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The Strategic Planning Gap
LMC explains The Strategic Planning Gap
A strategic planning tool used to calculate the difference or 'gap' between desired projections and current or forecasted operational reality. The details of the process showing the current position and where the company wants to be are plotted on a graph. The axes of the graph show the desired indicator for judging the gap (market share, sales, profitability etc.), against time. Analysis of the chart allows businesses to decide on the resources and strategy needed to achieve the company's objectives.
Plotting the chart
First, the desired results are plotted. In this example the corporate objective is £60m in sales over a given time period. The current forecast models are then used to work out, if nothing strategic changes over that same time, what the outcome will be (in this example £30m in sales). This presents the first gap, i.e. the difference between the upper and lower lines, known as the 'operations gap'.
Strategic gap analysis
Once the gap has been identified, the process of strategic planning begins to form a plan or strategy on how to close the gap and achieve the desired corporate objective. There are two methods that can be employed to close the gap: strategic changes such as market development, penetration, diversification and product development, or tactical changes such as price shifting and discounts.
Overall
The strategic planning gap is used by the highest level strategists within an organisation and can be used for human resources, business direction, business processes or information technology. The analysis process allows companies to analyse and challenge their business strategies, identify underutilized resources or misplaced foci, and to establish benchmarks for themselves and their products or services. Once these have been identified, the cyclical process of strategic and tactical changes to achieve the desired result can begin.
