What is the difference between a Strategic Plan, a Succession Plan, and an Exit Plan?
Strategic Plan:
A strategic plan outlines the long-term goals and objectives of an organization and the strategies to achieve them. Given the speed of business these days, the strategic plan rarely goes beyond three years. It is simultaneously data-driven and aspirational including vision and mission statements, competitive analysis, and projections for growth in terms of product or service offerings, revenue, and/or customer acquisition. The strategic plan is crafted by a very small group, usually just the senior leaders of an organization (and the board of directors, if one exists), and passed down to lower levels of the organization for execution. A strategic consultant can assist in helping the senior leadership team to define their vision, goals, and implementation strategy.
Succession Plan:
A succession plan is a structured process for identifying and developing internal talent to fill key leadership positions within an organization as attrition happens. Grooming future leaders for promotion ensures continuity of the strategic plan as “new” leaders are still aligned with the established vision and goals. Succession planning is aspirational in that a company does not want to replace like with like; future leaders should have “new and improved” skills to help the organization keep pace with the future. Succession planning involves the whole organization in that all employees should be continually improving their skills and all current leaders should be grooming future leaders. HR typically leads the process since they are the “people people” of the organization.
A succession planning consultant helps map out the leadership pipeline, and identify the development needed - both for individuals and the organization as a whole - and the order of execution (e.g. all employees in their first three years will develop communication skills, financial acumen, and competitive intelligence). Succession planning is essential for maintaining organizational stability and retaining institutional knowledge,
Exit Plan:
The exit plan helps the business owners to exit or divest from their investment in a company. Do they sell, merge, offer terms, pass on to a family member, or create an ESOP? The point of the exit plan is to protect the owner, get the most valuation for the business, and ensure a smooth transition to the new owner.
All three types of plans are critical for organizational success and they each serve distinct purposes: a strategic plan guides the overall direction and priorities of the organization, a succession plan ensures leadership continuity and talent development, and an exit plan prepares for the eventual divestment or transition of ownership or control.
The plan that gets the least attention (and is the least understood) is the succession plan. A strategic plan is important as you are building and growing a company. An exit plan is important when you want to move on to a new endeavor or retire. While the succession plan helps you to achieve both of those things.
