Like so many great people, Strategic Planning lived a full life. It touched many businesses in a positive way—but failed many, as well. It wasn’t perfect, but it made contributions to society. In the end, everyone said that it had lived well, but it’s time was done.
As I’ve gathered stories about my new book, The Flexible Stance: Thriving in a Boom/Bust Economy, I’ve talked to many CEOs who say that they are no longer doing Strategic Planning as such. Typically they say that they are focusing on execution, with a number of them adding that they are trying to be more nimble.
The king is dead. Long live the king.
Strategic planning is dead. The new king is execution and flexibility.
Many companies abandoned strategic planning in the recent recession. Their practice had been to gather for a three-day executive retreat to develop the strategic plan and play golf. After the SWOT (strengths, weaknesses, opportunities, threats) analysis, the team would define the one most likely path for the external environment. The executive team would then develop the appropriate strategy for that one vision of the future. By lucky coincidence, the team always developed the strategy that the CEO wanted going into the meeting.
The central problem, of course, was that the future didn’t cooperate. In 2008, the economy dove when it was supposed to fly. Technology drove the world in surprising directions. For example, importing liquefied natural gas looked great until technology made exporting look even greater.. Social attitudes sometimes changed too quickly for business, as when companies went bankrupt due to the uproar over pink slime (or “finely textured beef”). The government, far from being a stabilizing force, enacted major new laws that threw uncertainty at business like a boxer throws punches at a stumbling opponent.
Inability to predict the future was the major cause of the death of strategic planning, but other problems contributed. Companies developed plans that said “yes” to every division manager instead of shifting resources to the best opportunities. Strategic plans were not connected to action steps, and when action steps were described, they were in such vague terms that executives continued to do what they had previously been doing. (See my article, “3 Strategic Planning Pitfalls.”)
Within strategic planning sessions, too much time was spent crafting a mission statement that sounded noble but said nothing. Too much time was spent on unique value propositions that were pretty much identical to 17 competitors’ unique value propositions.
In our eulogies for strategic planning, let’s recognize what it did right. Strategic planning got executives talking about the future. The usual workweek is spent dealing with the nuts and bolts of the business. How many quarter inch screws should we make? Is three-eighths making a comeback? Should washers be bundled with nuts or sold a la carte?
Strategic planning helped company leaders lift their heads up and look at the horizon. The big picture emerged. Different divisions’ plans were described, compared and coordinated. Even though strategic planning had its faults, it had its strengths.
In the next article I will describe what will replace strategic planning. Oops, that is falling back on the old “one best forecast” approach to the future. Let’s say that I will describe one approach to managing a business that can capture the strengths of the old process while avoiding its drawbacks.
Bill Conerly – FORBES