Four Fatal Mistakes in Strategic Planning

Four Fatal Mistakes in Strategic Planning

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Over 88 percent of this country’s large organizations are now engaged in some form of strategic planning…and this number continues to expand, reaching across all industry sectors and involves companies of all sizes.
Yet, as business leaders gather to strategically plan their futures, they continue to make fundamental…even fatal mistakes. Here are the top four:

  1. Skipping Rigorous Analysis
    Many believe business experience and knowledge, alone, equips them with all the information they need to plan profitable growth. Not true! A more viable approach includes research into how its industry is evolving, identifying emerging trends and opportunities as well as barriers to growth to be found in the current competitive landscape.
  2. Believing Strategy Can Be Built in a Day
    Many executives honestly believe effective strategies can be crafted, explored and agreed in the space of a single off-site meeting where the most anticipated events are meals and afternoon golf. While these meetings are excellent forums for addressing key issues and coming up with recommendations for solutions, strategy creation requires time (over weeks) for adequate discussion, problem solving, exploring various courses of action, validation and resolution.
  3. Failing to Link Strategic Planning with Strategy Execution
    Where strategic planning requires only the top team, execution of these plans involves the entire organization.  The degree of disconnect between planning and execution in most organizations is astounding. The lack of communication, structure and management processes to build accountability, measure and monitor progress is frequently not there.  Instead, build a dashboard to recognize achievements, note missed milestones, surface major issues and apply corrective actions.  Also, reviewing performance on a bi-weekly to monthly basis accelerates success.
  4. Letting the Profit Motive Become Unhitched from the Purpose Motive
    Strategy is typically about increasing profitable growth and that’s a good thing!  Engaged employees, however, want to be committed to a transcendent purpose that gives meaning to their work life.  Because strategy execution is a “whole organization” activity, reinforcing organizational purpose must be part of the strategy as well. Successful organizations maximize both profit and purpose.  When employees lose a sense of contribution and purpose and become driven solely by profit, the development of ethical problems, poor service, and bad products occur — which our economy has been a living example for the last several years (witness from Wall Street to BP).

The title of this piece, as you recall, include the words “Fatal” and “Mistakes” — and that’s exactly what these four points are…and why it’s dangerous to risk making even one of them.  Navigating the journey of strategic planning for profitability growth is often less perilous with an expert guide at your side.

2 Responses to Four Fatal Mistakes in Strategic Planning

  1. Rick Harris says:

    These four points got me thinking about the assumptions that I make when I’m working with a client on strategy execution.
    1. The reason to do rigorous analysis is to develop deep domain knowledge. Deep domain knowledge comes in handy when you hit a wall you hadn’t anticipated. It helps you stay focused on the long term instead of engaging in knee-jerk (and expensive) pivots at every obstacle.
    2. The reason strategy can’t be built in a day is that a strategy is a theory of how the business ought to interact within its environment to be successful. A theory, once formulated, needs to be tested three ways: on reflection (did we really mean what we said yesterday?); in pilots; and in hindsight. In each case you’re generating real-world data to know whether you’ve selected the appropriate strategy. Maybe golf and a good meal are not a bad idea after all. The best you can expect for a one- day off site is a damn good first draft. Might as well do some heavy thinking in the morning and then relax and build the team. Your going to need the team when it comes to execution.
    3. You mention communication and scorecards–two key management tools in keeping the strategy on track. This is clearly a lot better than issuing platitudes without clear accountability. Another issue is the degree of change that’s needed (behavior, attitude) to make a new strategy work. Sometimes in addition to clarifying success, I think you’ve got to engage the troops. That’s, of course, related to point 4.
    4. For most people, at least people in large companies, the profit motive isn’t all that motivational. With the gap between executive and rank-and-file pay being as wide as it is, exhorting employees to control costs is often met with a cynical sneer. Perhaps it’s time to shut up about the profit motive (or it’s proxy “shareholder value”) and only focus on the higher purpose to which the company contributes. And if you can’t come up with one, it’s time to shutter the business before the market does it for you.

    Thanks for a thought-provoking post.

  2. My experience has been that numbers 1 and 3 are most important, yet both are routinely either skipped or not thoroughly completed. I would add to #1 that the most important part of analysis is to uncover and critically examine all assumptions, especially those underlying the nature of the firm’s industry. Equally important, after analytical diagnosis of real impediments in #1, is the failure to “see” the big picture. Executive leadership is key here. Even with a good organizational audit, if there is little real commitment to implement recommendations, all the foregoing is a waste of resources. There MUST be unwavering commitment to change for improvements, no matter how painful.

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