Financial planning is not a subset of strategic planning -- it's an integrated step. Although strategic planning typically should come first for best execution, the strategic plan doesn't have to be in place before a company can start thinking about resource allocation. But most companies find that you can't plan the money trail if you don't know where it needs to go.
Regardless of all the careful planning and conservative speculation, there's one factor that strategic and financial planning simply must not forget to include -- new ideas. To move into a wide-open future, an organization has to be willing to innovate. The future will be different no matter what, and innovation (and risk-taking) can serve the business well. Including innovation in the strategic plan -- with a willingness to pay for it in the financial plan -- becomes an inspiring and engaging part of the company culture and a way to distinguish a company from the competition.
Innovation can be risky, but risk can take the company to the level its strategic plan says it wants to go. As the old adage goes, you have to break eggs to make an omelet. Risks can go one of two ways, so plans must account for risks. The strategic plan must justify why the risk is vital. For example, if a hotel chain wants to have floating space hotels in 50 years, it has to justify that very expensive risk with some data about the increasing feasibility of space tourism in order for the financial plan to support it.
Ultimately, each plan serves a different part of the business, and reflects the two sides of the human brain: the creative and the practical. But if they work together, the strategic plan and the financial plan can shape the organization's future while also adapting to the future.
For more on strategic and financial planning and related topics, visit the links on the following page.