How To Make Strategic Planning Work

LOS ANGELES - June 27, 2013 - PRLog -- Making “Strategic Planning” Work

“Strategic planning” is one of the most misunderstood and maligned managerial tools. Entire books have been written to explain why it cannot work.¹ Most organizations have tried it and many claim to do it, but relatively few companies actually succeed in achieving success through the strategic planning. However, if done effectively it can be a powerful tool for building sustainably successful organizations. Many companies have used it successfully to create leading or dominant positions in their space or to dislodge entrenched competitors.²

What is the Value of Strategic Planning?

Strategic planning matters because it can increase “alpha” and reduce “beta.” Stated differently, effective strategic planning can increase the incremental economic value of a business (“Alpha”) vis a vis other organizations that do not plan effectively, and it can reduce risks caused by the failure to plan effectively (“Beta”).

The Top 10 Reasons Strategic Planning Doesn’t Work

There are many reasons why strategic planning typically will not work in an organization.

The top ten reasons strategic planning typically does not work are:

1.          It is done in an ad hoc manner without a systematic method.

2.          It focuses primarily upon markets and product strategy and not upon the infrastructure required supporting that strategy or building a sustainable successful organization.³

3.          It uses the “obsolete” notion of a “SWOT” analysis rather than the more advanced notion of an “Environmental Scan” and a comprehensive Organizational Assessment based upon the Pyramid of Organizational Development™.⁴

4.          It results in a set of flip charts rather than a written strategic plan.

5.          It uses a set of loosely defined terminology rather than a consistent set of interrelated concepts.

6.          It is conducted without proper training of senior management in how to think strategically and plan.

7.          The plan is developed by outside “experts” rather than by management who are trained and guided by seasoned facilitators using a proven methodology.

8.          The CEO or leader prefers the “freedom” to do whatever he or she wants to do without the constraints of a written strategic plan.

9.          The CEO or leadership group does not believe it has the time to develop a strategy plan, even if it only would take a few days it done correctly!

10.          The leadership group believes (incorrectly) that “great execution” makes up for a poorly conceived plan or no plan at all.  

What Should A Strategic Plan Accomplish For A Business?

The key deliverables of an effective, value added Strategic Planning Process must include:

• Identification of your company’s current opportunities, threats, strengths, and weaknesses – based on an assessment of your company’s environment and internal capabilities (using the Pyramid of Organizational Development™).  

• A written plan that clearly outlines what you and your team want your company to become in the long-term – including specific measurable results to be achieved 3-5 years out (what we call the company’s “Strategic Mission”).

• Within the plan, the identification of specific strategies (long-term results to be achieved) related to seven Key Result Areas (factors critical to long-term success) and specific, measurable, time-dated Goals that support these strategies.  The Key Result Areas that provide an organizing tool for the plan are the levels in the Pyramid of Organizational Development™, plus Financial Results Management.

• Development of your team’s strategic planning capabilities so that you and your team can continue to develop, implement and manage your company’s plans over the long-term, with or without consultant involvement.

• Promotion of a common vision for the company, a commitment to common goals, and a common language for future discussion of strategic issues.  In brief, implementing this process helps ensure that all planning team members (and the company as a whole) are on the same page with respect to the company’s future direction and the steps needed to take the company where it wants to be.

The Bottom Line

Strategic planning is maligned, misunderstood, and typically does not work in organizations because it is poorly conceived and poorly executed. However, it can be done effectively; and if it is done well, it can be a powerful tool for building sustainably successful organizations.  For further discussion of how to make strategic planning work, including the unique framework of the Pyramid of Organizational Development™, please visit the Management System's website under both http://www.mgtsystems.com/what-we-do    and http://www.mgtsystems.com/what-makes-us-different for information on all the key concepts, frameworks and methods mentioned above including the Pyramid of Organizational Development™ and Strategic Planning.

Footnotes

1  See Henry Mintzberg, The Rise and Fall of Strategic Planning, The Free Press, 1994.

² For examples of companies that have used strategic planning successfully including Starbucks, see Dr.Eric G. Flamholtz and Dr. Yvonne Randle's, Leading Strategic Change, Cambridge University Press, 2008.

³  For an explanation of this see Dr. Eric G. Flamholtz and Dr.Yvonne Randle's, Growing Pains, Jossey-Bass Publishers, Inc., 2007.

⁴ See, ibid, chapter 7.