The very concept of ‘strategic planning’ has been under pressure for about 50 years. We’ve just chosen to ignore it
by Steve Miller
Realising that the five-year plan is dead is not a knee-jerk reaction to Covid-19. The very concept of “strategic planning” has been under pressure for about 50 years. We’ve just chosen to ignore it.
The source of the stress lies in the antecedents of “strategic planning” itself. It came from the military and was proven and honed by two world wars. It permeated business and became codified and accepted practice for business leaders who were indoctrinated at postgrad business schools, mistaking an MBA for an education.
The problem is that the approach itself was rooted in five seemingly obvious military “truths”:
- The past reasonably predicted the future;
- Good data was scarce and hard to come by;
- Lines of communication were unreliable;
- People at “the top” knew best; and
- Most change occurred gradually.
Welcome to 2020.
The past no longer guarantees an accurate view of the future. It really hasn’t since April 7 1969. We just didn’t realise it at the time. The birth of the internet ushered in a space that allows people to gather and share information across the globe. It’s a space where ideas can be expressed and reshaped and you can learn just about anything you want to. In real time. At next to no cost. And it’s turned every one of the strategic planning precepts on its head.
The truth is that most strategic plans are nothing more than the Linus security blanket of corporate higher echelons. Most are, I suspect, a means to appease prying investors and to persuade employees that the bosses have a plan as they continue to micro-manage the day-to-day activities of the business. Which, as it happens, may be exactly the right thing to do.
Where is strategy headed?
While strategic planning might be dead, strategy is not. It’s just how we need to do it that has evolved. Five new precepts have replaced the old quintet:
1. It starts with purpose
The new view of business strategy starts with a statement of intent. Ordinarily this is encapsulated in a 10-year, high-level view of the future and the role the business intends to play in that space. It clearly and unambiguously spells out the purpose of the business. If you haven’t been paying attention to the long game you might want to take another look at your Chinese competitors – they’ve likely been doing it while you’re relying on Trump to protect your patch for a couple of years. The jury is out on that one.
2. It fosters an enduring culture
People used to be the enduring repository of knowledge in a business. That’s changed: businesses have become much more aggressive in protecting short-term profit through retrenchment. Often the oldest and most expensive are the first to feel the knife. Goodbye corporate memory. And younger millennials have adopted a different approach to life-learning – they have different criteria about what constitutes success, and they’re never going to leave their future plans exclusively in your hands; they’re far more likely to leave for another company or even another career before you’re ready to promote them. So, if people no longer carry the torch of corporate understanding, only the glue of an enduring culture can keep the business intact and allow it the flexibility to expand and contract as it must to survive.
3. It’s driven by data
Data scarcity is no longer a constraint. We drown in data. The trick is to filter. And to do that, strategy is being informed by pattern recognition – finding veracity in the data, making sense of it, then ultimately shaping it is what defines business decisions. Interpreting and attempting to forecast the evolution of those shapes is what is guiding their success.
4. Thought is made real by testing
Instead of “betting the farm” on an informed guess-from-on-high as we used to do, life is now about fast-tracking concepts, prototypes, and messages and then A/B testing the hell out of them. And then iterating the idea and doing it all over again. Tomorrow.
Tactics are no longer conceived in the rarefied air of boardrooms; they reek of the sweat of the trenches. Great CEOs are part of everyday decision-making, especially about brands. “Micro-management” is smart these days. Anyone who tells you they only concentrate on the “big picture” isn’t in control of their business.
5. It’s executed by the whole
Strategy conception, evolution, testing, and analysis are now a “whole-body” task. It’s iterative, it’s inputted to by the actions of everyone in the business, from top to bottom and from bottom to top. Ultimately, “strategy”, like brands, is how the entire business acts in the market. It has passed from the realms of high-level, contemplative musing to hard-nosed, everyday business activity and delivery.
Think of strategy and planning more as the constant corrections at the helm to reach a destination as opposed to simply plotting the course on a chart, and strategy comes alive. It shifts from being a noun becoming a verb, acting – it no longer needs a “five-year plan” because strategy becomes the action, not the thought.
And it becomes so much the better for it.
THE BIG TAKE-OUT:
Strategy needs to be centred on purpose, culture, data and testing, and then needs to be executed by everybody in the business.
