Strategic planning, the what and the why of planning, is often overlooked by organisations who concentrate on tactical planning, the how of planning. The resultant business plan is overwhelmed by tactical initiatives and pet projects. Alignment with a strategy to attain the organisation’s goals is achieved by accident.
Strategic planning is often seen as unnecessary or at times, not even contemplated in an environment benign to the organisation, e.g. high levels of market growth or monopoly situations. In my experience, a strategic plan based on basic critical thinking is a precursor to developing a competitive advantage where often none has previously been seen.
The dotcom boom and bust during the last decade is the clearest example of the adage, ?failing to plan is planning to fail?. A Boston consulting study in 2000 revealed that the key problems resulting in failure of companies were 59% poor revenue cost and profit model, 55% no competitive advantage and 34% lack of consumer benefit. It is clear from the study that many fewer dotcoms would have started and many fewer would have failed with some strategic planning.
In the arena of public organisations the discussion of the last few years in Brazil, California, Queensland and Fiji over the adequacy of planning for electricity requirements leads one to consider what level of strategic planning occurred in those organisations over the previous five to ten years. The problem of capacity is not of current management’s making, but of management five or more years ago.
Strategic planning is a fairly simple process. Unfortunately it has been made to appear difficult by many of my current profession. Consultants desire to use tools to explain strategic concepts in a graphical sense, combined with their use of acronyms or two and three word descriptions of their pet methodology has shrouded strategic planning in an unnecessary mystery.
Who can or wants to remember what Porter’s five forces analysis, PESTLE analysis, directional policy matrix, Anshoff matrix and game theory are? They are consultant tools to help explain the current or future environment of the organisation. For some consultants however they become the end rather than the means.
Strategic planning must start with the end in mind. Take care not to fall into the consultant-speak trap taking two days of management time to carefully craft a vision statement which nobody understands. It is better to actually think about what you want the organisation to be doing in three to five years time. So that you know whether you have successfully got there, the ?end? or goal had better be quantifiable. The ?statement? will take care of itself.
After sorting out what success looks like, the next step is to understand both your current external and internal environments. That is, what things are happening external to your organisation, e.g. public tastes, government policy, global trade and within your organisation, e.g. employee competence, productivity, systems integration, that will have an impact on reaching your goal? There are tools that can help, but all that is really needed is your team armed with data about your organisation and the external environment.
Data comes in four levels of increasing dependability, internal opinion, external opinion, internal fact and external fact. The dependability ranges from when three salesmen have a talk over a beer about what customers want (internal opinion) to quantitative research using appropriate quota samples (external fact).
The required outcome of the analysis is to understand what strategic changes (what and why) your organisation needs to make to reach your goals in your current and future competitive environment, taking into account your current level of capability.
In private enterprise, the outcome will include quantitative time based goals (usually financial or market related), brand, products and services, external customers (consumers or businesses), internal customers (other functions or company owned supply chain members) and channels (where do customers buy from).
In public enterprise the outcome will include time-based goals (usually service or public outcome based), services, external customers (the public), internal customers (other government departments), and channels (who does what to deliver the service).
Unsurprisingly, strategic planning in the private and public sector have similar outcome deliverables, even though the nature of the products and services and their environments differ significantly.
Business planning, the how, in both cases will have outcomes which include competence, intellectual property, policy, assets, processes, organisational design, measures, rewards, systems and risk management.
Developing a business plan in a static environment without understanding what services and products we are going to deliver to which external and internal customers through which channels for what benefit to our organisation and our customers is a risk. Doing it in our rapidly changing environment is a folly that will manifest itself as a problem for future managers.
The time to begin strategic planning is now.