Strategic planning has been part of management lexicon for over 50 years. It is the process of evaluating the environment and deciding on a handful of priorities that will determine the direction of the business over the next 2-5 years and longer in some instances. The senior management of the organisation who have an in-depth knowledge of the customers, the markets and the environmental trends that are occurring that will impact the business undertakes this strategic planning process.
Inherent in the use of the words strategic planning is the idea that strategic thinking is integral to strategic planning. As we have explained in earlier articles strategic thinking is a later level of cognitive development. Therefore if the team does not possess this capability or the organisation culture inhibits this capability from being then strategic planning will not occur – although a strategic plan may be documented the changes are it will have a superficial relationship to the market. The reason is that in the process of developing the strategic plan the wrong questions were being asked and conversations were being held so a true in depth transformational strategic plan may not emerge. If it does there may be a significant potential that it will not be understood by many of the participants.
Whilst this is an important consideration Kotter has found that over 70% of all strategic plans are not implemented. They either become a reference document to appease stakeholders or just fill up the bottom draw with the link between day to day operations and the strategic plan being tenuous and co-incidental at best. The reason is that strategic planning and executional excellence are two distinctly different processes. In Jim Collin’s framework in his book Good to Great where he found that companies that are able to go from average performance to 3x better go through three distinct phases. They first attract the right team of disciplined people. These people engage in disciplined thinking and finally they execute through disciplined action. Our work with Supercompanies is that they have instinctively followed this approach and achieve significantly better results. Teams need distinctly different processes to ensure that there is both disciplined thinking (strategic Planning) and disciplined action (executional excellence). The teams for both processes overlap but the skills and capabilities for each process is significantly different.
The strategic planning process is ambiguous, messy and iterative with parallel thinking occurring where as the executional process is more systematic and sequential with shore term goals and the need for best practice, expert knowledge being essential.
Strategic thinking is about positioning the organisation differently to the competition. It is this differentiation that requires leadership taking the organisation to places it never thought possible. It is about challenging the organisation about its purpose and re-defining it in a way that makes it different and is able to more successfully meet customer needs.
This team must trust each other because there is a high level of intense debate and challenging of assumptions so that people understand the subtleties of the position and its inherent advantage. People must be willing to be open to have assumptions challenged otherwise the thinking becomes the constraint within the organisation. People must believe that the people around the table debating the strategy seek the best outcomes for the organisation. In our experience it is the willingness to adapt and listen that differentiates the Supercompanies from the rest.
The strategic planning team needs to put time aside to debate these issues. Whilst this may be biannually for the overall plan they will meet at least monthly to make sure the assumptions in the strategic plan are still valid or if there is drift to correct this before it becomes a major issue. The focus is around market segmentation brand promises, competitor behaviour and general market conditions.
In the end it is about providing the organisation with a handful of priorities that align with the strategic purpose of the business for the next 12 months.
Executional excellence has been an overlooked discipline within strategic management. Yet it is crucial to have the capacity to execute on its plan otherwise all the work in the strategic plan becomes meaningless. Executional excellence starts with revenue and profit forecasts supported by the few high priorities that the senior leadership have laid down for the coming year. These are cascaded down through the organisation and broken down into goals and objectives at each level so that everyone understands their role in achieving the plan.
These goals and objectives are tracked daily and weekly and everyone knows how they are performing against their own goals. Daily, weekly and monthly meetings are held where performance is celebrated or corrective action put in place to address any drift. Execution is a discipline process and is not something senior management can ignore, nor delegate. If employees see senior management ignoring the performance (good or bad) then they will also not focus on it.
There are many more details to be addressed when driving the strategic planning process. However the most important step is to understand the difference between strategic thinking and strategic planning and then secondly have distinctly different processes which need committed management if you wish to drive success.