Strategic Planning | Transformation Required
Why are most executives not enamoured by the annual strategic planning process and why do most CEO’s complain that it yields few new ideas and is often fraught with politics.
And why is it the first to be blamed for any strategic missteps. In particular why do some companies fall behind their rivals, if not fail entirely, despite investing significant resources in strategic planning. In the era of disruption we believe there are three reasons for this
1 Some companies miss a major shift or disruption
2 Others perceive the disruption but fail in their strategic response
3 And some develop a sound strategic response but fail to effectively implement.
But the risk of these occurring can be significantly mitigated by changing the Strategic Planning Process in two ways –
1 Conversations not Spreadsheets. Too often a paucity of vigorous debate results in legacy spreadsheets and their implied assumptions dictating strategic direction. What’s required is a greater emphasis on challenging the status-quo, pursuing innovative solutions to long-standing issues, and exploring scenarios and strategic options beyond the norm.
2 Always-On not Annual. In an era of business stability an annual review of strategic direction was largely sufficient. Given the current pace of strategic disruption it’s not. To increase the odds of success in today’s turbulent environment, the annual strategic review must be complemented with something more dynamic. We call it always-on strategy.
Strategic Planning | Conversations not Spreadsheets
The counterintuitive notion that the strategic planning process is far from ideal for creating innovative strategy has been observed repeatedly.
Strategy researchers have often observed that truly innovative strategy is often created – in real-time – in hallway conversations, informal discussions, casual workshops, and during moments of quiet reflection.
Based on this research our goal for the strategic planning process is not simply to make strategy for the upcoming year but to –
1 Prepare Minds. In this context we transform the planning process from a scripted show into an insightful forum. The aim of the forum is to make sure that key managers have a solid understanding of the current business strategy, its context and assumptions, likely disruptions and scenarios, and potential initiatives and responses. This makes it possible for the organisation to make strategy in real-time as the year progresses and as events unfold.
2 Drive Innovation. Very few formal strategy making processes can guarantee flashes of brilliant creative strategies. But what can be done do is to increase the likelihood that they will occur. This is achieved by embedding cross-department, cross-topic informal workshops throughout the year and in particular leading up to the annual strategic planning forum.
Undergoing this transformation will also require that organisations separate discussions of strategy from setting financial targets. While both are important, combining them tends to prioritise short-term financial targets and numbers over strategic dialogue.
Strategic Planning | Always-On not Annual
A set-and-implement approach to strategy is ineffective and poorly suited to today’s fast changing markets.
What’s required is an always-on approach that complements the annual strategy planning process.
This always-on approach gives strategists and leaders a regular forum in which to review and discuss issues identified during the annual process and during the course of the year.
The always-on approach is particularly well suited to addressing issues that
1 have the potential to significantly disrupt the business unit
2 can significantly change the nature of the business unit – for example adjacent market growth
3 can reposition the business unit – for example upstream/downstream integration
Always-on strategy enables a methodical approach to disruption scanning. Strategists and leaders are then able to pre-empt and formulate responses. And they can closely monitor the progress of strategic initiatives to increase the speed and impact of execution.
Strategic Planning | Re-Imagined
Integrating always-on strategy into the planning process transforms rigid and sequential strategy-making into agile and continuous strategy-creation.
In addition, creating prepared minds immersed in real dialogue significantly increases the likelihood of truly different strategy.