A survey of senior executives found that less than a quarter of them agreed that they made big, strategic decisions during their strategic planning process. Less than a quarter! In other words, over 75% of corporate strategy programmes failed to move the dial on their strategies. What a waste of time, money and energy!
The problem is that the term ‘strategic planning’ is an oxymoron. It is virtually impossible to develop a winning strategy during an annual planning process. Strategy and planning are two separate tasks. If you try to combine them, the planning process takes over and you become one of the 75% of executive teams that avoid making a strategic decision.
A planning-led approach tends to start with a growth target for the next year or two. It’s often led by the finance team and quickly becomes an incremental, today-forward, budgeting exercise. The big management discussions are not on major strategic challenges, but whether the gross margin target should be 32.4% or 32.5%.
In contrast, a strategy-led approach focuses on the big challenges and opportunities facing the business and the type of organisation you’re trying to build. The discussions include what product, channel and geographical markets you want to operate in, how you can develop compelling competitive advantages, and the type of organisation and capabilities – potentially including acquisitions – you will need to win in your chosen markets. Only then do you focus on the steps required to bring your strategy to life.
A strategy-led approach is ‘future-back’ not ‘today-forward’ and means that you will end up taking actions you would never have considered under a planning-led approach.
Which approach does your business take to ‘strategic planning’ and, if you’re a planning-led business, how much more could you achieve if you shifted towards a strategy-led approach?
Off The Record: The Planner’s Dream Goes Wrong by The Jam
The house in the country designs the 14th floor,
Old Mrs. Smith don’t get out much more,
Coitus interruptus, because of next door’s rows,
Your washing gets nicked when the light goes out,
Baby’s scream in the nightmare-throng,
But planners just get embarrassed when their plans go wrong!