Strategic planning for success.

Given a sound strategy, an organization can survive any number of inefficiencies; but no organization, no matter how efficient, can survive a wrong strategy."

Gen. Robert E. Wood

Since the then-chairman of Sears Roebuck spoke these words in the 1950s, the world has changed dramatically.

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However, the basic premise remains--a castings producer or a supplier to the industry cannot survive without a sound strategy, no matter how efficient it may become.

All organizations have a strategy, whether formal or informal, written or passed along by word of mouth from the CEO. That strategy is manifest in the systems that are in place for management and control of the business, as well as actions taken to satisfy the needs of selected markets and to reap the financial and other rewards of providing that satisfaction.

In this context, we define strategic planning as the rational determination of where the organization is, where it should go and how it will get there.

In today's world, formal strategic planning is necessary to develop a successful business strategy. Such a system is needed for the following reasons:

* Only by systematically examining the major external forces impacting its business--including competition, regulation, technological developments, commercial and economic trends, and, especially, changing customer needs and wants--can a metalcaster truly and consistently understand what it takes to achieve and maintain successful levels of performance.

* Such performance is also increasingly dependent on agreement to and ownership of a strategic direction on the part of managers and employees. An effective strategic planning system facilitates such understanding and "buy-in." Developing a Plan

There are numerous equally effective approaches for developing a strategic plan. The approach chosen will depend on the prevailing culture, management preferences, the nature of available resources and other circumstances. However, all successful approaches share certain characteristics:

Appropriate Timing. A new strategic plan should not be developed every year. On the other hand, given the accelerating pace of change, planning for a five-year or longer horizon is generally much too risky. Unless circumstances dictate otherwise, a thorough review and revitalization of the strategic plan is needed every three years. In between, progress versus plan should be monitored at least quarterly and corrective action taken as indicated.

Thorough Preparation. Preparation is probably the most neglected phase of strategic planning--and arguably the most important. Inadequate preparation is one of the two most frequent causes of failure in implementation.

Preparation for strategic planning must incorporate training of both upper and middle managers regarding the importance of planning and the process itself. In addition, this phase must include the development of a complete and objective base of information for planning.

This information should be communicated throughout the organization, leading to a companywide understanding of the external forces previously mentioned--which dictate future opportunities for and threats to the business--and the company's own capabilities, strengths and weaknesses, which help define its realistic strategic options.

Wide Participation. As noted, ownership by those who will be implementing the plan is essential for its success. Therefore, based on the training and information from the preparation phase, a team of senior managers and others should articulate a consensus vision for the future of the enterprise as well as the corporate objectives and strategies needed to make the vision real.

This process should occur with frequent communication to and feedback from the wider organization. Then, each manager and his or her staff should jointly consider alternatives and develop functional-level objectives, strategies and action plans to successfully implement the corporation's strategies and achieve these objectives.

Linkage. Strategy must drive business systems, not the other way around. Failure to adhere to this principle is the second most frequent cause of failure in implementing strategic plans. Budgeting, quality, compensation, training, order processing and other systems must be linked to the plan. Each system must be thoroughly examined and modified as necessary to facilitate plan implementation. Strategic Management

If a strategic planning process includes all four of these characteristics, faithful application of that process is much more likely to lead to successful implementation than if any are missing. Moreover, these factors will help strategic planning become a more integral part of the organization's culture.

As that happens, strategic planning becomes strategic management. When a business is managed strategically, managers and staff begin to make fact-based decisions that are congruent with the organization's consensus vision and strategic plan.

In addition, employees start to perceive the business differently. They begin to understand that directing the company from the outside in, and becoming increasingly responsive to opportunities and threats in the marketplace, is the key to long-term success for the company and themselves.