Data suggests that most organizations could benefit from adopting a more formalized approach to strategic planning. Many companies have routinely failed to successfully and fully implement their strategic goals.
Whether you are the CEO, COO, CFO or any other manager how often and how close do you come to meeting your annual objectives?
A great majority of executives (64% of a recent Booze & Company Inc. survey) say that their biggest frustration is “having too many conflicting priorities.” followed by these executive challenges:
(a) Ensuring that day-to-day decisions are in line with the strategy (56%)
(b) Allocating resources in a way that really supports the strategy (56%)
The Harvard Business Review estimates the ROI from traditional planning approaches is 34% or less.
The Economist Intelligence Unit estimates that organizations realize just 60% of the potential value of their strategies.
Kaplan and Norton research suggest that 90% of organizations fail to successfully implement their strategies.
If strategic planning is as important to success as business experts’ claim, why aren’t they being done? Or is the better question why are the strategic plans that are put together not working?
Factors to Correct
While the above statistics suggest a disconnect between the ideal and the reality, strategic plans can be vastly improved by understanding the discipline of the planning process. This and stretching the process further into the operations layer where execution takes place can increase success. Failure to execute on strategy has several root causes, which include:
• Failure to challenge underlying assumptions (critical evaluation)
• Poor prioritization or taking on too many initiatives
• Lack of detail planning to support goal achievement
• Poor communication and coordination
• Strategy and culture misalignment
• Strategy and operations misaligned (including disconnected budgeting)
• Plan goals lacking accountability
• Not having the right people in place who can and will execute
• Not inviting lower-level stakeholders
• Lack of risk identification & mitigation strategies
Given the opportunity to better leverage the art and science of strategic planning, why would leadership not endeavor to understand strategic planning and unlock the competitive advantages it can bring them?
Quite often it is seen as a waste of time. The leadership team schedules a “retreat” and immediately Brainstorm Island rises from the depths of freedom from the restraints of a hectic office. Lots of great ideas are generated; lists and plans are laboriously captured on flip charts, a plan is born and everyone feels refreshed, inspired and can’t wait to get back to office to get started.
The reality of Brainstorm Island is as soon as everyone gets back to the office all the good ideas and initiatives begin the slow death of drowning in day-to-day demands of corporate life. It becomes clear too many goals were set, not enough detailed planning was created, and the right people are lacking to make it possible, so on and so on. Before long the notebook gets shelved and operations go back to the way they were.
It doesn’t take but a few of these failures to get everyone beginning to believe strategic planning is a waste of time or something consultants made up to create jobs for themselves. Any further attempt at strategic planning are viewed with suspect.
But strategic planning does work. It just takes practice, a method and yes, sometimes a consultant to get the ball rolling in the right direction. For starters, begin with one or two objectives –the fundamental issues that will keep your business alive and thriving.
At a minimum, for strategic planning to yield competitive advantage, it must address three key questions:
- “What do we do?”
- “Who are our customers?”
- “How do we, or can we, do what we do better than our competitors?”
All other discussions directly revolve around those three answers.
Certtainly it goes without saying that you cannot swallow an entire elephant in one gigantic bite. Start with an issue that can have the greatest impact on your organization’s overall success, such as talent management.
As Cass Wheeler (past President of the American Heart Association) said “you cannot underestimate the importance of surrounding yourself with the best people.”
And Martin Davis, author of Take No Prisoners: A No-Holds Barred Approach to Corporate Excellence says in his book, “the difference between a company operating at sub-optimal and optimal is the people”.
Wouldn’t it make sense to start there – with the people on your teams? First, know what you are looking for and second, know when you have found it.
Predictive Index™ is a talent assessment tool that has been around since the 1950s. We can help get you started.
Cindy Mallard | July 31, 2011