Strategic Planning: Why you should zoom out and zoom in has been saved
Strategic Planning: Why you should zoom out and zoom in
Despite the challenges of strategic planning in a rapidly changing world, most companies have remained loyal to the five year plan as a basic framework. Some have moved to a three-year horizon to address the growing uncertainty, with a few taking the dramatic step of abandoning a long-term strategic plan altogether.
Regardless of the time frame, executives have increasingly adopted a reactive approach to strategy. The goal: to sense and respond as quickly as possible to events as they happen.
The result, however, has been that many companies are spreading themselves too thin dealing with an ever-expanding array of initiatives. Even the very largest companies are wrestling with the realisation that the number of new programmes exceeds the available resources. They are also recognising that these initiatives tend to be incremental in nature, due not only to limited resources, but also because they are responses to short-term events.
The outcomes speak volumes. At the Deloitte Centre for the Edge, we have been tracking the performance of all US public companies over the last half century.
Measured in terms of return on assets, performance on average for all public companies has declined by more than 75% since 1965. If the goal of strategy is to at least maintain current financial performance over time, this is evidence that the current approaches are not working.
Fortunately, there is an alternative. It’s based on an approach that some of the most successful digital technology companies have pursued over the past several decades. We call it zoom out/zoom in. And in this June issue of CFO Insights, we’ll discuss its components and why CFOs and other executives should embrace it to boost immediate strategic impact and prepare for the long term.
For more information about Deloitte's CFO programme, click here.