Traditionally, strategic planning has been recognized as very important activity to the effective management of the firm. However, according to some recent surveys (from 2006 and 2007), which are related to the organizational practice of strategic planning, “some” survey participants were not satisfied fully with the process or outcome.
Hence I would like to discuss some typical barriers and problems, which exist within strategic planning. Of course, I will make some suggestions on how to overcome them. These barriers are
- analysis barriers,
- agenda setting related barriers and
- barriers for strategy finding
Overcoming analysis barriers
Strategic analysis can be a complex task. Managers may be overwhelmed by the large amount of information. It is difficult enough to distinguish between relevant and irrelevant information. It is, however, even more difficult to make sense of this information.
In such a situation, people tend to unconsciously reduce complexity by focusing on direct effects: Whatever finding from the initial analysis is considered relevant, people just think of some obvious direct effects. Then, they immediately start to derive strategy approaches.
What to do
First, and most importantly, organizations should help their managers with the process of strategic analysis. There are several approaches to choose from, for example:
- provide specialized training in this field
- provide a structured process with some standard tools for strategic analysis (but make sure to avoid the disadvantages of standard models and tools
- provide coaching and consulting from the experts in the central strategic planning department
- narrow down the focus of the analysis (e.g. competitors’ moves in the first round, technological trends in the second round, and so on)
To develop a successful and sustainable strategy, organizations should apply an approach that considers the impact of secondary effects. I recommend taking a dynamic view of the marketplace all the time. Therefore organizations should anticipate competitive reactions to their strategic moves and explicitly incorporate them into their strategic analysis. To ensure such a dynamic view I recommend applying an approach that is based on the analytical technique of business dynamics.
Overcoming barriers in agenda setting
In some cases only top managers contribute to the agenda of the strategy meeting. Some major disadvantages are linked with this approach:
- Not all really important issues will be set to the agenda; due to this fact
- Some important aspects that have an impact on the meta level of corporate issues will not be considered.
- Inappropriate agenda-setting can team up with other issues to form a mutually reinforcing set of problems which makes your strategy process doomed to failure.
What to do
The quality of strategic decisions can be improved if middle management has the chance to contribute their issues and concerns to the stage of agenda setting. Hence it is recommended to establish a procedure that ensures the involvement of middle managers during the process of agenda setting.
Degree and content of such a procedure should consider both size and structures of the organization. In larger organizations, a two-step-approach could be employed:
- Collect all suggestions and ideas for the agenda from middle management
- Review, cluster, filter, and prioritize them in order to derive the most relevant items
A positive side effect will be that the middle managers will feel involved and taken seriously. This process relieves them from the perceived need to smuggle their issues into other items on the agenda.
Overcoming barriers of strategy finding
Strategy finding is the responsibility of top management. In particular in smaller and medium sized organizations, managers do not deal with strategies on a regular basis. They lack the experience to derive appropriate strategies and initiatives from the analysis results. In addition, the executive team in such organizations consists only of very few people. This even further limits their ability to discover the one best strategy amongst many options.
What to do
To generate a variety of ideas the organization has to ensure that various perspectives and different levels of knowledge are reflected. This can be achieved by including senior management representatives from all functional units of the organization. That should include small units as well as those units that are far away from corporate HQ.
In order to overcome the lack-of-experience-barrier, it is advisable to include strategic planning and thinking capabilities in the personnel development activities.
Another option is to bring in some outside experience. I don’t mean to hire McKinsey or BCG. Nevertheless an experienced external coach or consultant may facilitate strategy finding by moderating and guiding the strategy process.
The above examples include by far not all barriers and solutions for strategic planning. They are just an illustration for the broad range of issues that make or break a successful strategic planning process.
The first step to improve this process is to critically assess the organizations capabilities, strengths and weaknesses in strategic planning. Compare them with best practice approaches. On this basis, you can identify the most important areas for improvement and decide on some measures to take.
For a more detailed discussion of barriers for strategic planning and how to overcome them, I recommend my paper on that topic.