Despite articles recently published in the Harvard Business Review, strategic planning is not dead. Roger L. Martin wrote in his article, The Big Lie of Strategic Planning (Jan-Feb 2014 issue), “This is a truly terrible way to make strategy. It may be an excellent way to cope with fear of the unknown, but fear and discomfort are an essential part of strategy making.”
Based on my experience with many different clients, Mr. Martin couldn’t be more wrong. But, he is not alone in his attempt to discredit strategic planning. There are four reasons that business leaders tell me why they “don’t bother” with strategic planning.
1. It detracts from innovative and truly strategic thinking (Roger Martin’s argument).
The word strategic comes from a 6th century B.C. Greek root meaning “generalship.” It also means, “Of great importance within an integrated whole or to a planned effect.” A plan is, “A detailed program of action.” Therefore, a strategic plan, done correctly, is simply a detailed plan of action to accomplish the mission and vision of a company as established by its leaders. It is a logical way to avoid unnecessary fear and discomfort, which are not conducive to strategic thinking. Flying by the seat of your pants is not an innovative strategy. If you are prepared, you will not fear.
One of my clients told me recently after completing a strategic plan, “I had all these ideas rolling around in my head. Now, I know and all my managers know where we are going and how we are going to get there.”
The innovative thinking was done collaboratively. The strategy was established and unanimously ratified. Now, unexpected problems and opportunities will be dealt with in a systematic manner, without panic.
2. Strategic planning is only for big companies.
This is like saying that you only need building plans when you are building a mansion. No contractor in his right mind would agree to that.
Strategic planning is a tool and all companies need the best tools, used properly, in order to be as successful as they can be. Any company that has at least two tiers of management needs to create a strategic plan so everyone knows how to build the company.
I have personally been involved with strategic plans for small to mid-size companies. Without exception, the results of the planning process have made these companies much more successful. Literally, millions of dollars have been made by following a properly structured strategic planning process.
We followed this process at a power plant where I was the CEO. The power plant used coal as a fuel and the State of California had pledged to put us out of business because of green house gases. The scrap value of the assets was about $1 million and the cost of site remediation was about $1 million – net ZERO dollars. Our strategic plan converted the power plant fuel source to biomass and the plant sold for over $50 million.
3. It costs a lot of money and then just sits in a bookcase, collecting dust.
True, if it is not done correctly. If strategic planning is done correctly, it will cost a fraction of the improvement in net income. It will only collect dust if management does not have a vested interest in making it work.
I worked with a CEO who told his management team that strategic planning was a waste of time. In his case, it would have been a waste of time. He was brilliant but he treated his “managers” as minions. A strategic plan only makes sense when management functions as a collaborative team.
One of my clients asked how many of my strategic planning sessions end in big arguments. The answer is that there is a lot of healthy disagreement and conflicting opinions, but in the end, everyone comes to a consensus that they can support. There is a mutual respect among people who work together to accomplish a difficult objective. Businesses that have self-absorbed bosses don’t do strategic planning.
4. Strategic planning doesn’t work
In 1987, Congress created the Baldrige Performance Excellence Program to help organizations improve their performance and succeed in the competitive global marketplace. Strategic Planning is one of the six essential categories for performance excellence. The organization that was created to recognize performance excellence not only thinks strategic planning works, they insist that strategic planning be part of any excellent organization.
I am a Certified Examiner for the state-based Baldrige program for California called CAPE. As such, I was privileged to do a site visit of a major health care organization. Their strategic plan made them the best in their region. They had happy employees, satisfied customers and they made a lot of money. Strategic planning worked for them, and it will work for you.
In summary, there are a few reasons that you might choose not to do strategic planning:
a. You make more than enough money.
b. Your employees don’t need any focus or purpose.
c. Your managers never have any good ideas.
d. Flying by the seat of your pants is your style.
If none of those reasons apply, then get started today on a better tomorrow with strategic planning.