Do you run an annual planning process in your business? And, if so, do you refresh your strategy when you run that process? If you do, congratulations on your commitment and discipline, but – and it’s a big but – your efforts are misplaced.

Annual strategy sessions, which are commonly translated into three-year plans and a one-year budget, have not moved pace with the outside world. Have you noticed, for instance, how the third year of your three-year plans never happens? Come to think of it, have you spotted that the second year hardly ever happens either? Wait a minute – even the first year rarely survives intact, does it?

We all know that the world – including your market – is becoming faster and more unpredictable. Life-cycles are shortening and your ability to develop any kind of sustainable competitive advantage is dwindling. Even Apple, which has probably had one of the biggest competitive advantages of any company in history, has seen its gap against its competitors dwindle in recent years.

So, if your market is turbulent and unpredictable why do you persist with annual strategy processes and three-year plans? As the CEO of a £300 million services business once said to me, “In ten years’ time people will laugh at us for developing three-year plans!”

I believe that you need a different approach to strategy and planning that is both faster and more flexible. This approach is built on five core principles:

  1. Establish a clear direction – based on what won’t change in your market. Amazon has become one of the world’s largest businesses, in a highly dynamic and fast-moving market, by focusing on what won’t change. Jeff Bezos, the CEO, bet the company’s future on the fact that consumers want more choice, greater speed of delivery and lower prices. He believed that if the company focused on those factors that, whatever happened to technology and society over time, Amazon should be successful. What are your customers’ fundamental needs and ‘hot buttons’ that are unlikely to change over the next 10 years or so? And which of those could you focus on and build and exploit the capabilities necessary to lead your market?
  2. Accelerate innovation – based on your core direction. The key to strategic success in the 21st century is to innovate faster and more effectively than your competitors. Rather than periodic, one-off innovations, a constant stream of innovation now drives success, some incremental and some transformational. Once you are clear on your direction, you must align your innovation accordingly. Amazon, for instance, has created its ‘marketplace’ that allows external providers to compete with Amazon’s in-house team, so that customers can get both a broader offer and lower prices. This innovation has step-changed Amazon’s business model, and has demonstrated to customers the company’s focus on providing customer value. How strong and transformational is your innovation pipeline, and how well focused is it on your strategic priorities?
  3. Make partnerships a way of life. For most companies, access to capital and investors’ attitude to risk make it difficult to simply use acquisitions to deliver your innovations and future growth. Instead, more companies are turning to alliances and partnerships to help accelerate delivery of their strategy and to share financial risk. In recent years, for example, even the corporate behemoth, Microsoft, has entered into joint ventures with both Nokia and GE to help it fast-track growth without having to build or acquire all the assets and capabilities it would need to go it alone. The need for speed demands that partnerships become a critical organisational capability for your company. How effective is your business at developing and sustaining partnerships?
  4. Develop and pursue rolling 90-day plans. Some projects have long-term, fixed deadlines. Major IT changes, product launches and new buildings and facilities demand a clear multi-year plan. But both these types of projects and more flexible, ‘rapid-fire’ projects benefit from increased clarity on what will be delivered over the next 90 days. I like rolling 90 day plans because three months is long enough to make significant progress, but short enough to keep the pressure on hitting your deadlines. A 12-18 month high-level view of future progress with a focus on the upcoming 90 days provides the right balance of pace, accountability and continuity. How clear are you on what your strategic plan will deliver over the next 90 days?
  5. Review strategic progress at least twice a month. Most companies look at trading figures on a weekly basis, and many managers look for a daily, if not hourly, update. Yet, these same businesses still track strategy on a quarterly basis. The executive team at Amazon, on the other hand, run a weekly strategy meeting. If your focus is on speed and becoming the leader of your market, quarterly or even monthly reviews are insufficient. I suggest that you review progress every two weeks. That way, all your teams will remain focused on strategy delivery and you have the ability to flex resources and efforts across your initiatives as circumstances change and new issues and opportunities emerge. How frequently are you tracking the delivery of your strategy, and how easy is it for you to switch resources across your agenda?

Strategy ain’t what it used to be. You can no longer simply establish a clear position in your market it, create a multi-year plan to make it happen and expect things to work out. The world is too fast and too messy to allow that to happen, and your strategy and planning processes must reflect these realities. The five principles set out above will help you clarify your strategy, align your organisation and accelerate the delivery of your key priorities.

What steps do you need to take to create a strategy process that is fit for the 21st century?

© Stuart Cross 2013. All rights reserved.