Every once in a while, when I am working with clients, I run up against the sentiment that strategic planning is a process that, at its core, is focused on the negatives in business. That is, strategic planning appears to be primarily concerned with identifying and closing gaps in organizational direction and capabilities. Why, I get asked, doesn’t strategic planning focus more on identifying, recognizing and celebrating, and leveraging the successes and strengths an organization has?
When I was first asked this question a few years ago, it stopped me in my tracks. In fact, the question prompted me to ask myself – “Is the strategic planning process too focused on gaps and should strengths play a bigger role in the process?”
After thinking a bit about this question, I have formed the opinion that yes – perhaps the strategic planning process does take a bit of a lop-sided view of things with us traditionally focusing more on the gap side of the equation while taking our strengths for granted. I think that this approach is simply an outgrowth of some fundamental beliefs including (1) ALL organizational strengths are good (and should therefore be maintained), and (2) that they will somehow continue to remain our strengths over time. And, furthermore, (3) to move forward, companies need to put more energy into focusing on identifying and closing critical strategic and operational gaps.
While it makes sense to put a focus on closing key gaps, I have come to the conclusion that not giving due consideration to strengths translates into a flawed strategic planning approach. So let’s talk about the role the so called “positive” elements in business (i.e. strengths and opportunities) do, and should, play in the strategy development process.
A common precursor to strategy development is the SWOT Analysis and all its variants (e.g. PEST Analysis, Five Forces, etc.). While all of the SWOT elements can plan a role in determining strategic direction and developing an organization’s strategy map, the opportunities and threats play a vital role in informing many initial strategic decisions. Opportunities themselves are often identified in response to gaps in the external market including unmet customer needs and expectations, gaps in the customer service experience, and key competitor offering and capability shortcomings. Opportunities can also include emerging business and market scenarios, and future expected trends. Threats are situations and trends that could have a negative impact on a company’s ability to achieve business success.
These elements of the SWOT Analysis are usually used to identify strategic directions and a strategy that leverages selected opportunities and manages the key threats appropriately. Opportunities generally inform such strategic elements as a company’s mission, primary customer value proposition, and product and service decisions. Key threats are often addressed through strategic directions and strategies that either eliminate or effectively mitigate the serious ones.
This treatment of both the “positive” (i.e. opportunities) and the “negative” is fairly standard in traditional strategic planning approaches. As a result, I think that we could say that, going in, strategic planning is informed equally by positive and negative forces.
So perhaps, based on this initial assessment, the feeling that strategic planning focuses too much on the negatives is actually an incorrect perception. However, let’s look at what usually happens next in the planning process and how it might contribute to the assertion that there’s a negative focus.
Once a company’s strategic directions and strategy map have been created, the next step many organizations take is to assess current organizational and capability gaps in executing the strategy and achieving the desired business results. This is primarily done by leveraging the weaknesses identified in the SWOT Analysis to create gap closing projects. The thinking is that weaknesses must be effectively addressed to move forward. Rarely are strengths considered at this point, primarily because talking about organizational strengths simply does not fit into a gap closing paradigm. That is, items on the strengths side of the ledger represent things the company currently does well and, as a result, they are not naturally considered as a source of gap information.
I think that this apparent lack of consideration of the SWOT strength elements is probably the root cause of the complaint that strengths (aka. the “positives”) get overlooked during strategic planning.
A better approach to planning is to actually include a review of both strengths AND weaknesses when assessing an organization’s ability to execute and achieve its business strategy. The first step in this assessment is to take each strength and weakness element and evaluate its importance in, or criticality to, achieving the mission and vision, and delivering the primary customer value proposition. Any strength or weakness that is ranked as having low levels of importance or criticality should receive no further consideration in the planning process.
This is an important point so let’s pause here. What I am effectively saying is that all organizational strengths (and weaknesses) are not created equal and that, for example, a current organizational strength may not be strategically relevant. When this is the case, and a lot of effort and resources are going into maintaining that strength, there may be an opportunity to rethink those investments. Maybe that strength doesn’t need to be maintained at such a high level of capability. Or, more radically, maybe that strength doesn’t need to be a strength at all and the company wouldn’t suffer if it drifted down so it wasn’t a recognized strength anymore. This first step in the assessment process provides you with (1) an interesting opportunity to look at your organization’s assumptions about its strengths and their relative value, and (2) information with which to have an informed discussion about the wisdom of investments in non-strategic strengths.
The first step in this assessment process also allows an organization to evaluate the strategic impact of its identified weaknesses (or more positively phrased – its opportunities for improvement). As can happen with the strengths, this analysis can determine that some weaknesses may have little or no impact on an organization’s ability to execute its business strategy and deliver desired business results. When this is in fact the case, there is no need to assign resources to closing non-strategic organizational weaknesses.
With the sub-set of strategic strengths and weaknesses now identified, the next step in the assessment process is to evaluate the size of the capability gap for each strength and weakness. A gap is determined by comparing current performance against required future performance – when current performance does not equal required future performance, a gap exists. As gaps are identified they can be prioritized for closure. For example, an organization may choose to address big gaps with high strategic value before SWOT elements that have smaller performance gaps. A lot of discussion and consideration goes into prioritizing identified gaps but the usual result is gap closing projects that are implemented at strategically relevant timelines, often within the vision time frame.
Occasionally through this step in the assessment process, strengths are actually found to have performance gaps. That is, while performance capability is high, improvements may still be required to achieve future state performance levels. When this happens, the enhancement of a strength may be included as, or within, a gap closing project.
In some cases, current strengths are performing at future state levels. When this is the case, one option is to assume that, moving forward, the strength will be naturally maintained and, as a result, no extra effort and/or investment is needed to maintain that strength at current levels. However, sometimes there is the risk that, with the organization’s focus diverted to gap closing efforts, a current strength may “slip” in performance levels. When an organization determines that this is a possible risk, some make the decision to invest in a strength maintaining “project” to protect a key strategic strength. This is a particularly wise decision when the strength in question is a key differentiator or provides a company with a distinct competitive advantage in the market place.
With this background thinking in mind, let’s go back to the question we originally started with: “Is the strategic planning process too focused on the negatives in business?”
When people ask this question, it’s my experience that they are usually saying that they believe or are worried that organizational strengths don’t get equal (or more) consideration in the traditional strategic planning process. Generally, I would have to say that this is true and that both weaknesses AND strengths must be given equal treatment during the planning process if you realistically hope to become a better organization. That is, they must both be evaluated objectively relative to their contribution to strategy execution success and the size of the performance gap and then handled accordingly.
It would be a critical flaw in thinking to simply assume that all strengths are valuable to maintain and that effort should go into supporting all strengths equally. It is the same error as assuming that all weaknesses represent gaps that must be closed. The bottom line is that, as it is with most things, focusing attention and efforts too far on either end of the strengths-weaknesses continuum is a sub-optimal place to be. To ensure a sound business strategy, both strengths and weaknesses must receive equal treatment and fair consideration through the strategic planning process.
More worrisome to me, however, are the risks associated with judging strategic planning, including the evaluation of a company’s strengths and weaknesses, as a “negative” activity and experience. To be productive, strategic planning needs to be an honest, truth telling process where the act of telling the truth about where your company is trying to go, what your current capabilities are, and what you need to focus on (including the gaps you need to close) to get from here to there is perceived to be, at worst, neutral and objective, or, even better, considered to be a positive activity and experience that provides your organization with the best possible route to higher levels of business performance and success.
So, perhaps in the end, what is really required to answer the question “Is strategic planning too focused on the negatives?” is a fundamental shift in perception and perspective about the nature of strategic planning itself.