Part 1 of this article will explore how companies fail to create true strategic plans and the symptoms and problems associated with this.
As large companies work through the third quarter, many will be attending planning and budgeting meetings. Companies typically begin their planning for next year right around now. This process happens each year and in most companies there is a very clear articulation of the financial goals, including capital allocations, headcounts, expense budgets and revenue forecasts. Alongside there is a strategic plan, but in most cases the plan is either too ambitious or too general, leaving employees and managers with clear financial targets and a blurry corporate strategy on how to achieve these targets.
Each year, business leaders complain about how strategic planning is ineffective or useless. They are frustrated with the lack of innovation, change or growth in their companies. A growing number of blog posts and articles point to this problem.
The Whipping Boys
Strategists have become the whipping boys of corporate leadership failures. Despite the hours and days strategy teams spend on rigorous analysis, scenario modeling, market research and countless drafts of plans where they point out specific problem areas or new growth opportunities, when it comes to decision time, it is the business leaders who cop out. Strategists and consultants advise them to choose and make trade offs, but they fear being too bold by making just a few big bets. Or they don’t want to leave anybody out of the strategic agenda. Either way, the strategic plan becomes a watered down document which lacks any real direction or action plan.
Typically leaders who don’t want to make trade offs handle this in one of two ways. One way is to create an all encompassing goal that appeases everyone. Goals like “creating a better customer experience” or “delivering excellence” sound motivational and positive. Nobody can argue with the underlying good intent. The phrase becomes the go-to mantra for the year. Sometimes business line head or functional leaders might even use the catch phrase to receive a larger budget or negotiate a more favorable org structure. Employees see the phrase and understand that a problem is recognized or that management is trying to make things better. The lacking set of actions, measurements and clear directives leaves everyone wanting more. Over the year the phrase is repeated in presentations, town halls and meetings and people become numb to it or worse yet, joke about it.
The To-Do List
The other approach that leaders often take is the to-do list. This is when there are too many voices and too many agendas. Instead of choosing the most important initiatives, the leader decides to list of 15 or more specific goals as strategic priorities. Some of these goals are measurable and others are not. They include things like “enter the Asia region” or “launch a new product for the mid market segment” or “increase revenues by 10%.” While these goals may be more specific, the sheer volume of goals creates a mission impossible scenario. Some of these goals may even contradict each other and pull resources in completely different directions. At the end of the year, the company might have accomplished two or three things on the list, but even this is unlikely. When employees see a list of 15 priorities they either feel anxiety or confusion because they intuitively know that it’s impossible for a big organization to complete the entire list. Worse, it exposes a lack of leadership. Everyone knows that having 15 priorities is essentially the same as saying that nobody could decide and agree on a few select priorities.
At the end of the year, the company might have luckily hit its financial targets. The management may feel good about their financials, but most will bemoan the strategy as being ineffective or poorly executed and the cycle will repeat.
Part 2 explores how leaders can remedy the problem of poor strategic planning and execution.
This article was written by Falguni Desai from Forbes and was legally licensed through the NewsCred publisher network.