Eddielogic

– Thoughts on Strategy and Management

Improving strategic planning processes

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This post will focus on options and ideas to improve strategic planning, again. A couple of days ago I have presented the first post “Ideas for overcoming analysis barriers” in this informal series – for improving strategic planning in your organization – in our strategy blog. But before starting with this new post I think that it is essential to describe delimitations of scope and some general recommendations, which you should have in mind when managing your own planning processes.

There is a large number of options and ways to overcome existing barriers and problems and so to improve the process of strategic planning. Typically those barriers can be found in the organizational context, e.g. corporate culture; as well as in the different phases in the strategic planning process. Strategic analysis, agenda setting, strategy implementation including progress monitoring are confronted very often with barriers. However, according to some studies and our own observations the strategic analysis is done very well in many organizations. To be more precisely; the external analysis is done perfect; the internal analysis has some areas for improvement, too. We think, that the organizational context has an impact how you do the internal analysis. A corporate culture that does not allow raising the right questions and that does not have an appropriate debate culture, running the internal analysis is a very hard business. Determining the best method for every strategic planning process in every industry goes (far!) beyond the scope of this post series.

Furthermore you should have in mind that overcoming these barriers cannot guarantee in general that the right strategic decisions will be made or that strategic implementation will be better executed. I know that this would be a real match, but there is a number of overlapping features (e.g. creativity, organizational learning, and capital resources) that have an impact. So what are the benefits? Overcoming the identified problems and barriers illustrate the potential options that your organization might have to develop an appropriate strategic planning process!

 

General recommendations for the process

Sometimes organizations are concerned about the effort to implement and to run a strategic planning process; in some cases they have made bad experiences with the planning outcomes.

To set up an appropriate planning process I would like to highlight the benefits of a tailored planning cycle for your organization, in particular when your organization consists of several business units. The instrument has the objective to free business units from the need to conduct the planning process every single year; hence these units undertake strategic planning only every two or three years. Imagine that a business unit did implement its new strategy last year; the first results are in line with planning predictions and the environment for that business unit did not change. Why do you want force these guys to run a new planning process or at least to fill in your strategic planning forms?
If you decide to go this way I recommend that your organization employs trigger mechanisms (Idea: Those trigger mechanism can employ financial ratios. Others can be operational to offer a more complex evaluation of the unit’s performance) to identify which business units need to undergo the full planning process.
Major benefit is: Your corporate strategy function (that might be you, your business development staff or your strategic planning department) can focus its resources on critical issues that affect the entire company. Another benefit is that well planned and managed units can take care for their operations (instead of filling in HQ-forms), what will make its staff very happy…

However, when important changes in the external environment occur, your senior management must be able to address strategic issues with the business unit on an ad hoc basis. Last but not least I have to stress that some business units should review the strategy they developed a year ago and make minor adaptations; opposite other business units should completely reinventing themselves due to their several years old strategy that has reached maturity.

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2 Comments

  1. Eddie,

    You make some very good points about the fact that many compaines are good at strategic analysis. The real challenge comes when trying to execute the plans. Here’s a company that’s put a system together for small businesses that addresses planning and execution with an enduring system: http://www.sixdisciplines.com.

    Cheers.

  2. Hi Dale,

    thanks for your feedback. You have an interesting blog on your website.
    Well, I think that it is very important that managers (CEO, corporate planners etc) understand where the critical issues of strategic planning can be found. I have met managers who thought that implementation and monitoring would be a self running process and that external analysis would be the hardest job. Explaining the problems and issues is a good way to establish focus and to run an appropriate planning process.

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