The annual strategic planning review frequently amounts to little more than a stage on which senior executives and presidents of business units present warmed-over updates of last year’s presentations, take few risks in broaching new ideas, and strive above all to avoid confrontation. Rather than preparing the company to deal with the strategic uncertainties ahead or serving as the focal point for creative thinking about a company’s vision and direction, the planning process, “is like some primitive tribal ritual,” as one executive was quoted saying in a magazine article. “There is a lot of dancing, waving of feathers, and beating of drums. No one is exactly sure why we do it, but there is an almost mystical hope that something good will come out of it,” the executive added.
However, as the business environment tightens, developing effective strategies is crucial. But how can the Competitive Intelligence Analyst suggest avenues to improve the process? This article suggests three avenues:
- Splitting the Strategic Planning process from the budgeting process
- Defining strategic issues that go beyond one individual business unit
- Moving from Strategic Planning to Competitive Planning
Splitting the Strategic Planning process from the budgeting process
Companies should avoid combining strategy reviews with discussions of budgets and financial targets, because when the two are considered together, short-term financial issues dominate at the expense of long-term strategic ones.
The essence is in the timing: best-practice companies surveyed organized two clearly demarcated meetings: a full day on strategy with each business unit and a shorter meeting, at a different time of year, to set financial targets. The two are then coupled in a rolling annual cycle; the financial plan is an input for the strategy discussion, which in turn is an input for the next financial plan.
One for the broad vision, one for the focus: as the strategic planning cycle gets split into two phases, executives have the opportunity to use the fist phase – the strategic vision and directions – to explore alternative avenues to growth and profitability. In this phase, scenario-planning techniques, war-gaming exercises, role plays can generate broad strategic ideas and innovations that would not come from the Strategic Planning process.
Defining strategic issues that go beyond one individual business unit
All companies periodically face issues that are bigger than their individual business units. Instead of evaluating and discussing every single market and business unit at each Strategic Planning session, consider picking a few issues each year. Call them “burning issues,” big hairy issues,” or “need to figure out issues” if those terms are more explicit.
For example:
- How should the company deal with an economic slowdown in the United States?
- Should the company pull out of Asia?
- How can we solve the distribution challenges we have faced in the last few years?
- Is our main differentiation axis our technology competencies or our brand?
Identifying such issues and persuading the organization to deal with them are important ways in which a CEO and the Competitive Intelligence unit add strategic value to a company. For example, GE’s leadership team devised a significant theme every few years – the push into services and Six Sigma quality improvement, for instance – to shake up the thinking of the company’s people and to drive strategic creativity.
In these cases, many of the companies in the sample relied on small, elite task forces staffed by top-performing managers temporarily pulled from their normal roles to work on the issues, deliver decisions or recommendations, and disband. Other situations require larger numbers of people to engage in strategic discussions, but not necessarily on a full-time basis.
Moving from Strategic Planning to Competitive Planning
To make strategic recommendations easier to implement, managers can also try to define deliverables that are closely linked to the competitive positioning of their company in the market. The table below illustrates some of the differences between deliverables from a typical strategic planning process and a structured Competitive Planning process:
Let me define some of the concepts described above:
Competitive Competence Triangle: a method to define which is the axis on which a company will compete and win. The hypothesis driving this framework is that a company should maintain a reasonable level of competence in one of the axes, and should thrive to excel in one and one only.
- Winning through operational excellence:
Focus on operational excellence to offer a combination of quality, price and ease of purchase that no one else in your market can match. Don’t worry about innovation, just execute extraordinarily well, guarantee low prices and hassle-free services, standardize and simplify. - Winning through great products:
Innovate and develop products that push performance boundaries. Develop the capability of speed to market and be relentless in making your own products obsolete. Invent, develop, and market – fast. - Winning through customer intimacy:
Cultivate close and long term customer relationships and intimate knowledge of customer requirements. Create a dependency of customized service and support, and focus on customer retention and satisfaction.
The figure below illustrates how companies have applied this model:
Source: The Discipline of Market Leaders – by Michael Treacy, Fred Wiersema
Competitive Landscape: a framework to map out the competitor’s strategic position in a specific industry
Competitive Intent: a framework to identify how competitors might pick their growth priorities
Conclusions
Moving away from endless boring Strategic Planning sessions is the key to motivating your managers through the exercise and energizing them with its possibilities. This article outlines several new methods to approach Strategic Planning, all of which could be summarized by the following: pick a few strategic issues, select a different analysis technique each time, and keep your managers challenged.
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Estelle Mtayer * is president of
Competia . Competia is North America’s
leading consultancy and training organization for senior executives
and analysts in Strategic Planning and Competitive Intelligence. Its
flagship product, Competia.com, is the world’s largest community,
portal and magazine for strategy professionals. Competia.com enables
thousands of registered users to access each month a wealth of
resources: news on the advancement of their profession, practical and
hands-on tools and analysis techniques especially designed to help
them increase efficiency in their work. A former consultant at the
international strategic consulting firm McKinsey & Company, Estelle
has written and lectured widely on the process involved in turning the
intelligence gained into actions.
Estelle can be reached at estelle@competia.com
