I was in a meeting with a senior executive recently, when he shared his concern that the processes and approaches the company is using to develop the corporate strategy may not take the business forward as planned, but backward. As we discussed his challenges, there were some key gaps that the organization was likely to fall into that could easily be avoided with a strong planning process. So, here are a few of the more prominent reasons organizations fall into the strategic planning gap…How many of these are evident in your business?
Reason Number 1: Lack of Leadership Engagement
One important reason behind a company’s inability to create a visible and viable strategy is that, frequently, key senior leaders are not appropriately engaged in the development process. This often means that critical success factors are not considered, priorities are unclear, and incomplete strategies are developed. It is important for leaders to immerse themselves in the process to understand how the gears of the business engage – how their domain aligns to and fits with the other critical pieces within the corporation. Critical insights and knowledgeable contributions regarding all aspects of the business will provide the pivot point for the strategic planning process – key decisions emerge from a compilation and understanding of diverse perspectives.
Companies often believe that strategic plans can be developed in one or two day strategic planning sessions – this is simply not true. Strategic planning is a dedicated process that is developed over a period of time with all senior leaders engaged and participating – not to mention, an ongoing process that drives the ability to stay ahead of the competition. Without a strong process for engaging leaders and formulating strategic plans as a unit, companies often end up with plans that are meaningless from a strategic point of view.
Reason Number 2: Leaders lose sight of the difference between strategy and planning
Very often I come across companies that confuse strategy with planning. The annual financial and operating planning process drives many corporate strategic decisions – which is a backward premise. They are different activities and should be treated as such: strategy is about developing a framework that drives future actions and decisions; planning is about resource allocation. Critical strategic decisions don’t fit within the annual planning timetable and neither should the strategy development process. When strategy and planning overlap, the plans thrust upon the organization are anything but strategic in nature. Upon closer examination one may find that these efforts are (at best) a collection of tactical plans targeting operational efficiency – operational efficiency IS NOT by it’s nature strategic. However, effective strategy can result in operational optimization.
Reason Number 3: Too much data, too little insight vs. too much insight, too little data
Few companies have a structured process for scanning the environment and observing emerging trends. There is either an information drought or an overload of information – generally, there is no middle ground. When there is information, often companies do not know how to draw any strategic meaning from it. In the absence (or lack of usability) of relevant data, assumptions are made that may not reflect the reality of the environment, which means a rapid decline in credibility and relevance of the strategic plan. While it is definitely not advisable to engage in paralysis by analysis – it is important to gather as many facts as you can, within a limited amount of time, apply what you know, and move forward with a decision. It is key insights based on the information you have (depending on risk factors, often 80% is good enough), not excessive data, that will drive a successful strategy.
Reason Number 4: Insufficient alignment, commitment and communication.
When the process is structured correctly, the leadership team has invested significant time creating the strategy together. A common result is that they come to believe that the strategic intent is clear to everyone across the organization. In most companies this is far from reality, and the strategy is left to interpretation. This creates organizational misalignment, with group or divisional strategies not fitting comfortably within the whole. The strategy process should include ensuring that executive alignment and commitment is strong, but also that sufficient time and effort is spent on communicating the strategy throughout the entire organization to ensure there is understanding, buy-in, and integration across the company. Problems often surface when there is a lack of alignment and integration – strategically, operationally, and interpersonally.
As an organization continues to deliberate strategy as an abstract concept or simply a mandated process, the typical result is that strategic plans are not living documents and do not deliver the desired results. Any one of a million reasons can derail the strategic planning process. As this repeatedly occurs, the concept of strategic planning is eroded to such an extent that the exercise is taken up just as another routine, isolated from the business of the company. The strategy process should bring rigor and challenge to the leadership team’s thinking – it should result in a strategic plan that is alive in everyone’s mind, engages community ownership, and provides a driving force that guides the company steadily toward competitive advantage.
Is your strategic planning process on track? Here are some potential indicators:
- Are all of the organizational, divisional and team leaders engaged and aligned (at the appropriate levels)?
- Is there a clear understanding, and separation, of strategy and planning? Is strategic planning a dedicated, ongoing process? Are plans adjusted as new trends or business impacts assessed?
- Is there good balance and perspective between data collection and business insight?
- Do all the key players understand their place in the strategy and how it all fits together as a complete puzzle?
- Is every leader, at every level, committed to the strategy? Is it a cohesive group effort?
- Is there a strong communication component within the strategic plan? Is the strategy common knowledge throughout the organization?
- Is the strategic plan a living, breathing document that everyone is working toward achieving, every single day?
There is only one way to a great strategic plan – a dedicated, integrated strategic planning process that ensures a climate of trust and the innovative business ideas of leaders.
Is your organization “Minding The Gap” to develop successful strategy?
Please engage the discussion and let us know how you mind the strategic planning gaps in your organization. Please feel free to contact me at firstname.lastname@example.org. Check back soon for the next installation of Leadership Across Boundaries & Borders.