A Better Scheme for Strategic Planning
By Keith McFarland
Often when I give a speech, I'll ask how many people in the audience work in an organization that has a strategic plan -- and most raise their hands. Then I ask, "How many of you feel that your company's strategic-planning process is useful?" Only a few hands go up -- usually just those belonging to the presidents and CEOs in the room.
Why is this? An audience member once approached me during a break with a colorful opinion: "Strategic planning," he said, "is organizational masturbation. It makes the guy in charge feel good, but it doesn't do much for anyone else." Is it possible that the traditional strategic-planning process, once such a great idea, has outlived its usefulness?
Formal strategic planning became popular first with big companies in the 1960s, after a decade characterized by stable interest rates, predictable (and primarily domestic) competition, long product life cycles, and, relative to today, slow rates of change in most industries. Traditional strategic planning was probably appropriate in that environment. It was usually a lengthy affair, concentrated at the top of an organization, and carried out by specially trained, highly analytical people.
But today, traditional strategic planning may sometimes cost companies more than it contributes. More importantly, they often get in the way of real work -- especially in small to midsize businesses, where quick adaptation is the key to survival.
That kind of strategic planning may be dead, but strategy has never been more important. What's needed now is a new version of strategy -- a strategy 2.0 -- one that better reflects the realities of today's volatile and hypercompetitive markets, dizzying product life cycles, and increased globalization. Here are some of my favorite ideas for reshaping the strategy-making process:
Change the calendar
A common complaint is that businesses spend months doing a strategic plan, and within 60 days of completing it, some unexpected change in the environment makes the plan obsolete. So it collects dust in its neat three-ring binder until strategic-planning time rolls around next year, and people realize that they haven't really driven their business by strategy.
Smart executives are figuring out that a 1960s pace for planning doesn't work today and are shifting to a 90-day strategy process. They realize that strategy-making is the vital, ongoing process through which a company learns how it can win -- and they manage their strategic assumptions and initiatives as aggressively as they manage their numbers.
Compress the process
How can an outfit possibly do strategic planning every quarter? Certainly not by simply speeding up the traditional processes. The people at Microsoft (MSFT ) came up with an innovative solution. For years, they have used a sort of "strategy slam" process to make sure strategies get mapped and adapted quickly. They identify a group of 20 or 30 people most capable of contributing to the strategy of a new initiative and literally lock them in a room for 48 hours with a skilled facilitator. The only ground rule: A comprehensive strategy and detailed action plan that the entire team will endorse must be delivered on the 48th hour.
The important thing is to get the idea out of analysis and into action -- and then be open to change as you learn what works in the marketplace. These Microsoft groups learned that they could deliver in 48 hours a plan that was 90% as good as one they would have taken two months to produce. And considering how fast things change in today's markets, 90% is probably good enough.
Get more people involved
As strategy moves from a static, top-down, and analytical process to a dynamic and creative one, it becomes crucial to get a wider circle of people involved. When a CEO and his/her team go off for a day to build strategy, there's a tendency to just recycle the current assumptions of the business. But introduce promising people from the middle of the enterprise -- sales people, product-development folks, financial analysts -- and the discussions get interesting. And usually, out-of-the-box thinking increases.
In addition, when it comes time to implement the strategy and to identify new opportunities on a daily basis, these folks in the trenches will have both the knowledge and commitment to do so -- since they helped create the plan in the first place.
Get the CEO off center stage. I once worked with a California technology concern where emotions were running so high in the management ranks that I hired a facilitator to help plan and chair our strategy retreat. I thought having an independent third party involved might help people to face the painful facts and acknowledge the need for radical change.
The process delivered that, as well as another unexpected benefit: I noticed people were willing to take more of a "full-swing" at the issues. No matter how much leaders want their teams to question the assumptions of the status quo, the mere fact that the chief exec is leading the meeting subtly links him or her to the prevailing state of affairs -- and makes people in the room, perhaps unconsciously, "choke up on the bat."
When you take the CEO out of the center of the process and make it clear that the facilitator is there to make sure assumptions get questioned, you unleash a whole new level of critical and creative thinking. For the rest of my career as a CEO, I never ran another strategy retreat myself.
Edited by Rod Kurtz