The Difference Between Strategic Planning and Annual Planning (And Why You Need Both)

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What is the difference between strategic planning and annual planning? If you’re not sure, or your organization uses one document for both, keep reading! There’s a significant difference between the goals and uses of a strategic plan, which sets your organization’s longer-term vision, and an annual plan, which charts out a path to achieving its objectives. If your strategic plan is really an annual plan in disguise, here are a few pointers to help you clarify between them as well as tips to help them work together better.

 “Why?” versus “How?”

Everything starts with your customers. A good strategic plan asks, “Why do we serve customers?” Strategic plans examine your customer’s motivations, why they need you, and why you matter. Customer needs can evolve over time, so strategic plans keep a finger on the pulse of those needs and a seat at the table for your company’s product(s) or service(s). A strategic plan helps understand your changing customer as well as the competitive landscape in which you operate.

Once you understand “Why?” you next need to detail, “How?” The annual plan picks up here, and tackles questions about how you can deliver for your customers better and more efficiently. Strategic plans define the need while differentiators, service delivery models, and operational questions are addressed in an annual plan.

“What if?” versus “What is?”

Most management teams spend a significant portion of their time together dealing with the here and now, anticipating upcoming needs, troubleshooting issues, measuring progress, and adjusting strategies. Addressing present-day, real-life demands is important, no doubt. However, teams should take time to step outside of the confines of daily operational imperatives to ask the broader questions around, “What if…?”

What if we were to expand? What if we develop a new technology? What if we reinvent ourselves? What if the unexpected happens? Strategic planning allows leadership teams to have conversation at the 30,000-foot level. Ideas can be cultivated, expanded upon, and prioritized in the strategic plan. Once priorities are set in a strategic plan, ideas are handed off to an annual plan to outline the current state, identify what is needed for the ideal state, and detail steps to bridge the gap.

Road Maps versus Destinations

If success were a family vacation, the strategic plan would be the destination brochure and the annual plan would be the road map. Strategic plans paint the clear picture of the destination – it’s what success looks like for the organization. It defines broad goals to which everyone is aligned. Annual plans chart progress to those goals and provide details around objectives, milestones, key performance indicators (KPIs), responsibility, and accountability.

Leadership versus Management

Generally, it is the responsibility of organizational leadership to create and share the higher-level vision and strategy, so strategic plans are often the responsibility of the C-suite. However, good leadership teams rely on their management teams to help achieve the loftiest of organizational goals. All levels of management need to understand the vision outlined in the strategic plan as well as their role in it so they can craft objectives within an annual that contribute to that vision.

Strategic plans and annual plans are not the same, though both are immensely valuable to an organization’s success. Having a vision of success, and actively working toward that vision sets great organizations apart from the rest.

Chartwell Agency facilitates sessions with organizations for strategic and annual plans, and would be happy to discuss how we can help your organization create yours.