Successful leaders don't start out asking, "What do I want to do?" They ask, "What needs to be done?"
- Peter Drucker
Since most organizations state that strategic planning is one of the most critical things they do, why do they do it so badly?
McKinsey just published a survey of how strategic planning is performed by 796 corporations worldwide, each with revenues of at least $500 million. Of these, only 23% stated that they follow a formal strategic planning process. Not too surprisingly, those that do follow a formal process are much happier with how strategy is developed in their organizations.
But of course a formal process isn't enough. Too many organizations have a simplified notion of how to conduct strategic planning. "How about we do a SWOT analysis and then talk about our how our pet projects fit in?"
The key complaint is that the company needs to align more with the strategic plan, and the follow up is always that there needs to be a method to monitor progress against the plan. For a function that is seen as critical to the organization, why are strategic planning activities still so immature?
As
Cokins noted, employees can only implement a strategy when they clearly understand it, and their role in achieving the company’s strategic objectives. Organizations are composed of strategic business units, departments or functional areas. What those groups do, what projects they undertake, compose the organization’s strategy, not the words on a strategic planning document.
At many companies, strategy is a highly abstract concept, and is not something that can be easily communicated or translated into action. But without a clear sense of where the company is headed and why, lower levels in the organization cannot put in place executable plans. In short, the link between strategy and performance can’t be drawn because the strategy itself is not sufficiently concrete.
Strategic planning cannot exist in a vacuum. Yes, let's define Mission, Values and the Vision of where we want to be. But that Vision needs to be backed up with strategic objectives, target measurements (with milestones) and projects which directly address those objectives. The organization must have transparency from the Vision to the initiatives it undertakes in each department, and each objective should be wholly addressed by the measures behind it. The goal is to create a culture where everyone understands the strategic vision, works on projects to achieve that vision, and the company moves forward.
However, successful implementation of a mature strategic planning process requires an open conversation between executive management and functional management about strategy. As projects are undertaken, tactical leaders need to share their measured results with senior managers, who must assess failures or successes appropriately. Did the outcome prove that the strategy set by the organization will lead to growth? Or does the strategy, and supporting activities, need to be reviewed and revised? Organizations where executives are accustomed to setting direction, but not accustomed to getting feedback on the results, will require a different mindset about the role of strategy in the organization. You might notice from the McKinsey survey -- C-Level executives have a much rosier assessment of how strategic planning is working than those working under them. Definitely a sign that an open conversation isn't taking place!
