I am often asked by clients which strategic planning framework they should use. In general, strategic planning frameworks provide a structured approach for organizations to define and execute their long-term strategies. While there are numerous frameworks available, I will compare the following: SWOT Analysis, Balanced Scorecard, OKRs, Porter’s Five Forces, and McKinsey’s Three Horizons.
- SWOT Analysis:
- Pros: Easy way to assesses internal strengths and weaknesses and external opportunities and threats.
- Cons: Lacks prioritization and doesn’t provide a clear path for action. Your team must be careful about categorizing and prioritizing the action items. See my previous article on ways to optimize your SWOT analysis.
- Recommended for: A SWOT is a great for getting a snapshot of the current state of your organization and identifying key areas of focus.
- Balanced Scorecard:
- Pros: Offers a balanced view of an organization’s performance and helps align different organizational initiatives.
- Cons: Can be complex to implement and measure accurately.
- Recommended for: Aligning strategic objectives with operational activities and measuring progress towards goals.
- OKR (Objectives and Key Results):
- Pros: Provides a clear structure for goal setting, with measurable key results that drive focus and alignment across the organization. The OKR system has gained massive popularity with big brands and has replaced the KPI system for many organizations.
- Cons: The OKR system requires complete buy-in from leadership and integration into the entire organization in order to be truly effective. I have seen teams abandon OKRs because they didn’t stick with it or have enough leadership championing it.
- Recommended for: Goal-setting and performance tracking, especially in fast-paced and performance-driven cultures.
- Porter’s Five Forces:
- Pros: Analyzes industry dynamics by assessing competitive forces (e.g., rivalry, supplier power, buyer power, etc.).
- Cons: Narrow focus on external factors and doesn’t provide a comprehensive strategic planning view.
- Recommended for: Understanding the competitive landscape and identifying opportunities and threats in the industry.
- McKinsey’s Three Horizons:
- Pros: By focusing on three horizons or timelines, this tool provides a structured approach to thinking about stages of business development. Also helps leaders think about how to balance short-term efficiency with long-term transformation and innovation. It encourages a forward-thinking mindset and the need for adaptability.
- Cons: It does not provide guidelines or metrics on how to actually measure these changes.
- Recommended for: Future-forward,, innovative and creative thinking.
A Strat Planning framework that I like to use with clients:
No matter what Strategic Planning Framework you choose, it is important to get buy in from your executive leadership team as well as your Board. These stakeholders must understand the planning process and the importance of staying committed through the execution phases. For assistance in facilitating your next Strategic Planning session, contact me here.