Mastering Business Strategy: The Essential Guide to Long-Term Planning
By Dennis Bluthardt, Namaste Studios
Businesses must plan long-term to steer through fast-changing market circumstances, consumer tastes, and technical advancements. It provides a route map for a company to set its sights and strategize for its journey, allowing the business to follow a relatively straight path, though not always in the same manner, from the present toward some future time.
Strategic planning: When starting to map out their plans, businesses should conduct a full Strengths, Weaknesses, Opportunities, and Threats (SWOT) analysis. Most will build a comprehensive strategic plan that aligns the most that their brand has to offer with the future marketplace opportunities that suit what the brand provides. This proactive planning process should help brands construct more realistic future views.
Trendspotting: To give forecasts for those engaged in long-term planning, I have dug up a few future marketing trends that future brands may need.
Risk management: Many long-term strategies call for long-term investment, whether in new technology, an area of expertise, product development, or a new company division. Others may need to regulate their planning to protect their brand, which is a reputational risk if something goes awry and causes the brand’s value to hit the stock price.
Understanding Long-Term Planning
In business terms, when we talk about “long-term planning,” we are talking about creating a vision for what a company or individual wants to achieve in the reasonably distant future (considered in business planning to be about 3, 5, or more years). It also includes the action plan to go from where one is to that future vision. Doing that requires deep thought and analysis: how to make the future more about analyzing market trends, analyzing competitive environments (competition is both external and internal), and analyzing a company or individual to understand what they do well and less well and where to concentrate efforts and what to consider doing in the future.
Then, the actual long-term plan (LTP) becomes an action guide. In other words, by creating a monolithic structure of (changeable) plans, forecasting future trends and needs, and laying out in a game plan a proposed future direction, business managers or individuals can see where they are and decide: is that where they want to be; what are the most critical parts of the plan to use; what alternative steps can be taken to accomplish the plan; and what other opportunities are possible. In other words, the LTP becomes a roadmap for the company that the owners or senior management can utilize to guide future decisions.
Setting Business Goals for the Future
Any company that wants to succeed in the long haul has to set business goals.” This might be something you’re taught in Business 101, but many companies don’t set practical goals.
Next, consider using the SMART criteria (Specific, Measurable, Achievable, Relevant, and Time-bound) for the company’s goals. This will clarify whether businesses are moving in the desired direction.
Ensure the business goals align with where you see your industry heading in the long term. Why the long term? Setting business goals typically happens when conducting strategic planning, so this should be in your foresight. If your goal, for instance, is to get more car drivers this year, but analysts across the United States predict the end of driver’s ed, your goal, and your industry’s trends don’t align.
If the two don’t align, you might have the correct numbers this year, but what about years 2 and 3? Can you keep up the current speed, whatever that may be?
Adapting your business goals to the market trends will improve your strategic marketing approach. Industries are changing, and so too should your business goals.
Gaining a Competitive Advantage
Long-term planning is crucial for a business to maintain and increase its market share in today’s competitive environment.
One could spend the most money on research and development (R&D). Companies like Apple have consistently outspent many of their competitors for R&D because they are always planning for the long term; they are building the “next big thing” before most of their competitors have even released their “last big thing.” This budgeting has allowed Apple almost constantly to stay at least a third step ahead of its competitors. They are a slow-motion innovation factory, releasing remarkably world-changing device after world-changing device. They went from a scientific curiosity to an industry’s preeminent superpower in just 10 years.
One can build up such a strong brand identity that customers are willing to put up with many things to give them money. Starbucks has been pretty good at this, emphasizing an identity about the individual and treating them with humble service and respect.
One can enter strategic partnerships to maintain market share through long-term strategic planning. For example, two “competitors,” Spotify and Hulu, partnered with each other to help even out their strange shortfalls. Users can purchase a package of both for $10 a month (usually a $24 value). That perk has convinced a lot of newer users to sign up for a Spotify Premium account, and it’s kept a lot of users from ditching an account they no longer need. This has helped both streaming platforms maintain their overall market share and, for the short term, has given users a more excellent value for the products they’ve received.
Risk Management in Long-Term Planning
Risk management binds the hands of time. It is a most reassuring endeavor. Identifying possible risks to company objectives is not the same as identifying them and assessing their potential for harm. That is what good risk management does. And thoughtful risk management, like all long-term planning, is about converting uncertainty into some level of knowns that underwrites decisions. When you convert unknowns into knowns, risk management makes it possible to move with some sense of security toward company objectives.
Potential risks might include:
Risks related to the market. Consider how fluctuations in the overall economy might lower future earnings or raise the need for extra capital.
Risks related to technology. Of course, we in the technology sector constantly think about this.
Risks associated with geopolitics or regulation.
Risks associated with people (“Are we able to staff the sales team promptly?”)
Risks linked to finance (foreign currency, ability to invest, etc.)
Growth Strategies for Sustainable Success
If you want your organization to enjoy continued success, you must adopt several growth strategies (market penetration, product development, diversification, strategic partnerships) into your long-term plans. This means you can double down on which ones show the most promise. It’s a clever way to keep moving, regardless of where you are or where you fit into society’s ever-changing tastes.
Chances are you’re going to want to see a lot of aligned arrows for “growth strategy” before you cast it in stone for “organizational development.” This is an opportunity for you to get your team working together. It’s a chance for you to explain what your organization does. It’s a chance for you to define where you fit. In a word, culture. From this culture, you will know where further (innovative) ideas can resonate.
Similarly, consider deciding to grow in parallel with your organizational development. This way, what you will be doing (for your customers), who you are (your look, style, nature), and your why (your mission or perhaps your vision) will stay along for the ride. This reduces confusion among stakeholders, end users/customers, and employees. As the overwhelm dials down, so will your employees’ comfort dial-up (“I like, I know, I have, I am consistent”).
The Role of Decision-Making in Long-Term Planning
Whether formally planning for the next few years or setting informal goals, long-term planning requires looking at what you’ll be up against, and the resources needed to get there. Like SWOT Analysis, you’ll speculate about how threats might affect you, identify opportunities you want to seize and think about where you fit into that picture. This will allow you to identify activities to guide your business in the right direction.
Tools: SWOT Analysis Scenario Planning
Long-term planning must occur in every corporation because it establishes the North Star for where the organization wants to go and what it wants to be. The process must deal with where the organization seeks to create unique capabilities, how to find an integrated set of resources and capabilities, and the industry structure it wants to compete in. A long-term plan that defines the desired future state of all the key variables associated with these decisions must be created.
This plan and this future vision set the context for all the following critical business activities.
This long-term plan then sets the context for what future research needs to be conducted or what known study needs to be utilized to support this plan. For example, a complete diagnostic of the organization’s performance against this long-term plan must be conducted at least once a year.
This update signals the actions needed for an integrated progress update against this desired long-term plan. This initiative, in turn, provides input for identifying and programming a warranted new wave of long-term planning.
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