Strategic Plan Development - Why Organisations Need a Strategy - Director Tools: Organisation

Sep 23, 2026

Strategic plan development defines strategy as a long-term, uncertain and iterative process that refines organisational purpose, selects goals, and develops ways to achieve them more effectively than competitors. It explains the board’s governance responsibilities, including oversight of performance, compliance, and ownership of strategic direction. It distinguishes the board’s role in monitoring and endorsing strategy from management’s responsibility for detailed planning and implementation, supported by measures to track success.

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Pages5

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Strategic plan development

Why do organisations need a strategy?

What is a strategic plan?

The role of the board in strategy?

ORGANISATION Strategic plan development Why do organisations need a strategy? Every organisation has a purpose reflected in its goals. Strategy is the process of refining the organisational purpose, selecting the organisation’s goals and developing ways to achieve them. It is typically characterised by being long term and uncertain. It is also an iterative process where different ways to achieve an organisation’s goal (goals) are tried and refined in an effort to become more effective . Most organisations exist ina competitive environment and must win by achieving their goals more effectively than their competitors . Boards are responsible for governance . Broadly speaking, this includes oversight of organisational performance and compliance with all legal and regulatory requirements . There are three areas of importance related to an organisation’s performance for boards to consider: strategy, risk and corporate outcomes (for example, financial results) . In a governance context, strategy refers to the decisions made by the board and management that determine how an organisation will meet its goals while responding to changes in its environment and allocating resources to meet those goals. The process of strategic planning assists an organisation to enhance its understanding of the environments in which it exists, where it is going, how it is going to get there and how it will know if it has been successful in achieving its aims. What is a strategic plan? Having a clear strategy is only the beginning. An organisation must also have a detailed plan for implementing the strategy and a set of measures to indicate how well the implementation is going. A strategic plan is a document setting out the organisation’s aspirations and how it will achieve them. It can be defined as a roadmap to sustainable value creation based on the best possible information available at the time. It addresses the long-term direction of the organisation by describing what it’s going todo and how. Generally, a strategic plan’s time horizon will be three to five years . However, the planning horizon will depend to a large extent on the industry: a high tech company in a rapidly changing area may have a horizon of 18 months whereas established utilities (for example, a water authority) may have a planning horizon out to 40 years, given the long payback period of the investments required. DIRECTOR TOOLS: ORGANISATION For more information visit [companydirectors.com.au](companydirectors.com.au) 1 STRATEGIC PLAN DEVELOPMENT What is the role of the board in strategy? The Corporations Act 2001 (Cth) s 198A (1), provides that: The business of a company is to be managed by or under the direction of the directors. Given the importance of strategy, it is not surprising that good corporate governance requires that: Generally speaking, the board of a listed entity should be responsible under its charter for... overseeing management in its implementation of the entity’s strategic objectives, instilling of the entity’s values and performance generally.1 Strategy development may be shared between the board and management, but detailed planning and implementing the strategic objectives are usually the preserve of management. The board will monitor that management has a plan, that the plan will advance the organisation towards its strategic goals and that implementation of the plan is delivering the desired results . In short, the board must own the strategy. Generally, the board's main role is to collaborate with management in setting strategic direction, with consideration given to risk appetite. However, the final approval of the strategy must rest with the board. Justice Neville Owen summarised that role as follows: Generally speaking, it is for management, rather than the board, to propose strategy. This is not an impediment to the board taking the initiative in an appropriate case. But management is best able to dedicate t

FAQs

Why do organisations need a strategy?

Organisations need a strategy to refine their purpose into selected goals and practical ways to achieve them. Strategy provides long-term direction while adapting through iterative refinement in an uncertain environment.

What is the role of the board in strategy?

The board must understand, test and endorse the company’s strategy, collaborate on strategic direction, and retain final approval. It also monitors whether management’s plan advances the organisation toward endorsed strategic objectives and delivers desired results.

How do board and management responsibilities differ in strategic planning?

Strategy development may be shared, but detailed planning and implementing strategic objectives are usually management’s responsibility. The board focuses on governance: challenging deviations, monitoring performance, and ensuring rigorous process and oversight.

Sep 23, 2026

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