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It’s that time of year again – strategic planning. But, what does this actually involve nowadays? Do we believe that ‘strategy’ and ‘planning’ can be intertwined harmlessly? Or is it time to recognise that strategic thinking needs to be separated from planning?
Strategic planning usually begins with a mad scramble to the spreadsheets, accompanied by the shuffle of “decks”, as the latest market and competitor reports are dusted off and regurgitated into a seemingly bottomless pit of templates and tabs. Confidently, the budget allocation process then begins, outwardly aligned to the firm’s ‘strategy’ of providing “better customer experiences” or some other ‘pillar’. Inevitably, weeks pass as budgets are cut, re-cut and cut again underneath a storm-cloud of political to-ing and fro-ing, as investment benefits propped up by seemingly prophetic but realistically dubious financial models are used to out-muscle contenders to the ‘envelope’. Eventually, a detailed execution plan is finalised, spanning five years with prioritised initiatives priced to the last cent.
After this festival of template population, surely the organisation now has a prescient set of slides capable of plotting the road to success?
Or, you may be wondering, where the ‘strategy’ was in all of this?
Any sign of deliberate strategic choices? Any time spent carefully considering why the firm currently exists? Beyond execution timetables and dollar allocations, was there any consideration of where it actually wants to be in the future or how it is going to win in that space?
Indeed, as Henry Mintzberg announced in 1994, “Strategic planning is not strategic thinking.”
Over the years client remarks have echoed the sentiment that strategic planning has morphed into something quite unrecognisable. The following list attempts to portray some of the major grievances that often get raised by senior client members:
This approach to strategic planning, which permeates many of today’s top organisations, is ill-suited to the environment within which it operates. It has failed to evolve and adapt to the dynamism that now defines the business world. Subsequently, the planning process hamstrings the organisation by:
Some organisations, in recognition of these issues, have moved to a rolling budgeting process, removing the need for polished strategic arguments, yet still propagating incremental change. Others have been more successful in fostering a more strategy-friendly environment, particularly through the use of Design Thinking, where the traditional budgeting and planning rigour has been peeled back in favour of strategy design supported by constructs such as customer experience, prototyping and dialogue.
We have four recommendations that will help organisations rediscover what it means to think strategically and plan to execute on this, whilst avoiding the ills of the current process.
1. Decouple strategic thinking from strategic planning and revisit regularly
Consideration of detailed profit margins and recovery periods smothers any attempt to take a step back and make deliberate choices regarding what the firm is trying to achieve. Separate the two, and reconsider your strategy every three to six months.
2. Follow a simple, independent strategic decision framework
A deliberate choice structure will grant organisations the much needed luxury of thinking through the tough choices. Separate strategic thinking from the stringent analysis that supports a choice to avoid a focus on ‘what is’, and invite a focus on ‘what could be’. Don’t simply refresh this by updating trend considerations, but allocate some time to truly think through your current choices.
3. Make strategy a tough conversation
From the very top to the bottom of the organisation, tough choices first require conversations, not spreadsheets. Bring people together, and put them at the forefront of the strategy process – give them time to think and the choices will become easier. This will involve a deliberate attempt to mix employees across silos, which typically obstructs the truly generative dialogue that results from diversity of opinion and expertise.
4. Separate resources for execution and exploration
Organisations that funnel all of their resources into execution are missing out on an opportunity to generate truly strategic moves. A non-centralised set of fixed funds (separate from the annual budget allocation process) that enables parts of the organisation to explore new opportunities, prototype ideas and stress-test options will result in new and greater value capture and more robust choices. Only through failing faster will organisations succeed sooner.
We need to recognise that the antiquated strategic planning process can impede progress in a turbulent environment. By making a deliberate effort to follow these four suggestions, strategic thinking can re-emerge from the organisational safety net that is led by endless analysis, riddled with stage-gates and overburdened with financial scrutiny. Untangle strategic thinking and planning and strategic thinking will once again prove its inimitable value.
This blog was authored by James Revell.
Jeremy is the Lead Partner for Monitor Deloitte in Australia, the firm’s strategy consulting practice. His primary market focus is in the communications, infrastructure, and life science sectors where he has worked extensively with executives across the Asia Pacific region and globally on the development and execution of their corporate and competitive strategies, and transformational change programs. Jeremy is Deloitte Consulting’s Asia Pacific Leader for its Strategy, Analytics and M&A offering portfolio, and the Chief Strategy Officer for Deloitte Consulting in Australia.