Strategic Planning vs. Long Range Planning
Long range planning refers to long-term goals that are set to help organizations on their growth path. Different methods, like short-term, strategic and long range planning, can help organizations maintain a healthy cash flow and expand into new markets. But, for success, it’s important to understand the benefits of long range planning specifically.
So, in this article, the definition of long range planning is explained, the process of long range planning, why long range planning is important and some best practices for long range planning by o9.
Long Range Planning Definition
Long range planning is a guide that can help an organization reach growth goals. These plans might be a part of a company's strategic plan, which is a comprehensive framework that determines the direction of an organization.
Often, organizations set five to ten long range plans in place to enact parts of their mission statement or strategy. Then, the company's leaders create operational plans to accomplish each step. Long range planning might have set of flexible deadlines, depending on the organization's ultimate goal.
Depending upon the type of business, the time scale for long range planning can vary from three years through to one or two decades. This is particularly true for organizations such as utilities, large-scale high-tech manufacturers, chemical plants and research companies where the time and costs associated with investments are such that plants take years to build and returns are measured over long periods.
Short-term planning, on the other hand, deals with the here and now while medium-term plans address actions intended to permanently resolve short-term issues.
To provide another answer to the question, “What is long range planning?”: Long range planning is about changing the direction of the organization to meet its long-term goals and insulate it from the upheavals that periodically affect the economy.
Long Range Planning Process
Long range planning strategies are a multi-step journey: it requires you to have a roadmap of prioritized actions with sustainable wins and benefits. To create that roadmap, the first thing is to understand the different elements of a long range planning process.
- Establish a complete strategy
The best approach is to establish a mix of short, medium, and long-term strategic plans, and then revisit them frequently. Having a mix across time horizons will help secure sound performance in the short run, as well as sustain longevity.
Short-term plans are the most immediate. They illustrate how your organization has fared in recent history and reflect its present business performance for the next six months. The issues will be pinpointed and opportunities, and then identify improvement plans that can be implemented and accomplished quickly.
Medium-term strategic plans extend the look into the future and examine the potential and prospects over the next year. But you can also develop medium-term plans that extend two or three years out. Such plans focus on maintaining and improving the organization’s growth rate and creating ways to measure company performance and health.
Finally, your long-term strategic plans are centred around your mission and your purpose. They help analyze potential new products, services, markets, and processes as part of a future strategy.
All elements are important.
- Engage stakeholders across the organization
The key to establishing a successful planning team and to arriving at a successful strategy is diversity. So you should create teams consisting both of new hires who have the ability to think outside the box, and candid, tell-it-like-it-is employees. Look for change-makers across your organization, remembering that leaders come in all shapes and sizes and not all of them are in executive positions.
Consider, too, including customers and vendors on your planning teams or at least, in your discovery process. By inviting a broad range of people to the strategy table, you’ll gain new and invaluable perspectives that lead to creative opportunities for your organization’s future.
- Execute with engagement, alignment, and communication
If you’ve adopted the best practice of engaging a diverse team of stakeholders in planning, congratulations; you’ve already created a good foundation for ensuring strong execution. That diversity helps to establish accountability and secure early organizational buy-in. And without buy-in, implementation can sink fast.
You can further fuel success by assigning the execution of initiatives to your various planning teams and to other small teams of employees. In any case, wherever those initiatives land, ensure each is allocated adequate resources and is accompanied by timelines, goals, and clear expectations. Then back that up with ongoing dialogue, strong communication, and progress reviews.
- Monitor your key performance indicators
Your strategic plan initiatives must come with metrics/ key performance indicators (KPIs) that are connected to action then diligently tracked. Monitoring your KPIs gives your organization the ability to measure its progress, manage risk, and make critical adjustments along the way.
Your KPIs can reflect any number of objectives as part of your plan. Alongside financial metrics, consider organizational and people goals (like employee retention), or the quality of customer relationships, for example.
Why Is Long Range Planning Important?
Long range business planning includes developing a mission statement, vision statement and ongoing business goals and strategies necessary to move the company's vision and mission forward. By focusing on key issues such as productivity, customer service and quality, business goals and objectives provide a sense of direction, purpose and urgency, it also motivates organizational teams to deliver the performance necessary to achieve targeted results.
Having a long range planning helps improve businesses in several aspects:
Long range planning business goals make business teams and individuals accountable for moving forward a company's mission and vision. The mission statement articulates the purpose of the organization's existence. Long-term strategies are typically larger goals that take a longer time to complete. When creating these plans, the purpose is to set goals that improve your company. As you complete the plan, you can see growth within your business, such as increased sales or more employees. These results depend on what your goals are, but you usually set long-term goals, so your business can improve and expand.
Long-term strategies can also be important for risk management. Since they occur over an extended period, you can mitigate risks by revising your long-term strategy as necessary and tracking your results more actively. You can make more adventurous decisions within long-term strategies because you know you can apply changes.
Long-term planning can help you create a financially stable budget because you can divide the costs over the course of your strategy. This also allows for better resource allocation.
Test marketing is when you test the popularity of a new product or service by exposing it to your audience for a (small) amount of time. Long range planning allows you to implement test marketing because you can make manageable changes to your company with little risk. This means that you can create a new product to see how customers react to it.
What are the Challenges of Long Range Planning?
Some of the common challenges of long-term planning include lack of ownership, poor communication, lack of alignment, and slow adoption. These are some challenges of long rang planning:
Lack of Ownership
Long range planning often involves setting goals and strategies that extend beyond the current leadership's tenure. This can lead to a lack of ownership among current executives and managers as they may feel less invested in implementing plans that might not fully benefit them personally. Ensuring a sense of ownership and commitment to the long range plan is crucial to driving its successful execution.
Effective collaboration is essential for long range planning to be successful. The vision, goals, and strategies must be clearly communicated throughout the organization to ensure everyone understands their roles and responsibilities in achieving the long-term objectives. Poor communication can lead to misunderstandings, misalignment, and decreased employee engagement.
Lack of Alignment
Achieving alignment across various departments and teams is a common challenge in long range planning. Different units may have their own objectives and priorities, which can sometimes conflict with the organization's overarching long-term goals. It requires strong leadership and collaboration to align all stakeholders towards a unified vision and ensure that everyone is working towards common objectives.
Long range plans can face resistance from employees and stakeholders who are comfortable with existing practices or are sceptical about the effectiveness of new strategies. Encouraging adoption of the long range plan often involves overcoming resistance to change, providing adequate training and support, and demonstrating the benefits of the proposed strategies.
Addressing these challenges requires proactive leadership, effective communication, and a commitment to creating a culture that embraces long range planning. It is essential to involve key stakeholders, provide clear ownership of the plan, and continuously communicate the plan's importance and progress. By fostering alignment and encouraging adoption throughout the organization, businesses can enhance the chances of successful long range planning and ensure the plan's long-term impact.
Strategic Planning versus Long Range Planning
In today’s rapidly changing business landscape, organizations need to adopt effective planning strategies to thrive and remain competitive. Long range planning and strategic planning are two approaches commonly used to set goals, define objectives, and chart a course for the future and both are important for sustainable success.
While these terms are often used interchangeably, they each have distinct characteristics and serve different purposes. This section will delve into the differences between long range planning and strategic planning, explore their unique benefits, and examine how organizations can effectively leverage both.
Strategic planning typically covers a shorter time frame, often ranging from one to five years. It involves setting specific goals and action plans to achieve them within this relatively immediate period. On the other hand, long range planning, extends further into the future, generally spanning five years or more, and can sometimes cover up to ten or even twenty years. Its focus is on envisioning the organization's position and direction over the long term.
Scope and Detail
Strategic planning is more detailed and focused on the specific initiatives, projects, and resources required to achieve short-to-medium-term goals. It involves a thorough analysis of the internal and external factors that impact the organization's success. Long range planning is broader in scope and tends to be more high-level and less detailed. It sets a long-term vision, mission, and overarching goals, providing a general roadmap for the organization's future growth and development.
Flexibility and Adaptability
Due to its shorter time frame, strategic planning is generally more adaptable to changing circumstances and can be adjusted more frequently to respond to emerging opportunities or challenges. Long range planning may be less flexible, as its longer time horizon involves making assumptions about future conditions that may be subject to greater uncertainty.
Focus on Vision and Direction
Strategic planning primarily focuses on achieving specific short-to-medium-term objectives that align with the organization's mission and contribute to its overall success. Long range strategic planning emphasizes setting a compelling vision for the organization's future and establishing strategic directions that will guide decision-making and efforts in the years to come.
Frequency of Review
Strategic plans are often reviewed annually or every few years to ensure they remain relevant and effective. Long range plans, in contrast, are reviewed less frequently. This is typically every five years or more, due to their longer time frame and broader vision.
Summary: Long Range Planning Software by o9 Solutions
Choosing o9 Solutions offers businesses a powerful advantage in their long range planning and decision-making processes. With its comprehensive and user-friendly platform, o9 empowers organizations to conduct data-driven, long range planning that aligns with strategic goals.
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About the author
o9 SolutionsThe Digital Brain Platform
o9 Solutions is a leading AI-powered platform for integrated business planning and decision-making for the enterprise. Whether it is driving demand, aligning demand and supply, or optimizing commercial initiatives, any planning process can be made faster and smarter with o9’s AI-powered digital solutions. o9 brings together technology innovations—such as graph-based enterprise modeling, big data analytics, advanced algorithms for scenario planning, collaborative portals, easy-to-use interfaces and cloud-based delivery—into one platform.