Booz & Co.’s Strategy + Business published something of a primer called “Successful Strategic Planning” last month, and it’s worth a quick review for the distilled–if simple–wisdom it embodies. [For those of you who haven’t been keeping up the latest in corporate moniker-speak, the firm formerly known as the venerable Booz, Allen & Hamilton evidently decided in a fit of brand hari-kari to change their name to “booz&co.“, prompting involuntary but unavoidable associations with liquor and/or trademarked clown acts. If you can get past that, read on; if not, I suggest you take it as a lesson in violating the cardinal rule of re-branding, to wit, “First, do no harm.”]
In any event, the piece–it’s a quick read–provides “five pillars of corporate strategic planning.” Here goes:
1. Tailor your process to your business
This may sound obvious, may indeed even be obvious, but what exacctly does it mean? Consider, at one pole, a “mature, homogeneous [firm] operating in a relatively stable environment.” This calls for active long-term planning, given that relatively few environmental variables are likely to change in material ways. At the other pole would be a firm in a “volatile, diverse”environment: This would require a far more dynamic and even “artistic” approach to strategic planning.
Another dimension of “tailoring” has to do with centralized vs. dispersed management. If your firm is run from a strong centralized core, everyone will logically look to that top core for direction. Don’t kid yourself that you can run the firm somewhat autocratically on a day to day basis and then expect inspiration from the provinces when you change your hat and don that of strategic planner. Again, conversely, if your firm’s management has always been diffuse (think of a financial holding company), then edicts from the hub will be viewed as peremptory, coming from a source which has not earned the right to attempt to issue unilateral ukases, and it the advice and strategy will be rejected well before the merits are ever reached.
2. Accommodate external perspectives
Political observers and journalists often lament over how the President–regardless of party or ideology–tends to be drawn irresistibly into “The Bubble” of the White House, where dissenting voices, much less the cacophony of a 300-million person nation, are seldom if ever heard. The same syndrome can all too readily befall firm leaders if they’re not careful. In the day to day, this may not matter terribly much, but in strategic planning the need for diverse views and forecasts is essential. Indeed, “scenario planning” is something you should seriously consider pursuing: Generate three to five plausible (not outlandish, but not business-as-usual) scenarios, which are simply alternative stories about possible futures and their impact on your firm.
Each scenario should be primarily driven by a possible near-term development such as intense pricing pressure by clients, a shift in economic activity from its traditional centers, or a permanently high new plateau in the price of essential commodites (oil, to state the obvious, but possibly others as well). Follow through on each to derive the financial impact on your firm, and then consider what opportunities and threats each environment would give rise to.
Finally, of course, assess whether your firm has the financial, intellectual, and cultural wherewithal to respond with agility rather than rigidity to the variosu possible futures.
3. Create a performance culture
Stick with me here, realizing that phrase is engraved on one of the top 10 cue-cards used to train junior MBAs looking to memorize the phrases that they can deploy in any conceivable situation to make themselves look smart and competent even if they are utterly clueless about the competitive environment they’re being asked to analyze.
The rubber meets the road on this score only if you measure performance and give people continuous feedback on how they’re doing. And don’t imagine for a moment that you can get away with feedback solely in the form of data or reports or scorecards. Rather, you have to go out and meet people face to face. Not only does this deliver the message that you’re deadly serious about performance management, but it reinforces and spreads a sense of “ownership” of the strategic plan.
Done well, performance management contributes to a performance culture. A performance culture is one in which all
employees’ empowerment is facilitated, there is widespread management by fact and by process, plans reflect the
organization’s capability, capability improvement is aligned with the strategy, and continuous improvement is achieved.
4. Be execution oriented
The first problem here is that while strategy is typically developed by a small group of people, execution is the responsibility of the entire organization at large. Performance in execution of the strategy, in turn, is heavily influenced by what our authors call, somewhat formally and formulaically, “decision rights” and “information flow.”
“Information flow” simply means that people outside the core of management know what they need to know to execute the strategy and to continuously be able to check on their progress. So give them financial metrics, on-screen, real-time dashboards, highly regular and frequent feedback: Empower them with tools to track what they need to know.
“Decision rights” means they have the authority commensurate with the responsiblity you’ve given them to execute the strategy. Nothing is more paralyzing, and ultimately demoralizing, then being able to see that one’s practive area, or office, or team, is falling short on execution and lacking any of the tools one would need to make midcourse corrections in hopes of improving things. You would–seriously–be better off keeping people in the dark altogether than bringing them into the Information Tent only to handcuff them.
5. Promote efficiency
If each of these five is sounding a little obvious, you are forgiven. What this final one means is essentially “provide people all the information they need, but not more.” In other words, don’t lose the forest in the trees. Eliminating unnecessary detail has several virtues:
- It speeds up decision-making cycle time; the less extraneous data one has to filter out, the faster one can identify deviations from the plan and get back on course.
- It permits focus on key drivers of actual value, to the exclusion of peripheral or second-order objectives.
- Most importantly, it helps create a context for decisions that is coherent, understandable, and easily explainable.
Now, let’s not lose sight of what this is supposedly all about.
Strategic planning is nothing less than carefully and unblinkingly assessing what your firm’s actual capabilities are and, accordingly, specifying what your firm can actually do better than anyone else. With that premise in hand, you can then decide which markets you most want to reach.
And go after them with a vengeance.
