Strategic planning is not worth the effort.
Or is strategy critical to long-term success?
If you’ve been in business for any length of time then you’ve most likely talked about the company’s strategy. Did you know what this meant? Did you have any say in what the strategy is or how it would be implemented? Did you care?
For a lot of the answer to these questions would have been no. Almost all business consultants will tell the business they must have a strategic plan. There are loads of plans and frameworks out there to help create the plan and many companies spend time and money to create detailed exhaustive plans. Why do businesses do this?
For many years business leaders considered the strategic plan the be-all, end-all.
In fact, it was known as “the one best way.” Up through the 90s, the strategic plan held such an exalted position that in 1993, with the performance and results act GPRA, the government mandated that the strategic plan would be required as one of three key performance documents for all federal agencies.
This would imply that completing the strategic plan must guarantee success — right?
But as it turns out, research has shown that 90% of all strategic plans that are created are deemed failures.
Why spend all this time creating the plan if it is just a false prophet?
There are a number of reasons why businesses continue to spend money and time creating these plans when they know they will be less than effective.
One of the reasons is it gives presidents, CEOs. top executives something to hang onto in a world of uncertainty. They can hold the plan up and say “it is done we can see how to move forward, and let’s get on to the day-to-day business”. Put the plan on the shelf and we’ll come back to it next year to see how we did.
Failure of the strategic plan, what does this mean?
When research shows that 90% of the strategic plans that are created are deemed failures what does this mean?
Failure of the plan is defined in three main areas:
- Failure to adequately execute the strategic plans.
- Failure to function as a team at the executive level or other levels.
- Failure to develop values and culture to support the plans. Failure to expeditiously do what is needed to be done.Feb 27, 2021Strategic Planning Failure | Encyclopedia.com www.encyclopedia.com
The success of the strategic plan defined by:
- Execution of the strategic plan is completed in the required timeframe and strategic goals have been reached.
- Teams are productive and have been effective at reaching their goals and objectives.
- The culture understands the strategy and actively makes strategic decisions that support the overall strategy, or strategic goals of the organization.
- The realization of the strategic goals of the business has resulted in increased growth, market share, and profitability.
Research has also shown over and over again for large or small businesses, strategic planning when done well, provides outsized returns and dramatically strengthens the company’s competitive position.
Why do strategic plans fail?
A quick review plans fail when;
- execution fails,
- teams are unproductive in reaching strategic goals
- Culture does not support the plan
There are general reasons why strategic plans fail, the details differ but in most cases, the reasons come back to two main areas that cause the failures.
- The plan is static
- Communication about the plan is inadequate
Most of everything that causes a plan to fail can be traced back to these two main reasons.
The plan is static
What does it mean to say the plan is static. This means that many times strategic teams spend many long days and nights to detail the plan, make sure they have put all the concerns down and what needs to be done to realize the goals. Once this is done the plan is passed through the board or given to the owners. Everyone looks at it says wow, this is great, good job, thanks for doing all of this and the plan goes on the shelf.
The plan is not looked at again until the next review period comes along.
Another way the plan becomes static and out of date is when key strategic decisions are needed the plan is not referenced to see how these decisions may affect the overall strategy.
The market changes and the plan is not referenced to see how these changes should or will affect the business’s overall strategy.
Communication about the plan is inadequate
When a plan is completed many times the only people to know about it are the team that created the plan and who the plan was submitted to. The mistake is that the management team does not think that the rest of the organization would understand the plan or that it should be something they should worry about.
This ill-conceived concept is: only top-level management should have a focus on the strategy. Unfortunately, this prevents the entire organization from thinking strategically, and as a result, decisions that need to be made on a day-to-day basis are made with no regard to the strategy of the business.
The plan is dynamic
The definition of strategic success is when:
- Execution succeeds, goals and objectives are reached in the timeframe desired.
- Teams are productive and effective in reaching their strategic goals
- Culture supports the plan
- The business has grown, their competitive position and profit have been improved.
How do plans become dynamic?
For most people when they hear strategic planning they immediately think of the strategic plan. This is a common misconception, something General Eisenhower said illustrates the point, “plans are worthless, but planning is everything”? What did he mean by this?
He meant that a plan is important, but what really matters, is the thinking behind the plan, the ability to make strategic decisions in the real world, in real-time.
Think of the strategic plan as a map or a guide to help you get to where you want to go. When you prepare to go on a trip you decide where you’re going to go, you grab the map or the GPS, and you’re off.
The GPS is actually a pretty good analogy to a dynamic strategic plan. When you first set the route into the GPS it gives you a set of directions with mile markers on where to make turns, along with how long it should take to get to each location.
What happens when conditions on the road change, traffic jams, or construction? The GPS will try and reroute while doing its best to keep you going to the original destination. What about if you add stops? The GPS will update the route and time to keep you headed to the final destination.
It is not a dead-on analogy but it is a useful visualization. The idea is the strategic plan is not static, it needs to change and update with changes in the market, business, and environmental changes.
How do these updates happen?
Effective updates happen in a direct relationship to how well the strategic plan is communicated and the level of support the plan has in the culture of the company.
When culture supports and understands the plan then there is a level of strategic thinking that happens in the day-to-day decisions. When decisions are needed that may not be supported by the plan this is communicated up the chain so that the plan can be adjusted and the business can stay on track towards the overall goals and objectives of the strategic plan.
For the culture to support and understand the plan there must be a definitive effort to communicate the plan and why it is important to all of the stakeholders that must implement the strategic goals.
This communication effort almost always results in more effective teams that are able to execute on reaching the goals of the plan. Teams/people are more likely to be engaged when they know and care about the direction the business has chosen. More engaged team members equal more effective team members.
Finally, just like the GPS analogy, if you pick the wrong destination then you are not going to get to where you want to go. So the dynamic strategic plan starts with the research to make sure the goals and objectives the plan lays out are the right ones.
As the market or business environment changes happen in real-time the plan can be adjusted to make sure the objectives are still the right ones and the directions to get there are still accurate.