Time for a new strategic-planning process

Monday's Wall Street Journal In The Lead column discussed what the CEO changes at Ford and Viacom say about strategic planning. In short, if you haven't discarded your once-a-year strategic planning process, it's time. Says the Journal:

Companies still wedded to traditional planning each year make just 2½ decisions that are "major," that is, with the potential to boost profits by at least 10%, according to a survey of 156 large companies by Marakon Associates. By contrast, companies that spotlight a few priorities and regularly hold strategy discussions -- instead of reviewing scores of business unit plans all at once -- make more than six big decisions each year, the study found.

Running a company, even a large one, is like driving at night in unfamiliar terrain. You may know your long-range objective. But you can only see up to the range of your headlights. Beyond that is a mystery.

So that once-a-year strategic plan is next to useless. As stated above, it slows the decision-making process and is too detailed to be valuable to the units trying to manage the business. Here's an example of a bureaucratically-created plan (does this type of plan work in any setting?).

Also, the time required to put together that strategic plan typically is months long. Given the speed of change in most industries today, that's just too slow. I've seen, on several occasions, strategic plans incorporating upwards of a thousand hours of work be obsolete on the day they're released.

For the business unit I ran most recently, we were bringing a brand-new product to market. We created a strategic plan during three-times per year half-day meetings of the entire group. This plan was usually ten pages or fewer of bullet lists and action items. A smaller team met monthly to share learning and adjust the plan as necessary, and the core leadership team of three met nearly every day.

We made one hundred or more adjustments to the plan in the first year. Just as you might while driving in unfamiliar terrain.

strategy, strategic planning