This week’s focus: The term ‘strategic planning’ is an oxymoron. It is virtually impossible to develop a winning business strategy during your annual planning process. Planning kills strategy every time!
Most planning processes begin with a sales and profit growth target, say 5% more than the current year. Consequently, any discussion about strategy gets subsumed by a mountain of small-scale initiatives that will help achieve the budget targets. The big management discussions are not on major issues of strategy, but on more detailed budgetary matters, such as whether the gross margin target for the year should be 32.4r% or 32.7%. The results, unsurprisingly, tend to be incremental.
A strategy process starts from a different place. The first step is to develop a view of the kind of business you are seeking to build. What are your big, longer-term performance goals? What markets do you want to be in and which customers do you wish to target? How do you want to win and dominate those markets? And what kind of organisation and capabilities will you need to help make all this happen?
In short, if you start with a fundamental focus on your strategy you will end up taking actions you would never even have considered under a planning-led approach. The results can be transformational.
I’m just about to start a strategy project with a company that has, for the past several years, been driven by a planning-led approach. As a result, the business has been able to achieve profit growth, but it has not been able to dominate its market or improve its competitive position. It will be interesting to see how the company’s priorities change as a result of our work together.
How about your business? To what extent are your initiatives and actions driven by a planning-led approach, and what new ideas and possibilities could you focus on if you were to adopt a strategy-led approach?
Off The Record: Weather To Fly by Elbow
So, in looking to stray from the line
We decided, instead, we should pull out the thread
That was stitching us into this tapestry vile
And why wouldn’t you try?
Perfect weather to fly!
© Stuart Cross 2018. All rights reserved.