Putting Strategic back into Strategic Planning
In the last article of this series, we started covering the shortcomings of the strategic planning process (SPP). We said that a fast-changing environment, often referred to as strategic acceleration or heightened rate of competition, is detrimental to the strategic aspects of the typical SPP. Same goes for the time pressure the organization faces when following the annual timeline in getting the multi-year plan done.
Let me offer some ideas of how your organization can become more strategic.
Divide and Conquer – Select Strategic Issues for Special Consideration
Before you even start the SPP, you should make two decisions following to the old Roman Empire’s adage of “divide and conquer.”
First, is it time for a full strategy review of the company or an important issue independent of the annual budget cycle? For example, are you considering taking over another company, contemplating radical cost-cutting, or entertaining the idea of significant expansion abroad? If the answer is yes, it might be time to do a full-blown, project-style review to come to a strategic decision. Even if the answer is no, you might follow best practice in conducting an all-encompassing strategic review at least every five years. By taking the big strategic decision out of the annual process, you give it the attention it deserves and avoid overloading the SPP.
Second, don’t just treat every business unit and corporate function the same. Before the SPP starts, identify which units need to go deeper. Create a list of five to 10 key themes to be addressed explicitly by certain areas. Practically, this means that every business unit has to follow the overall timeline, using the same templates and spreadsheets for the annual planning exercise. However, some units may be given extra time and resources upfront to tackle a strategic issue explicitly.
These issues might include, for instance, addressing a new competitive threat or looking into some special opportunities that top management feels might warrant a deeper exploration. For example, let’s say that a foreign subsidiary has been producing losses lately. Instead of just waiting for the SPP to run its course, the company tasks the local CEO to specifically address the underlying causes. Another example would be water cooler discussions between executives that a certain business unit should grow much faster than it has. By identifying these strategic issues early on, the company forces relevant parts of organization to explicitly pay attention to them and avoid business as usual when planning.
Use Innovative Strategic Discovery Tools to Harvest Your People’s Ideas
Garbage in, garbage out — we all know this saying. If you don’t provide your employees with the tools for strategic discovery and strategy generation, they won’t be able to come up or articulate their business ideas. Let me allow you to share a little secret: whenever a company hires a consultant to do strategic work, the end results are rarely a surprise to many employees. Why? Your workforce is an amazing source of knowledge, ideas, and usually has a good glimpse of what’s ailing or should be done. Rank-and-file employees often just lack the tools, incentives, or risk-free environment to express truly strategic, radical, or contrarian ideas. A good SPP harvests the knowledge of internal experts and employees by using the right tools. No use of PowerPoint templates or typical brainstorming will generate the best results, though. You need frameworks, strategic idea generation tools, and good facilitation to get there.
For example, if the strategic question is how to grow a retail bank faster than the competition in a certain region, assemble 10-15 executives and employees from the front line, and then ask them where they would usually look to solve the problem. Typical answers might be “introduce new products” or “use a different pricing scheme.” Instead of letting your group off the hook with these traditional areas of optimization, force them to look in a direction neither your company nor your competitors would contemplate.
Maybe this is a group that has never considered, say, differentiating the set-up of bank branches, or questioning the people who man a branch, or using bank statements as tools for differentiation. Now force the people in that group to generate many ideas regarding those underappreciated performance levers by applying a set of well-known strategic patterns like “giving something up to gain something else,” “attacking your competitor on two fronts,” or hockey player Wayne Gretzky’s famous adage, “Move to where the puck will be, not where it is.”
In our example, the group might use the first strategic pattern mentioned above to come up with the idea of opening up a new concept of branch, where the bank shares (i.e., gives up) its branch real estate space with a non-bank business that generates high foot traffic (i.e., helps the bank gain potential new customers). The breadth and quality of the generated ideas will amaze you. Classify your ideas and select the ones that promise high returns for further analysis. This is just one of many innovative ways of getting to innovative ideas the typical SPP overlooks.
The beauty of using strategic discovery tools is that they perfectly fit the strategic planning process’ inherently limited timeframe. Whether you organize a one-day session or series of strategic discovery days, you will generate innovative strategic options without the drawn-out timelines of regular strategic projects. Needless to say, your employees will feel empowered and happy to have experienced something very different from the previous year’s SPP.
Any strategic options you discover have to be harvested, managed, and sometimes killed if they are not worthwhile. In the concluding part of this series, I will cover the importance of understanding the economic concept of options and how a company can manage them well.
Author: Michael Froehls
Management Consultant, Author, and Lecturer, Outthinker
Michael Froehls, PhD, is an independent management consultant associated with the NY-based advisory boutique Outthinker that helps companies design innovative growth strategies.
Originally published on: http://www.texasenterprise.utexas.edu/2014/07/10/leadership/good-bad-and-exciting-future-strategic-planning-part-4#sthash.w4lcMAtF.dpuf