Strategic planning is a misnomer and a path to loosing

Your challenges

Every year or so, teams in your business may be doing strategic planning. They identify the activities and deliverables they see value in producing for the forthcoming year. Each year, budgets are consumed, people are kept busy, but are valuable competitive outcomes that result in the business winning with customers being achieved on any significant level?

In this article, Roger Martin, the world’s #1 management thinker in 2017 and Professor Emeritus at the Rotman School of Management at University of Toronto explains why most strategic planning is the path to loosing in the longer term.

Most strategic planning has nothing to do with strategy

Roger explains, that most strategic planning is a set of activities the company says it is going to do. For example, improve customer experience, open a new facility, introduce a new HR system and feedback process. These activities can be full of promise, but the results are frequently disappointing because they lack a strategy.

What is a strategy?

A strategy is an integrative set of choices that positions you on a playing field of your choice in a way that you win.

Strategy is theory. Strategy states here is why we should be playing on this playing field and not this other one, and, here is how we are going to be better at serving customers on that playing field than anyone else.

That theory has to be coherent, doable and translatable into action for it to be a great strategy.

What is strategy?

Planning is the comfort trap

Planning does not require the coherence of Strategy. Instead, planning tends to be "Wishlist of different functional units". Commonly, there is no obvious or even identifiable lineage or traceability as to how the mis mash or strategic planning activities will deliver any substantial competitive outcome for a business.

Planning tends to be comforting as it is internally focussed. It is output and activity based, that is driven by the cost / resources side of the business. Managers have control over costs and resources, hence managers have control over plans and therefore it is more comforting or certainly less confronting that its strategy counterpart.

Strategy is frequently uncomfortable

Alternatively, Strategy specifies a competitive outcome to be achieved in the external (rather than internal) business environment. Strategy is a theory about how your business is going to win with customers, against competitors, neither of which a business has any control over. Strategy requires the courage to put yourself out, and say, here is what we believe will happen, knowing it cannot be proven in advance. Thus, very frequently it is easier and likely safer in many company cultures to stick with what managers control, and they can control activities and resources.

Planning is the comfort death trap

The tricky part of planning, is that while most businesses are planning and playing, at least one competitor is figuring out how to win.

Disruptor.

These competitors that figure out how to win are frequently called disruptors. They are disruptors because while all the industry players are playing and planning, the disruptor figures out how to win, and eventually takes the substantial share of the industry revenue.

Roger then gives the example of Southwest airlines and some of its' strategic choices that enabled it to be than everyone else for its target segment.

Escaping the planning trap

Step 1 - Acknowledge Strategy will have angst associated with it. Strategy because it is engineering an outcome outside your control will make you feel nervous. As a manager you have been conditioned you should do things that you can prove in advance. You cannot prove a strategy in advance.
It can be so much more tempting and comforting to retreat into your activity planning shell, review an activity plan - validate that all the activities are doable, then focus on those, even if they likely won't add up to much.

With strategy, you speculate that if our theory is right, about where the market is headed and what we can do, this will position us in an excellent, even leading position.
Accept the fact that you cannot be perfect on that, and that you cannot know for sure. This is not being a bad manager, instead it is being a courageous leader, because you are giving your organization a chance to do something great.

Secondly

Layout the logic. Identify what would have to be true about your sales, industry, competition and customers for this strategy to work. Why do that? Because then as you watch the world unfold and if something you say is in the logic is not working out, then you can tweak your strategy. Strategy is a journey, you want to have a mechanism for tweaking and refining so it gets better as you go along.

Thirdly

Avoid having Strategy get over complicated. Ideally, keep it to a single page. Here is where we are going to play, here is how we are going to win, here is the capability and resources needed to win and here are the management systems necessary to govern and implement the strategy, and that is why it is going to achieve this goal or aspiration that we have.

Finally

Roger advised, this may all feel a bit anxiety inducing, but if you continue with planning that is a way to guarantee losing.
If you do strategy is gives you the best possible chance of winning.