Strategic planning and strategic thinking are often misinterpreted, mismanaged, or otherwise??lost within the noise??of corporate bureaucracy, departmental confusion and infighting. As a result, businesses, departments, and managers alike find themselves in a constant state of?organizational paralysis.
When a company suffers from paralysis, great ideas & solutions may abound, but they aren?t translated into action, and there?s little change.?Without remedy, business plans inherently fail, as do the managers associated with them.
Business owners and leaders today have found that developing a strategy and an implementation plan is far more effective than leaving the future to chance. Furthermore, developing a strategy, a vision, a mission, and a specific plan of action contributes to long-term, sustainable success. If implemented correctly, it will create higher levels of motivation, commitment, and fuel continuously higher levels of achievement from everyone within the organization.
So what?s the difference? Strategic plans, by definition, often focus on a defined period ? the 2, 3, or perhaps 5 year plan. In contrast, strategic thinking is not time based and is an ongoing process. While strategic plans may be based on the ?how?, strategic thinking is based on the ?why?.
When strategic planning arrived on the scene in the mid-1960s, corporate leaders embraced it as ?the one best way? to devise and implement strategies that would enhance the competitiveness of each business unit. True to the scientific management pioneered by Frederick Taylor, this one best way involved separating thinking from doing and creating a new function staffed by specialists: strategic planners. Planning systems were expected to produce the best strategies as well as step-by-step instructions for carrying out those strategies so that the doers, the managers of businesses, could not get them wrong. As we now know, planning has not exactly worked out that way.
Indeed, today?s business climate is increasingly fluid ? with business conditions rapidly evolving, managers and individual stakeholders are being asked to accomplish?more with less,?and as such need to have a broad perspective and awareness of culture shifts and business conditions shaping the market. Often, managers are focused on the immediate, with little time to consider the strategic implications of their decision-making, nor place, if not critical role, in the strategic process and success of the initiative and business as a whole. ?In this period of rapid change economically and in business conditions around the globe, strategy in business is moving away from the basic ?strategic planning? to more of ?strategic thinking? in order to survive the crowded and competitive global environment.
As?Jack Welch?accurately noted,??Control your destiny or someone else will.?Regardless of industry, it is clear that the ongoing trend towards globalization, diversification of both products and services, increased emphasis on business differentiation, and the reality that organizations that hire only the very best people are positioned to effectively compete within the marketplace. Yet, is it enough?
Effective strategic planning is essential in driving sustainable success and financial viability of a business. To be sure, rarely if ever are books written, case studies provided or seminars made available indicative of businesses that worked towards maximizing its success and overall profitability without a well-defined, implemented, monitored & measured strategic plan. We continually hear or read about the success stories ? the Jack Welsh?plan?at?GE, Southwest Airlines?culture of excellence?, and more recently,?Apple?s?forward-thinking innovation and success in redefining the marketplace as we know it.
So where and how does ?strategic thinking? fit into the equation? With the volatility and rapid changes within today?s business climate, strategy in business is moving away from the basic fundamentals of ?strategic planning? to more of ?strategic thinking? in order to keep pace, thrive and ultimately survive in an increasingly crowded and competitive global economy.
What Must Companies do to Remain Competitive??
Forward-thinking organizations with a strong desire to maintain?if not improve?upon their competitive position recognize that to take advantage of emerging markets, they must maintain a balance between strategic planning and thinking. Doing so requires that they keep their strategic management process dynamic and equally adaptable. Within this framework, strategic thinking becomes a key competency for managers and stakeholders alike who are challenged with the realities of design and deployment of business and functional strategies.
It is within this period of such rapid change that we should shift from traditional strategic planning to strategic thinking and strategic management.?Henry Mintzberg(1994), in an article appearing within the Harvard Business Review?titled??The Fall and Rise of Strategic Planning,??argues that the label?strategic planning?has almost entirely disrupted strategic thinking.
Mintzburg?argues that strategic planning is about analysis, whereas strategic thinking is about synthesis. In essence, while with strategic planning we are able to develop actionable steps out of business objectives, strategic thinking is more about intuition and creativity to formulate a more integrated vision of where the organization should be heading.
So what does this mean? In practical terms, strategic thinking should ideally enable us to more effectively analyze, understand and define a complex situation and then develop and apply planning actions designed to generate the greatest possible ROI. Accordingly, it is then reasonable to conclude that strategic planning is subordinate to strategic thinking. So to summarize how they differ:
- Strategic Thinking:?primarily an analytic and creative decision-making process that ultimately results in an appropriate strategic plan for the organization.
- Strategic Planning:?the process of converting the results of strategic thinking as a set of potentially actionable strategies into an integrated plan of action that can be implemented.?
Strategic Thinking ? Ok ? What?s Next?
Strategic thinking fosters an environment that contributes greatly towards added predictability in an organizations future. It allows us to quickly adapt and adjust business plans while creating actionable strategies designed to keep pace and rapidly adjust to market trends.
A successful strategic plan should be?simple, manageable, and measurable?through well-defined key performance indicators, tied to company values and key organizational objectives. Although we all understand that ?speed counts? in business, business owners, managers, and leaders?must?sustain their efforts to ensure the company strategies ultimately yield positive results. Far too often, businesses fail due to what I like to refer to as the ?McDonald?s Mindset? ? meaning, WE want to see quick results ? WE want it prepared our way ? WE want it completed quickly and to our complete satisfaction?(and of course, at the lowest possible cost)!
Takeaways: A Phased Approach
Action Step 1:? Strategic Direction
Strategy formulation and planning processes must begin with a clear statement of destination and purpose. ?Clearly stated vision, mission, values, policies and goal statements form the foundation on which a strategic plan is built. ?These indispensable statements guide and enable a leadership team to maintain control over the inevitable changes which will occur in their organization?s environment.? Strategic direction must be in place, understood and embraced or no amount of strategy formulation and strategic planning will generate lasting value.
Action Step 2:? Strategic Planning
Strategic planning tracks along two dimensions, i.e. longer term versus shorter term strategies. ?Longer term strategies describe how the organization intends to address each of its key drivers of change.? Some drivers will be related to the external environment, e.g. market/product mix, competition, and value chain, while others will be critical internal considerations, e.g. leadership and governance, financing growth, risk management, infrastructure and people development.? For each driver or ?key result area? a clear high level ?how to? strategy statement is required.? Each statement should include a basic description, a timeline and a functional responsibility assignment. A longer term strategic plan should also include an annual strategic management calendar and review process.
Action Step 3:? Strategic Operating Plan
The shorter term ?operating? plan is all about the implementation of the organization?s longer term strategies.? This is accomplished by translating high level strategies into outcome focused objectives, actionable tactics and performance measures.? Together these planning elements provide a framework for organizing a strategic operating plan.? Key components of the plan include the following:
- A balanced set of objectives (stated as outcomes)
- A strategy deployment map suitable for communicating the linkage between each objective and a particular function or perspective of the organization
- A realistic set of?key performance indicators?with target ranges of performance
- A prioritized set of initiatives, programs and/or projects aimed at achieving the established targets
- A preliminary approach to aligning the workforce by cascading the Tier 1 organizational level objectives to Tier 2 business/functional unit objectives and ultimately to Tier 3 personal objectives.
- Appropriate financial summaries and contingency plans.
- A responsibility assignment matrix
For additional information or to request a meeting, contact us via email at?info@fmadvisors.com, or call us toll-free at 888.656.0740
You may also visit our website at?www.fmadvisors.com
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