Strategic planning and the mission statement: long-term planning critical for Montana companies.

• Author: Larson, Paul

Most high-level managers are involved in strategic planning, whether they realize it or not. Decisions about new products and markets, reactions to competitors, company financing, and other facets of business are strategic in nature. The manner in which a company makes those types of decisions is of utmost importance.

Some managers take a reactive approach to strategic planning. They wait for dropping sales, threatening competitors, demanding creditors, or emergencies to arise before taking action. This is strategic planning by default; competitors and external circumstances - not long-term intentions and plans - dictate a company's direction.

Granted, one sign of a successful company is adaptability. It is difficult to control every situation that may arise. Nonetheless, a company without a vision of where it is heading, and a flexible plan for getting there, usually gets nowhere. Organizations without long-term plans are usually disjointed: there is little teamwork and esprit de corps, and productivity is often low.

Committing to plan on a long-term basis is critical. When unforeseeable crises and opportunities arrive, one should resolve that they are not reason to throw out long-term approaches.

Rising Above the Masses

The following story about a military group that had been instructed to clear out the underbrush in a dense jungle illustrates the importance of strategic planning. A division of 1,000 men, all perfectly disciplined, was marching systematically through the jungle with machetes, completing the task to perfection. The men were in perfect unison, their path was planned exactly, and each man knew precisely what his job was. The project was perfectly managed. As they reached the completion point of their mission, one of the men broke ranks, climbed a tall tree, and surveyed the forest. He cupped his hands and shouted down to the rest of the division, "Wrong forest!"

A company may be highly organized, but are its leaders cutting through the right forest? Strategic planning forces managers to critically analyze the organization's most basic decisions such as choosing which businesses to be in, what products to carry, how to compete, and at what rate to grow. No amount of "good management" can overcome poor basic strategic decisions.

Defining the Business

The starting point of strategic planning is defining what sort of business the company is involved in - and it is not as simple as it sounds.

For the longest time, railroad companies believed they were in the railroad business. They concentrated on tracks and trains, loading railroad cars, and all those things that go along with being in the railroad business. For decades, the industry suffered poor...