I have been in the role of Strategic Planning for the last two-and-a-half years now. The first time I came to know that a function called Strategic Planning exists was during this time. Since then and till now, I have been involved only in the process of institutionalizing the Strategic Planning function in place in the two organizations I have worked for (including the current one). I have researched some of the literature available on the Strategic Planning function identifying some of the best practices available in contemporary business world. Though the research is still on, as part of my continuous learning process, I am yet to arrive at a consensus within me and amongst various other people on the whole philosophy behind the Strategic Planning Function and its processes.
Strategic Planning – An Oxymoron
There are innumerable amount of knowledge shared and written in this field, but all of those represents conflicting viewpoints on the whole philosophy of Strategic Planning. Management thinker Henry Mintzberg has labeled the term - Strategic Planning as an oxymoron. Business Strategies are never planned. Real business strategies are made informally – in hallway conversations, in working groups, and in quiet moments of reflection on long plane flights – and rarely in the paneled conference rooms where formal strategy meetings are held. Subsequent research in the field of strategic planning substantiates the point made by Mintzberg. Mintzberg’s views on the whole concept of strategic planning compliments the thought shared by Keinchi Ohme in his bestseller book ‘The Mind of the Strategist’ that the development of business strategies is as much a state of mind rather than a programmed thought process. Strategies are developed based on insights one has on the surrounding business environment which are based on one’s experience and knowledge.
Strategic Planning – Creating prepared minds through Learning
Sarah Kaplan and Eric D. Beinhocker in their article titled ‘The real value of Strategic Planning’ say “The goal of Strategic Planning process should not be to make strategy but to build prepared minds that are capable of making sound strategic decisions”.
As one of the former Senior Executive at GE Capital puts it – ‘Real Strategy is made in Real Time’. He saw the point of strategic planning not as predicting the future but as a learning exercise to prepare people for a future that is inherently uncertain. He also noted that, most processes are focused on creating plans and making decisions rather than learning.
Strategic Planning – the crucial link between Strategy and Operations
Kaplan and Norton in their seminal work on Balanced Scorecard provided for the first time a new dimension to Strategic planning process. They brought in the vital link between Planning and Execution. From ‘Thought to Action’; how successful companies implement strategies and achieve desired results on a continuous basis. They saw the role of Strategic Planning function as an orchestrate of Strategy Development and Deployment process. Their whole argument is based on this crucial link between Strategy and Operations. They call the Strategic Planning Function as the “Office of Strategy Management (OSM)”.
They argue that the typical planning function facilitates the annual strategic planning process but takes little or no leadership role in seeing that the strategy gets executed. This is where they find the usefulness of their tool – The Balanced Scorecard. This point is further substantiated by a recent survey by a renowned global management consulting firm, which revealed that “Greater satisfaction could come from improving company’s ability to align their people with their strategic plan and from monitoring progress against the plan”.
Most companies do realize that effective strategy execution requires communicating corporate strategy; ensuring that enterprise level plans are translated in to the plans of the various units and departments; executing strategic initiatives to deliver on the grand plan; and aligning employee’s competency development plans, and their personal goals and incentives, with strategic objectives. The OSM becomes the central point for coordinating all these tasks. The OSM might not do all the tasks but would definitely facilitate the entire process and ensures that strategies are executed.
Strategic Planning – An Oxymoron
There are innumerable amount of knowledge shared and written in this field, but all of those represents conflicting viewpoints on the whole philosophy of Strategic Planning. Management thinker Henry Mintzberg has labeled the term - Strategic Planning as an oxymoron. Business Strategies are never planned. Real business strategies are made informally – in hallway conversations, in working groups, and in quiet moments of reflection on long plane flights – and rarely in the paneled conference rooms where formal strategy meetings are held. Subsequent research in the field of strategic planning substantiates the point made by Mintzberg. Mintzberg’s views on the whole concept of strategic planning compliments the thought shared by Keinchi Ohme in his bestseller book ‘The Mind of the Strategist’ that the development of business strategies is as much a state of mind rather than a programmed thought process. Strategies are developed based on insights one has on the surrounding business environment which are based on one’s experience and knowledge.
Strategic Planning – Creating prepared minds through Learning
Sarah Kaplan and Eric D. Beinhocker in their article titled ‘The real value of Strategic Planning’ say “The goal of Strategic Planning process should not be to make strategy but to build prepared minds that are capable of making sound strategic decisions”.
As one of the former Senior Executive at GE Capital puts it – ‘Real Strategy is made in Real Time’. He saw the point of strategic planning not as predicting the future but as a learning exercise to prepare people for a future that is inherently uncertain. He also noted that, most processes are focused on creating plans and making decisions rather than learning.
Strategic Planning – the crucial link between Strategy and Operations
Kaplan and Norton in their seminal work on Balanced Scorecard provided for the first time a new dimension to Strategic planning process. They brought in the vital link between Planning and Execution. From ‘Thought to Action’; how successful companies implement strategies and achieve desired results on a continuous basis. They saw the role of Strategic Planning function as an orchestrate of Strategy Development and Deployment process. Their whole argument is based on this crucial link between Strategy and Operations. They call the Strategic Planning Function as the “Office of Strategy Management (OSM)”.
They argue that the typical planning function facilitates the annual strategic planning process but takes little or no leadership role in seeing that the strategy gets executed. This is where they find the usefulness of their tool – The Balanced Scorecard. This point is further substantiated by a recent survey by a renowned global management consulting firm, which revealed that “Greater satisfaction could come from improving company’s ability to align their people with their strategic plan and from monitoring progress against the plan”.
Most companies do realize that effective strategy execution requires communicating corporate strategy; ensuring that enterprise level plans are translated in to the plans of the various units and departments; executing strategic initiatives to deliver on the grand plan; and aligning employee’s competency development plans, and their personal goals and incentives, with strategic objectives. The OSM becomes the central point for coordinating all these tasks. The OSM might not do all the tasks but would definitely facilitate the entire process and ensures that strategies are executed.
Strategic Planning – Execution is the Key
While we are talking about the importance of Strategy Execution and the crucial linkage between strategy and operations; the other management thinker who comes to mind is Ram Charan. In his book titled ‘The Execution’ co-authored by Gary Bossidy, they provide some great case studies on the failure to execute some of the greatest strategies by some of the greatest companies around the world. He then goes on to provide a framework for ensuring execution of business strategies and get desired results. In one of the interviews to the Journal of Business Strategy, Ram Charan says ‘I wouldn’t say that strategic planning is dead, but it is now required to be more of an action plan. The most brilliant strategy in the world won’t work if your assumptions are wrong, especially in relation to whether you have the right people in place to make it happen. A strategy is not even worth writing down unless you can see how your company is going to make it happen. Once that road map is in place, you must have the people and mechanisms in place to continually adapt to a changing climate”.
In the same interview, he goes on to share his thoughts on the role of leadership in the whole strategic planning process and execution. He says – “Leaders don’t focus nearly enough on follow-through, on actually getting things done. Leading for execution is not rocket science, but it does require you as a leader to be deeply and passionately involved in your organization and have an honest feel for your capabilities and potential. Walk into any large bookstore and you’ll find dozens of books on strategy and leadership development. There is an endless supply of material on business tools and processes. Execution, however, is a specific set of behaviors and techniques that companies need to master in order to win. It is not a single “concept” or million-dollar idea. It is a discipline of its own, and the critical one for ongoing success, quarter after quarter.
According to a survey by a renowned global consulting firm – A significant number of respondents express concern about Executing strategy. 28% of the sample respondents say that their company produces a strategic plan that reflects the company’s goals and challenges but is not effective. Another 14% say the strategy and plans for executing it are not necessarily aligned with each other. Among the executives whose companies have a formal strategic planning process and who are satisfied with the results, 67% of them say aligning management with the strategy is an element of the strategic planning process and 78% of them say that their process leads to explicit objectives that are communicated through out the company.
Strategic Planning – Making it more Relevant and Effective
Though I cannot claim that the above research is complete in all respects and has been done to the minutest detail, it does give a fair idea on the thoughts that are floating around on the concepts and practice of Strategic Planning. This gives us good base for us to debate and build further thoughts on the issue under discussion.
Based on the above debate and thoughts put forth by many a people, I would like to make an attempt in bringing about some sort of a consensus and share my thoughts on how to make the strategic planning process more relevant and effective as a function and as process:
- All said and done, Strategic Planning is not dead. It is very much alive and its importance cannot be underestimated. However the challenge still remains as to what is the mandate for the function? What role does the function play in the context of an Organization’s overall objective?
- Strategic Planning function will always be a support function rather than a line function. It basically dons the role of a facilitator. It acts as a bridge between the Leadership/Senior Management and the Operational layer of the Organization.
- Strategic Planning is both intuitive/creative and analytical. You cannot have a polarized approach. Achieving the right balance is the key to success.
- While designing the Strategic Planning function and its processes, you cannot have a very narrow view of the organization and its business. The design has to be robust and holistic so that it encompasses the Organization issues in totality. More importantly, it should give enough room for a participative approach rather than an autocratic approach (52% the sample respondents in a global survey say that at their company, the important strategic decisions are made by a small group of senior managers including the CEO – Survey by a renowned global consulting firm). At the end of the day, success or the failure of any organization depends on its people. This statement though may sound clichéd, it’s a fact nobody can ignore. The more inclusive and participative you are in your approach in building consensus and decision making, the chances of success is also high.
Conclusion
Amongst all these diverse thoughts and philosophies put forward by the experts, nobody can claim to have a sure shot formula to a world-class, strategic planning process contributing to the organization’s goals. It entirely depends on the circumstances and situations in which the organization is that determines the mandate and structure of strategic planning function. However, the need for it as a concept and as a function is definitely there and cannot be underestimated. A world-class, relevant, structure and process for strategic planning could indeed be a source of competitive advantage.
Also in the whole world of management jargons and the desire to sensationalize and popularize the issue, it is easy for any professional to be misled in to the world where form matters more than substance. One has to constantly keep re-visiting the fundamentals of Businesses and the Organization. It still is the source of answers to most of the challenges businesses face.
A. S. Raghavendra
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