When Did Strategy Become a Four Letter Word?

After several meetings and discussions with colleagues and business leaders over the past few weeks, I’ve come to the sobering realization that strategy and, more specifically, strategic planning, has developed a bad name out there. More and more frequently, I seem to receive friendly advice telling me not to use the “S word” because it turns business people off. Just call it something else, or better yet, don’t talk about it at all they say – just convince “them” to do it without naming it strategy/strategic planning.

The unfortunate reality seems to be that, in many cases, executives and business leaders deal with strategy making and management because they know they should but they do so with a hesitation based in a real dislike for the process and the resulting plan (and distractions) it produces.    

Now, for me, someone who feels passionately about the value of strategy formulation and execution in driving higher levels of organizational performance success and more sustainable business results achievement, it’s really confusing, and worrisome, to think that strategy has become a dirty word in our businesses and organizations. So, I began to think about it and found myself wondering: Why is this the case? What is turning business leaders off?

How did strategy become a four letter word?

This is what I came up with.

 

1. Strategic planning can feel like a waste of time

The Problem: In a rapidly changing business environment, strategic plans are often out of date before they are rolled out. When this is the case, it’s easy to start to question the time, effort, expense incurred, and value associated with strategic planning activities. As a result, some organizations are swearing off the 3 – 5 year strategic plan and opting to complete 90 day plans that are really more tactical than strategic.     

The Root Cause of the Problem: The traditional approach to strategic planning no longer works in this dynamic business environment -

● It takes too long (6 months from start to plan production is simply too much time);

● It is too reliant on historical data (which doesn’t really help you move forward in uncharted waters) and doesn’t involve the people who know how the business really works in the strategy creation process;

● The plan it produces, as well as the annual planning cycle approach, aren’t dynamic and agile to change (reducing the relevance of the strategic plan as an effective business management tool) and the plan often ends up sitting on the shelf;

● The strategic plan is often a short to mid-term tactical plan that isn’t guaranteed to move the organization forward towards its long-term business goals; and

● No one in the organization (often including the executives that created the plan) really understands how to implement the strategic plan locally/in their everyday work activities (largely because it is written at a very high level and, though it seems to make sense, it’s unclear what implementation looks like below the corporate or executive level).    

The Turnaround Plan: Changing times require a different approach to strategy creation/formulation – one that works with, rather than against, a dynamic, often unpredictable business environment while still helping to chart a clear and understandable path towards the ultimate business goals of the organization. This new strategic planning process -

● Must be completed in weeks, not months;

● Leverages some data but is more reliant on their interpretation by, and the wisdom and intuition of, a broad range of stakeholders, including employees and key business partners, who participate hands on in the planning process;

● May involve an annual planning event but focuses more on quarterly strategy progress review and refresh/refinement sessions AND has mechanisms to identify, make and incorporate, and communicate required changes in the business strategy quickly, effectively, and efficiently at any time so that the strategic plan is always relevant; and

● Clearly lays out the long-term strategy to achieve the organization’s mission and vision AND both the mid-term (3 – 5 years) and short-term (12 – 18 months) business priorities, within the context of the long-term strategy, in an accessible roadmap format so that all employees and stakeholders understand what the key elements of the strategy are and what they look like in action. 

How to Learn to Like Strategic Planning Again: Drop the traditional approach to strategic planning and start formulating strategy using a fresher, faster, more dynamic, and agile approach.  

 

2. Strategic planning/formal plans introduce too much structure into the way we work

The Problem: While some people like process and structure, many do not. Strategic planning is a process that often produces a fairly prescriptive plan. As a result, those who have a more spontaneous approach to management can struggle with the rigor demanded by strategic planning.

The Root Cause of the Problem: On the surface, there are many perceived characteristics of strategic planning that seem to turn people off –

● Strategic planning is a deliberate process that is followed by a group of people to produce a certain result – if you dislike following processes, you probably won’t like strategic planning much;

● Strategic planning activities can be highly data driven with little to no opportunity for intuition and insights from a broad range of sources to make their way into the process – this makes strategic planning feel like a clinical process that is disconnected from the day to day realities of the business at the front lines; and

● A documented strategic plan can feel like it limits your options for individual creativity and innovation in your work.

While I see these concerns from time to time, and hear them presented as a rationale for disliking strategic planning, I think that they are really just convenient excuses. What I think is the true root cause driver here is a reluctance to (1) commit to a plan, (2) work together with others to implement the plan, including planning and possibly modifying personal actions based on their impact on others, and (3) be held accountable for one’s part in the successful completion of the plan and the achievement of targeted business results. Working with a strategic plan requires all this of everyone in the organization – no wonder it can feel like a scary proposition that is best to be avoided.  

The Turnaround Plan: Overcoming this particular problem requires a fundamental change in organizational beliefs and attitudes about strategic planning. To achieve this goal, co-operation is required from three sources which must be aligned with, and designed to support, the goal of helping people embrace the strategic planning process and its associated discipline.

Organizational and Management Processes 

● Business leaders, managers, and employees must commit to: adopting a strategic planning process that provides some structure and produces the desired results, follow and improve it moving forward, and stick with it over the long-term;

● Add strategic planning process and discipline to your organization but resist the temptation to go too far - the key is to add just enough structure to ensure that everyone is moving forward together in the same direction but not so much that there isn’t room for innovation and creative thinking, at all levels of the organization, about the best way to implement the strategy and get the organization to its intended goals;

● Management processes must integrate seamlessly with the strategic planning process, and the resulting plan, so that the business strategy (including strategy formulation and execution) becomes just a part of the way the organization works every day;

Supports and Rewards

● The organization must support business leaders, managers, and employees in their efforts to work on and within the strategic plan – this includes facilitating their involvement in the process by giving them the time away from their work to participate, and providing them with back up on the job;

● Business leaders, managers, and employees must be rewarded and recognized when they demonstrate the desired new attitudes and behaviors – this reinforcement helps sustain change across the entire organization; and

Leadership Behaviors

● Business leaders, managers, and employees must walk the talk and model the desired behavior at all times.

How to Learn to Like Strategic Planning Again: Focus on creating an organization, from top to bottom, that embraces the structure strategic planning provides and the commitment it demands.

   

3. The strategy execution failure rate is high

The Problem: Statistics have shown that the majority of organizations fail to actually do what their strategic plan says they’re going to do, so, many think: “Why bother planning in the first place?”

The Root Cause of the Problem: While strategy execution failure is a complex problem, there are typically four critical stumbling blocks that exist in the majority of cases including:

● Lack of employee buy-in for the plan;

● An unclear strategy execution roadmap;

● Unclear ownership accountabilities or no accountability framework; and

● Low levels of organizational alignment with the business strategy (including core processes and strategic projects, human resources and their skills and capabilities, and the plans (e.g. learning and development/human capital plans), tools and technologies, and resources (including budget dollars) that support the work being completed) 

The Turnaround Plan: Steps can be taken during the strategic planning process to reduce or prevent strategy execution problems including:

● Involving employees (as members of the strategic planning working team) in a meaningful way in the strategy creation process including making decisions in the key elements of the strategy and what they look like in action;

● As members of the strategic planning working team, help employees play the role of strategy ambassador throughout the organization and involve them in the roll out and implementation of the strategic plan;

● Develop your strategic plan in the form of a strategy execution roadmap that includes key strategic objectives, aligned business processes and strategic projects, and linked performance indicators – aligning processes, projects, and measures with your business strategy effectively links action with the strategy;

● Assign ownership (for strategic objectives, indicator data, indicator commentary, core business processes, and projects) across your organization, including clear responsibilities and target dates, that leverages current work responsibilities intelligently and build a culture of follow through within your organization; and

● Strive for maximum organizational alignment at all levels of the business with the elements of your strategic plan.

How to Learn to Like Strategic Planning Again: Leverage the strategic planning process to set the scene for strategy execution success. 

 

Strategy formulation and execution management are critical activities for any business that wants to achieve maximum organizational performance and sustained business success. The act of collaborating, talking about, and writing down your organization’s goals, and plans to achieve them, has a powerful effect on the amount of time and effort required to reach those goals, reducing them significantly for most companies.

If you want to avoid using the “S word” in your organization, I’ll leave that to you. However, the fact remains that successful companies have made peace with strategy (and the strategy formulation and execution management process) and have embraced it for the invaluable business management tool and process it is.

I believe that the key to success is not to avoid strategy but to adopt it on terms that make sense for your organization so that your business strategy/strategic plan can provide your organziation with all of the benefits it has the potential to deliver.

 

Comments

[Páginas Amarillas]

Someone who feels passionately about the value of strategy formulation and execution in driving higher levels of organizational performance success and more sustainable business

[Ashton Nembhard]

Sandy,
I think companies often confuse strategy with operating budgets. If I were to define strategy it would be the actions required to change the company’s business model to meet its governing financial objection – e.g. annual total shareholder return or targeted business value increase.
Strategy starts with defining a company’s business model i.e.:
Where do we compete? - i.e. products, geographies or customers.
How do we compete? – i.e. offering, asset configuration or pricing.
To adequately complete the above description the business will have to conduct a fact base exercise (e.g. quantify the performance of each product line and attractiveness of the underlying market) and in the process it will uncover issues and opportunities associated with its business model. An example of an issue could be an underperforming product line that is in a profitable market. The resolution of this issue becomes the strategy (with actions and quantification) that is layered onto the base business operating budget. My approach has been to couple the strategic plan and the 5 year financial plan where the first year of the financial plan becomes the operating budget for the business thus creating the linkage between the two processes. The managers are paid their incentive based on achievement of the budget which by definition includes the strategy.
Achievement of the operating budget will require a number of tactical actions but this exercise can occur at later time.
Conducting strategic planning in this manner will take extra time in the first year but my experience with a billion $ business was that in subsequent years the process would normally take 1.5 months.
Changes to the business model which become strategies are few (maybe 2) – less is more!!!

[Sandy Richardson]

I couldn't agree with you more Isabel!

[Isabel Romero Zabalbeascoa]

Quite interesting, in this crisis enviroment most of the Clients are really focussed on short term and tactical actions, it's difficult therefore to talk about Strategy, neverthelees it's easier if we told them what strategy means: yes, we need to walk, of course but it will be interesting if we know were to go, it will be nice if we are well prepared for the road and it will be wonderfull if we know what to do when we end our walk.

We need, we are forced to keep walking but at the same time we do need to know our goals....

In my experience it's much easier to set up strategy if we can take some time to explaian that it is not need to stop the day to day business, that it is not a need to destry the pass of the company and that they can still preparing their tactical actions while preparing a Strategic plan for the coming times. Strategic planning now a days must be flexible, easy to implement and comprehensive with the context and the content of the business.

Strategic planning must set up the basis and the goals of the Business (mission, vision, usp, values) but the plans must be set in short, medium and long term, and those plans must be reviewed at least as fast as the economy, the competitors and the consumers do.

As some of the colleages wrotte: Flexibility is a must

[writing jobs]

So, in my opinion, strategic planning should be an ongoing thing, not an onerous "that time of year" activity, which everyone hates and yields the results you so well describe.However, until thinking is seen as a valuable business activity, strategic planning may continiue to be a casuality.... Sandy

[Sandy Richardson]

Hi Allen: thank you for your comments. Isn't the inconsistency in the terminology used in strategic, etc. planning frustrating? Anyway, I was talking about strategic planning. In my mind, an organization's mission will remain constant, however, everything else could be in flux - even the strategic objectives selected to help achieve the mission can change (often based on learning and the business environment). The key is to stay agile and have regular opportunities to review and adjust the plan (objectives down to tactics) as required. To me, strategic planning and business/operational planning are part of a continuum and there has to be regular opportunities to adjust the plans to keep them relevant and and useful in moving the business forward. Sandy

[Sandy Richardson]

Hi Dave: Thank you for your comments. I also wonder some times if avoiding strategy is a "cultural" thing in that we are rewarded for taking action and not for thinking. Just look at how hard it is to schedule time into the business day for thinking - you might get some strange looks from your peers if you said you were booking thinking time into your calendar! As we both know, thinking and then acting usually produces better results, often more efficiently. However, until thinking is seen as a valuable business activity, strategic planning may continiue to be a casuality.... Sandy

[Dave]

Hello Sandy, Like Allen, I don't profess to be an expert in this area as well but in my opinion you will find more business leaders that are more tactical than strategic in their approach. I don't know if this is because of human nature ("do this tactic and get this result; repeat if works) or if this is drilled in from corporate culture.

It seems that asking someone to address what they are trying to accomplish strategically is actually asking them to perform an extra step in the process of getting from A to B. But it is one of the most important steps to take and if skipped then the larger goal of the exercise (the strategic goal) can be missed.

Lastly, I think the people have put strategy into a category of "nice to have" but not necessary" in running a business today. The best combination to find (and rarest) is someone who can understand and address the need for an overall strategy and can identify the tactics to get the job done.

Thanks

Dave

[Slim]

Thank you. Slim
ps. Great Blog

[Allen Bourne]

I don't profess to be any kind of expert in this area, but it seems to me there are a few pieces missing in your otherwise excellent assessment.

Maybe you meant business planning and not strategic planning. I've always understood that the hierarchy is as follows:

- Goa - not a quantitative thing; more aspirational
- Objectives - quantifiable, measurable things you have to do to have a sustainable business and achieve the Goal
- Strategies - the "how" behind each objective that will help you achieve it, so there will be many
- Tactics - the specific actions you will take to realize each strategy

When looked at this way, the Goal remains relatively constant, Objectives shouldn't change a lot either when you're talking about what it takes to stay in business or meet investor requirements, Strategies are added or retired based on current market conditions and so may change during the year, and Tactics get added as Strategies do.

So, in my opinion, strategic planning should be an ongoing thing, not an onerous "that time of year" activity, which everyone hates and yields the results you so well describe.

Too often, in my opinion, the first two are unclear or are poorly articulated to employees

[Sandy Richardson]

Hi Jocelyn:
I really love your counter-arguments! They are so true and you laid it out very clearly. I am glad that strategy prevailed! Sandy

[Sandy Richardson]

Hi Slim:
a very interesting story! My take away is that while the plan is great and necessary, it is just a plan - the real value comes in execution (the project) where things finally get done! Sandy

[Jocelyn]

Great article and examination of the subject! I recently had a similar discussion with a potential client who thought that strategic planning would be:

1. a distraction
2. too time consuming
3. something that they could do once they reached a certain point

I countered:

1. Strategic planning will take some time and energy, but you will be able to continue your day to day business during the process...it is flexible.

2. Not having a plan, goals and clear direction and wasting time trying to figure those out on the fly will be more time consuming.

3. You need to plan BEFORE you get there...

A nice discussion followed and strategic planning prevailed!

[Slim]

Sandy,

Quite by coincidence, when a member of a Chamber of Commerce Economic Development Committee, Strategy became a dirty word when the focus was shifted from project to plan.

This inspired the monograph China: The economy and a word beginning with the letter P.

http://slimviews.blogspot.com/2011/06/china-economy-and-word-beginning-with.html

Regards,

Slim