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Which of the Three Strategic Planning Types Create the Best Results?

An organization’s comfort level with risk can determine its choice – and its success.

By University Alliance
Which of the Three Strategic Planning Types Create the Best Results?

Most organizations use one of three types of strategic planning, but determining which approach will work best depends on the desired outcome and the company’s level of comfort with taking risks.

Planning, according to Jim Davis of the University of Notre Dame’s Mendoza College of Business, always begins with performance. Organizations typically want to plan to improve performance.

But what performance needs to be improved? That can be a tricky issue because, as Davis said, stakeholders often have differing definitions of performance.

For example, using a university as an example, professors might seek improved performance as it relates to access to research funding. Students, on the other hand, might want more options for class scheduling at different times or more access to computers throughout the campus. Residents and business owners adjacent to the university might want more students and more school events to draw more people and increase local revenue.

That’s why organizations must consider each of the common types of planning:

  • Transactional
  • Forecasted transformational
  • Revolutionary transformational

Transactional planning is the most conservative of the three, intended to sustain performance by simply doing the same thing in a better way. This often involves a focus on increasing efficiency by eliminating waste and improving how assets are utilized. The downside to transactional planning, Davis said, is that it merely acts in the same way without incorporating any imagination or initiating a different approach.

“If an organization only does transactional planning,” Davis said, “I guarantee it will become irrelevant in its market over time.”

Transformational planning, in contrast, is a more direct approach that directly challenges competition and initiates change.

Forecasted transformational planning analyzes past performance and looks ahead, considering different patterns to forecast future trends that can impact performance.

Revolutionary transformational planning is even bolder, Davis said, in that it essentially creates the future by redefining industry and regenerating an organization’s advantage. Organizations that embrace the revolutionary mindset often operate with urgency and a sense of passion in shaping and dictating the future.

An example of revolutionary planning would be the advent of mobile cellular phones, which continue to change the way people communicate on a daily basis by introducing new and previously unheard of technological advances.

Organizations increase their risk by adopting these planning approaches. Revolutionary planning has the greatest risk but also the greatest potential for reward. As Davis said, that’s the main reason investors are fond of organizations that take a revolutionary approach because those entities are breaking new ground and introducing ideas that can potentially reinvent an entire industry.

A chief trait among bold, forward-thinking organizations is confidence that the steps being taken will yield success. According to an August 2015 Entrepreneur magazine report, intentional vision directs intentional actions that breed intentional results.

This clarity of purpose can inform and transform a workplace and its team to embrace positivity and achieve a desired result.

The magazine article describes how some companies have employees working hand-in-hand with executives to identify priority assignments each week that produce tangible results, allowing workers to see first-hand the progress being made.

Those same companies often perform monthly assessments to identify any areas where productivity is not on par with expectations, allowing for discussion and adjustments to fortify the necessary teamwork and refocus efforts.

Strategic planning is an integral component for success, and a tool that organizations can use to maintain current performance or take a bold risk to mine uncharted territory and possibly create something new.

Whatever the path, the destination can only be reached with the right plan executed to perfection by a team that is confident the desired outcome can and will be achieved.

Wherever you are on your professional journey, the University of Notre Dame’s 100% online Executive Education Programs can help sharpen your skills and move you closer to your goal. 


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Category: Business Administration