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Improving the Efficiency of Strategic Planning

In the first article of this series, we looked at the known and lesser-known benefits of strategic planning. Let’s turn to shortfalls in the strategic planning process (SPP) and how they can be solved. One complaint is that the SPP is too bureaucratic, wastes a lot of time, and collects a bunch of data that’s not relevant. The good news is that’s easily fixable.

Organizational Complexity Drives Strategic Plan Complexity

The bigger and the more complex the organization, the more time will have to be spent on getting your strategic plan in shape. A matrix organization with multiple product lines and a presence in foreign markets incurs more complexity (e.g., exchange rates and capital allocation) than a small and local one-product company. Moreover, a company that has grown very fast, in particular through acquisitions, is prone to extra complexity as the organization is trying to catch up with reality in its planning efforts.

Why is the SPP often perceived as time consuming and cumbersome, no matter the company’s size? Because that’s its nature. You need iterations of top-down guidance and bottom-up work to arrive at a good, balanced plan. Still, there are often four problematic areas:

  • The plan’s hybrid strategic and financial nature
  • Data collection overload
  • Unknown and hidden costs of the process
  • Unprofessional or inefficient management of the strategic planning department

Hybrid Strategic / Financial Nature

The strategic planning department can be a part of the strategy department or the finance department, or be its own unit. Either way, it’s closely tied to finance. That’s necessary, but it poses a problem as each department has its own set of metrics and topics that it would like to prioritize.

Finance wants detailed numbers and multi-year forecasts. Strategy might think more in terms of projects and multi-stage investments, often accepting competitive uncertainties and “what ifs.” There is a bit of a built-in tension of what data should be collected, and what would be just nice to have.

As the head of strategic planning at a global insurance company, I found it useful to sit down with the finance department to jointly prioritize what each side truly needs in building the plan without creating overlap or inconsistencies. In fact, one of the success factors for a strategic planner is to build an excellent rapport with the finance function, both in the headquarters as well as in the divisions and subsidiaries..

Data Collection Overload

Organizations add new data requirements to their strategic plans over the years, but they often fail to remove older (and potentially outdated) metrics. The best way to focus on what’s necessary is for the head of strategic planning to take a hard look each year before the SPP cycle starts, and be radical in suggesting ideas for simplifying templates, requirements, and metrics.

Assuming the SPP cycle starts in late spring, the best time to kick the tires and get the necessary buy-in from all stakeholders (e.g., marketing, IT, CFO) is in the first quarter. Sometimes there is an easy solution. Many times information requests are separable from the strategic plan and can be handled with more of an ad hoc approach, because  departments collect them through different processes outside the SPP, so they are  already widely available with no need for duplication in the plan. In case of doubt, less is more. Keep the plan tight and avoid unnecessary complexity by being a tough gatekeeper on what departments are allowed to ask business units during the SPP.

Hidden Costs of the SPP

I’m not aware of any company that does the math on how much it spends on the SPP. Each required template or metric must be researched, calculated, verified, and put into an Excel sheet or PowerPoint deck by somebody. Central departments usually don’t see the costs they impose on the organization, and nobody fills out a time sheet or bills HQ for the additional work.

Mandates to spend time on what are often perceived as spurious requests can breed discontent with the whole process. Reducing data collection requirements will have an outsized effect on time spent. The strategic planner should check the cost-benefits of every information request. It’s my experience that often the seemingly small or add-on requests cause the most amount of work.

For example, different countries might measure things slightly differently. The quest to standardize, while laudable, might lead to a lot of trouble for the country trying to translate metrics into what HQ wants. It might be much easier to use what they have, and to estimate or take note of the difference. It’s better to focus on 10 key metrics that are crucial for strategic development and the financial plan than to use 100, the majority of which are expensive to produce and do not add value.

Running the Strategic Planning Department Professionally

As a strategic planner I ensured that our unit had rules of engagement in place: fast responses to inquiries and emails; a goal of 0 percent faulty calculations; and timely completion of all tasks with transparency and accessibility to stakeholders. To help achieve these goals, our unit provided only tested and easy-to-understand instructions for collecting financial and strategic information, mapped out generous timelines early in the process, and maintained an overall helpful attitude.

By leading a professional SPP, we encouraged the other business units to follow suit. Goodwill is built, turn-around times are reduced, and the occasional hang-up can be dealt with in a trustworthy collegial atmosphere, despite the pressure of getting the strategic plan done.

A strategic planning process can be run efficiently without compromising the quality of the plan. In fact, a more tightly run and professional process should produce a better plan, as the organization is more focused on what’s important and stays engaged instead of being put off by onerous requirements.


“8Ps” of StrategyOpportunity
for Disruption
Recommended Leverage Points
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3- What technologies do you control that can help you tap into market
segments that you previously thought unreachable?

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