Introduction

Operational Planning is putting your company’s strategy to work, which means that company strategies should be broken down into departmental strategies, which should further be broken down into goals, objectives and action plans.

Definition: A Strategic Plan is an organization's summary of the development process and the presentation of core directions, including setting a vision, mission and strategic goals.

Definition: An Operational Plan is an annual work plan explaining how the goals of the strategic plan will be implemented and what budget and processes are required.

Strategic planning helps you to pull back the lens, get a big picture view and consider future scenarios. It gives you the best opportunity to maintain control, avoid serious pitfalls and capture opportunities. Thinking strategically about your company involves creating a vision for where you want to be in 2, 5 or 10 years. Strategic planning is not just for big companies and has benefits no matter what your scale or goals. Your defined goals might include increasing the size of your company, sales or method of production. Goals may also include environmental and sustainability targets or to sell the business.

Operational planning focuses tightly on the day to day operations with no more than a 12-month cycle. Depending on the company’s activities, the manager might want to further break things down to daily, weekly, monthly or seasonal activity segments. Operational planning focuses on adjusting and developing controls, increasing efficiencies and reducing time and costs. The purpose of an operational plan is to effectively execute the goals identified in the strategic plan. Operational planning will determine where to focus attention and where you can take a step back. In addition to informing human resource decisions (such as hiring additional help), operational planning can identify areas where you should look at outside professional assistance (accountant, technical advisor or shared administrative assistant).

Operational plans answer key questions such as “Who is doing what?”, “What are the day to day activities?”, “How will the suppliers and vendors be used?”, “What are the labour requirements?” and “What are the sources of raw materials?” Specific plans can be developed for human resources, production, facilities, logistics and distribution.

The key to developing both strategic and operational plans is for the higher-level management to step back from the daily activities, and allow business units to manage their own performance, obviously with agreed upon and controlled targets. It requires the allocation of time and a mental shift to ensure objectivity.

Click here to view a video that explains the difference between operations and strategy.