning processes
    • Integrate the strategic and annual planning cycles with internal management processes.
  • Review the plan often
    • Review the strategic plan for performance achievement no less than quarterly and sometimes as often as monthly or weekly.
    • Focus on accountability for results and have clear and compelling consequences for unapproved missed deadlines.
  • Communication
    • Recognize the significant importance of communication and change management in the ability to effectively realize the benefits of your strategic plan.
    • Incorporate learning and feedback in order to promote continuous long-term improvement.

To learn more about how FRG can help you refine your Strategic Planning Process contact Matt Nelson at or directly at (940) 464-4584.