In today’s rapidly changing business environment, some argue conventional long range planning may no longer be relevant.
As background, here are the elements of a traditional strategic plan1:
- Mission – why you do what you do
- Vision – where do you want to be
- Core values – what guides you
- Driving Force – What is the nature of the products, services, customers, market segments and geographic areas that a company chooses to pursue? What is it now? Should it change?
- Strategic analysis
- The Five Forces2 – suppliers, customers, threat of substitutes (technology), ease of entry (potential entrants)
- SWOT – Strengths, Weaknesses, Opportunities and Threats
- Analysis of competitors SWOT
- Competitive advantage
- What should we continue, what should we change?
- Operating Plans & KPI’s (Key Performance Indicators)
- Budget, both capital and operating
- Balanced Scorecard – Finance, Internal Processes, Learning & Growth, Customer Satisfaction
Among those challenging traditional strategic planning is Clayton Christensen. In his book, The Innovator’s Dilemma3, he questions traditional concepts of strategic planning in an environment populated by increasingly innovative and agile competitors. His focus is on large companies who historically are not good at being agile and innovative and therefore lack the ability to respond to small, entrepreneurial, innovative competitors.
Rita Gunther McGrath, in her new book, The End of Competitive Advantage4, makes a frontal attack on accepted strategic planning methods designed, in her opinion, for another time. These are methods based on the presumption that competitive advantage is sustainable.
McGrath believes that the best one can hope for is “transient competitive advantage.” Her prescription for achieving transient competitive advantage includes smaller, faster, more agile organizations where “management-by-consensus” is a thing of the past. Her emphasis is on marshalling rather than owning assets, including talent. To ensure the appropriate deployment of these assets from one opportunity to the next, it is necessary to recentralize control over the resource allocation process, moving it out of strategic business units (SBUs). This raises the question as to the relevancy of SBUs and suggests that they be replaced by transient teams as a primary form of organization. They engage in a continuous process of creating and testing options, doing things fast and “roughly right” rather than relying on traditional strategic planning methods.
Like Christensen, McGrath’s message is aimed at large, historically slow moving companies. So as a TEC member, is strategic planning still relevant to you? What do you think?
Some closing thoughts:
- “Strategic Planning is the single most important function of the CEO”, Patrick Below
- “I have always found that plans are useless, but planning is indispensable.”, Dwight D. Eisenhower
- “If you don’t know where you are going, any road will take you there”, Lewis Carroll
Click here to read more on this subject. ( http://hbswk.hbs.edu/item/7341.html )
1”The Executive Guide to Strategic Planning”, by Patrick J. Below
2”Competitive Strategy”, by Michael E. Porter
3Clayton M. Christensen, The Innovator’s Dilemma (Boston: Harvard Business School Press, 1997)
4Rita Gunther McGrath, The End of Competitive Strategy: How to Keep Your Strategy Moving as Fast as Your Business, (Boston: Harvard Business Review Press, 2013)