The Everlasting Rise and Downfall of Strategic Planning: Lessons Learned in More than 40 Years!

Does it make sense to perform strategic planning in these turbulent times? A recent issue of the McKinsey Quarterly addressed this interesting question. In this blog I want to share with you my vision on the usefulness of strategic planning (Do it!). I also take the opportunity to recall into memory a bit of history. This might help to get a better understanding of the necessary conditions and possible pitfalls of the usage of strategic planning. Neglecting these strategic planning will produce meaningless answers. Turbulent times need bit extra attention.

History

From the beginning of mankind there has been interest in 'strategic planning' and 'strategic management', mostly driven by political and military forces. You can think of Sun Tzu (The Art of War) and Machiavelli (The Prince). Around 1900 Taylor started with measuring work, and later Sloan (My Years with General Motors), Peter Drucker (Management), Herzsburg, and Maslow pursued other aspects.

Strategic Planning

In 1965 (!), professor Igor Ansoff published his book Corporate Strategy on strategic planning. This excellent book, full of guidelines and checklists, has been the basis for many successful, and sadly, even many more unsuccessful attempts of companies to introduce strategic planning. 22 years later (!), Ansoff published a revised edition, doubling the original contents by adding a complete part on strategic management. In his opinion that addition reflects the lessons learned during this tumultuous period (1965-1987): Fast growth, diversification, depression, &hellips;.

The Relation between Strategic Planning and Strategic Management

This addition, strategic planning, is no coincidence, and it demonstrates the enormous influence of the late Peter Drucker. Where strategic planning concentrates on the analytical process, strategic management manages the organizational action process. Where strategic planning focuses on variables of business, economy, and technology, strategic management also includes psychological factors, as well as sociological and political ones. You could say that strategic management incorporates strategic planning.

Conditions for a Successful Strategic Planning Process

For strategic planning to become successful, a number of conditions must be met to overcome a possibly faulty planning process:

  • Strategic planning is part of the management process, and should not be left to a separate organization unit or department.
  • Strategic planning must provide main stream scenario's as well as alternatives.
  • Strategic planning must be consistent:
    Top-down as well as bottom up, and from top managers to work-floor employees. The commitment of all is required, also of decentralized units outside headquarters. Strategic planning must involve those who are supposed to carry it out.

I am afraid that none of these conditions has anything to do with today's turbulent situation.

Is the Situation Today Different?

To cope and overcome today's turmoil McKinsey presents these observations to deal with the current instabilities:

  • Linear extrapolations of the current situation do not make sense.
  • Incorporate disaster scenario's.
  • Make sure that the preservation of cash is an essential part of the strategy.
  • Make sure that the strategy addresses the priorities of today's tumultuous environment.
  • Planning makes no sense without successful execution of the scenario.
  • In turbulent times more variables are important, and therefore a better and faster measurement of KPI's is required. Also, fast, effective, and accurate closing of the feedback loop is mandatory for a tight control.
  • Don't be to opportunistic. There is a tendency to forget long-term trends and important existing strategies. Don't.

This advice leads to 3 suggestions to cope with heavy fluctuations:

  • Be realistic.
  • Intensify monitoring.
  • Look beyond the crisis.

Be Realistic

As always, several different futures are possible. Therefore, concentrate on the underlying drivers of uncertainty. The turmoil creates an explosion of new variables and a range of plausible outcomes.

More plausible outcomes must lead to more stress on gathering information, exploring possibilities, and plain, hard thinking.

Involve senior executives early, and collectively evaluate the appreciation of possible threats.

Intensify Monitoring

You must account for many strategies, and adjust rapidly. Identify and monitor key indicators closely. Decompose an average forecast in individual elements to enhance the transparency and to enable detailed monitoring.

Take real-time budget decisions, take conservation of cash seriously (pay as you go), and adhere to your strategic road map. And remember, the core competence of strategic planners is to evaluate strategies in an effective manner. Use this skill! They can help!

Look beyond the Crisis

The temptation is to neglect planning, because things change too fast. This is a serious mistake. Market trends roll on. The growth of the education and health-care market is steadily continuing. People are getting older, and have more money to spend.

Continue with Strategic Planning? YES!

My advice is to continue with strategic planning as essential part of strategic management. Lessons learned in almost 45 years:

  • Develop scenario's with a greater depth.
  • Monitor your strategy rigorously.
  • Remain focused on the long term.

One more thing: Strategic planning never ever replaces flair, intuition, perception, foresight, and finally yet important, luck!

This blog is part of a series on strategic planning:

  1. The Everlasting Rise and Downfall of Strategic Planning: Lessons Learned in More than 40 Years! (this blog)
  2. Driving Change: Drive Safely (My Checklist)
  3. "Live Fast, Die Young!"
  4. The Benefits of an Aligned Supply Chain (and How to Realize That...)
  5. How Many Customers Did You (re)Win This Year?

Results2Match has a strong vision on successful business strategies and result driven implementations.

This blog is written by Hans Lodder. Hans is a very experienced change management consultant and interim manager. You can contact Hans through his Results2Match email address.


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