Forget about strategic planning?

The January 25, 2010, Wall Street Journal offered an article headlined “Strategic Plans Lose Favor” with a subhead of “Slump Showed Bosses Value of Flexibility, Quick Decisions.”

I beg to differ with the basic premise of this article. The opening salvo in the article is:

“During the recession, as business forecasts based on seemingly plausible swings in sales smacked up against reality, executives discovered that strategic planning doesn’t really work.”

By “work,” they must mean it doesn’t take into account day-to-day, month-to-month, or quarter-to-quarter deviations from the plan or expectations. That isn’t the purpose of strategic planning.

Walt Shill, head of the North American management consulting practice for Accenture Ltd. offers the following thought in the article:

“Strategy, as we knew it, is dead. Corporate clients decided that increased flexibility and accelerated decision making are much more important than simply predicting the future.”

The best companies in the world do not neglect or forget about strategy during normal, recurring economic events including a recession.

The lack of effective processes to support sales and operations planning and to look at investment opportunities identified within or even outside the strategic planning process does not mean that strategic planning should be abandoned in favor of short-term thinking and planning.

The best companies need to be able to walk (have an ever-evolving strategy) and chew gum (have a good handle on sales and operations planning as well as take advantage of serendipitous investment opportunities). The best companies can ill afford to neglect their strategy just as they can’t neglect sales and operations planning. This isn’t an “either/or” proposition—it’s an “and” proposition.

Strategic planning isn’t going away in spite of some things you may read. That’s my conclusion and the conclusion of the WSJ authors of this article.

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Dave Gardner is a management consultant, speaker, author of Mass Customization: An Enterprise-Wide Business Strategy and blogger who resides in Silicon Valley. He helps his clients eliminate business execution issues that threaten profitable and sustainable growth. He can be reached through his website at www.gardnerandassoc.com.

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5 Comments

  • Jack Ricchiuto

    I've been doing "Strategic Doing 365" around the US with companies and communities and non-profits and people love the idea of ongoing strategic learning and doing, aligned with a long term vision (in this case 20 years out). The process works if it's proactive, collaborative, pragmatic, and agile.

  • Chris Reich

    Sorry, Linda but strategy also needs to be flexible. The game changes too fast to cling to strategy or tactic. This "cling to strategy" thinking is what keeps businesses, governments and people on poor courses well beyond the time to quit. And yes, there is a time to quit. Quit and start something new.

    Changing tactics won't fructify a bad strategy.

    Chris Reich
    www.TeachU.com

  • Bryan Entzminger

    It seems to me that favoring quick decisions and agility to long-term sales forecasting is also a strategy. A very entrepreneurial strategy.

  • Linda Lankowski

    Once again, people have forgotten that there is a difference between Mission, Strategy, and Tactics. Tactics need to be flexible, strategy should not be.

  • Chris Reich

    The first thing that came to mind as I read this was SNL's panning George Bush's planning abilities by coining the word "strategery".

    I too have written on the subject of strategic planning. In fact, my Blog today addresses the issue.

    Of course businesses need a plan. But let's call it a plan. As soon as the annoying jargon [strategic] creeps in, the gel begins to set and what was fluid becomes sticky.

    Far too little attention is placed on product/service refinement and what I would call "delightful delivery". Instead, companies mire down in metrics when focusing on delighting the customer will grow the business.

    Realistically, most companies don't need that much strategery. Yes, a giant steel producer needs to plan acquisition of raw materials, plant utilization and labor. But most companies, probably 95% or more, are actually hampered by long range "planning".

    Did Apple pull back on new product releases as the economy shrank? No. Did Apple have its most profitable quarter ever at the arguable peak of the recession? Yes.

    The central premise to my overall business philosophy is two-fold. First, develop intelligence within the company. That doesn't mean read the Wall Street Journal or Jack Welch. I want to develop thinking. Much business writing is comparable to Entertainment Tonight ala business. What Jack Welch did at G.E. was largely luck with a dash of common sense.

    I encourage people to read and discuss books of interest to them and then cross apply the knowledge. Example. George Patton read the Koran on his way to battle in the middle east. He wanted to understand the enemy. Had members of our government read the Koran before rushing to war, we might have made different decisions. Reading the Koran changed my point of view.

    The other key to my strategy is to use observation to alter process. We don't need most time and money wasting metrics because the outcomes are obvious. I consulted to a company which delivered very poor customer service. The first thing the CEO wanted was a series of measurements established. He asked for metrics. Dull witted people can deal with data. They can find what they like and don't like. They can issue orders to change a metric without having to think through a problem. This particular CEO wanted me to measure "time per call" as one of the many items to measure. Then, all we need to do is reduce that number. When a simple web search reveals thousands of customer complaints, when the email system is overwhelmed with daily complaints and the letters are pouring in from unhappy customers, do you really need that metric? I passed on the project. The company shrank from $350 million in sales to $5 million. The CEO was fired. The company will not recover.

    Finally, far too much "strategic" planning is based on past data. I call this rear-view mirror thinking. Trying to plan forward by looking backward is dangerous. That protocol makes change the enemy. In fact, almost all strategic planning makes change the enemy.

    Now ask yourself this. Do you see a resistance to change in American businesses? If you could quantify this, you probably would see that depth of strategic planning pushes in direct opposition to flexibility. (Obama's failed health care strategy reflects this. Health care reform was in the plan for year one but other issues became more important. Still, it was in the plan for year one and the administration was not going to yield. And the result was....)

    Chris Reich
    www.TeachU.com
    (Read the Articles I post)