Strategic Planning Myths
Strategic Planning is only for big companies.
True. No! Just kidding - that's a myth. Strategic planning is a simple process where the 5 to 12 people who are most responsible for creating the future get together in an intense, focused, process to answer the basic questions of business life:
- Where are we?
- Where do we want to be?
- What do we need to change in order to get there?
Having answered the big three questions, the team then creates action plans that start them moving in that direction - now! Now means today, this week, this month, and this quarter.
The major difference between strategic planning for a big company and doing so for a small company is the number of zeros following the numbers. Fortune 500 companies like to take weeks, involve expensive consulting firms, and meet at fancy resorts. Organizations like yours get the job done in two intense days at a local hotel meeting room or meeting facility.
Myrna Associates has worked with small company teams whose executives spent years doing it the Fortune 500 way and they tell us our intense two-day process produces better results. Not just comparable - better!
Take a look at some of their actual testimonials. »
Our industry is different, things change too quickly to plan.
Myth. Every industry and organization is changing quickly today - most propelled in some way by ever faster, cheaper, more powerful chips; the Internet; globalization; and the information explosion.
While your environment may be changing quickly, meaningful internal changes still require time to implement. It takes time to fully develop a totally new product, grow a new market's revenue large enough to replace the old one, recruit, indoctrinate, and utilize senior executives, expand into new countries, or build dominant market positions, etc. There is only so much seed corn. If you find yourself having to abandon most of your investments before you can receive a return, you eventually will have nothing left.
It takes twenty-four months for an elephant to give birth, but eight pregnant elephants won't produce a herd of eight in three months. Some things just take time. You can't invest in everything - you have to chose. Strategic planning provides a process to help you choose wisely.
Strategic planning is about deciding what you want to be in the future and translating that into a focus on what you need to invest in today. If your industry is changing rapidly, perhaps your view of the future is of a company with proprietary rapid development technology that allows it to be the first to respond. Or one that can quickly raise the funds necessary to deploy a new product nationally / internationally. Or a company that has state-of-the-art systems that allow it to maximize profit from one venture and then quickly transition to the next.
The longer the payback of a given investment, the better the fit has to be with your envisioned future.
The process is as important as the plan.
True. The team planning process is as valuable as the plan it produces. (Some argue that it's even more important.) Once in a while a CEO will try to save their company time and effort by sitting down and creating a vision, mission, strategy, and set of goals. Such plans are usually pretty good, after all the CEO is intelligent and highly intuitive. As an alternative, the CEO sometimes hires a consulting firm to develop a plan. (That assumes an MBA just out of college will know more about your business than the executives who have to execute the plan.)
The hard truth is that the best plan is one that actually gets implemented. That is why a plan developed by the implementation team will always beat a plan imposed on the implementation team.
We're in crisis, I'll do the planning when things are running well.
True or myth depending on the nature of the crisis. If you are in the midst of a short-term crisis such as an all-out push to get a new product out the door, you should wait until every member of the planning team can take part in the two-day process without distraction.
On the other hand, if you are in a protracted crisis -- lasting months and months -- then the planning meeting is an excellent opportunity to take a few steps back and triage the situation. Perhaps the only way out of crisis mode is to invest in changing the status quo through an upgrade of the infrastructure, entering a new market, creating a new product, developing a competitive strategy, replacing a team member in over their head, increasing the equity base, or getting out of legacy products, markets, customers, or people.
Time is short and resources typically limited when you're in crisis. You get fewer chances to get it right. It is important to reestablish what the vision, mission, strategy is so you not only solve today's problems but start building long-term value.
Having lost sight of our objective we redoubled our effort!
When you're up to your butt in alligators
It's easy to forget your goal was to drain the swamp!There's never enough time to do it right but
always enough time to do it again!
Strategic Planning takes too long, costs too much.
Myth. Planning takes as little or as much as you allocate to it. You never do enough planning yet unless you implement, nothing will come of your planning. Done well, the process dramatically enhances focus and saves man-years of wasted effort.
One man-year wasted is expensive. Not only is the morale of the individual damaged when their hard work is discarded due to a change in direction, but you lose $100,000 out of pocket! (Peter Drucker estimates once you fully account for benefits, space, equipment, training, turnover, and more importantly management support, that the true cost of an employee is three times their salary. Be sloppy in your focus and waste one $33,333 salaried man-year and you've removed $100,000 from your bottom line! If your pretax margin is 10% you will have to sell, deliver, and service an additional $1,000,000 to make up for that single poor decision!)
Even if you only save one man-year isn't that enough to cover the cost of getting your team together for two days and paying for the room, some food, and Myrna Associates' modest fee? (Modest fee? - take a look at our three levels of service »)
Five hundred years ago everybody thought the world was flat.
Myth. People have known the world was round for thousands of years. This myth was created by the popular 19th-century American author Washington Irving.
Just because everybody believes this myth doesn't make it true. What myths about your markets, technology, employees, customers, or government are clouding your behavior today? Ask yourself what elements of today's so-called common knowledge you're likely to be chuckling over in five years.
Things are running well, let's do the planning when we need it.
Myth. IBM founder T. J. Watson was fond of saying that he was the most afraid when things were going well. Complacency is more dangerous than any competitor.
Profits are highest in mature markets and products. The sweetest time is in the Autumn, just before winter hits. It takes time to develop the next big thing that will replace your current cash cows.
Strategic planning provides a forum for sorting though the myriad of potential investments and selecting and nurturing your future winners. I was with a company for 15 years that developed a rich and lucrative market. We knew its days were numbered and we would have to replace it eventually. We invested in over a dozen new ventures. When the time came and our core business started to fall out of the sky, we found that by investing in so many different, unfocused areas we had no single market with enough scale to soften the blow of the collapse. In effect, we had to start all over again.
Given a choice, wouldn't you rather plan for the future when you have the financial strength and resources to nurture your investments? Too many companies wait until they have to change. Being reactive can work but it is risky and generally unpleasant. Being proactive is a lot more fun!
Strategic planning can be done well quickly.
True. While you can't do a quality job in only half a day, you can do a quality job in two if the team remains focused, and you use a facilitator and formal process.
In fact, if you spread the actual planning process -- versus the implementation -- out over too many days or weeks, you can lose the interconnections between issues. There is a minimum time it takes for the planning team to get into a state of flow where they can grasp all the issues in their minds and make balanced decisions. It takes most of a day to reach this state of flow.
We suggest an annual cycle of planning and review meetings.
Use an annual two-day meeting to identify and prioritize this year's major issues; establish or refresh the organization's vision, mission, and strategy; and establish a small set of strategic goals with action plans that focus implementation.
This two-day annual planning meeting is followed up with monthly tracking and review, usually during your regular department meetings.
Then, a formal full-day review every 3 to 6 months provides an opportunity to celebrate successes; understand non-successes; re-validate vision, mission, and strategy; focus short-term action plans; and regenerate consensus, commitment, and excitement.
Strategic planning is nonsense - I can't tell you what I'll be doing tomorrow afternoon, much less in five years.
Myth. Strategic planning is not about predicting the future, reading crystal balls, or calling some psychic hotline.
Strategic planning is asking the people whose actions will create the future what they want that future to be. Where do you want to be in five years?
- Not where do you think you'll be.
- Not where do you forecast you'll be.
- Where do you want to be?
Perhaps no one has ever asked the question before? Once the team identifies where they want to be they ask the next big question. What has to change in order for us to get there? Those changes are articulated as a small set of strategic goals with implementation plans that start immediately.
While we talk about where we want to be in three to five years, the plan's focus is on what we are going to do during the next 1 to 12 months to get us there.
"The fellow that can only see a week ahead is always the popular fellow, for he is looking with the crowd. But the one that can see years ahead, he has a telescope but he can't make anybody believe that he has it." - Will Rogers
Hasn't strategic planning been pronounced dead?
True but... The obituaries you may have read in Business Week and recent Tom Peters books refer to traditional big-company strategic planning.
Imagine having a planning department that hires MBAs with no operational experience, fresh out of business school. You then assign them a full-time job to write a strategic plan. After interviewing the operational managers, conducting various kinds of research, holding endless meetings, and generally wasting a lot of resources, they publish a thick tome about how the company should run its business. This plan is chiseled in stone tablets and quickly becomes irrelevant.
Operational managers attend multiple meetings where the plan is introduced and explained, Then they file the plan away and forget it until the next planning cycle.
Life is unfair. Despite the MBA's hard work, despite the quality of the analysis, thinking, and planning, the plan seldom is read, much less implemented. Most often copies of the plan end up in one of the many circular files that working managers keep for such nonsense.
Strategic plans created by the people who will implement them and live with the consequences work. This form of strategic planning will never die.
Strategic planning would be a waste of time -- we don't have enough time to handle our current load, much less new goals!
Myth. Everyone has the same 24 hours a day and seven days a week. Lewis Carroll said it best in Alice's Adventures in Wonderland.
Would you tell me, please, which way I ought to go from here?
That depends a good deal on where you want to get to, said the Cat.
I don't much care where --- said Alice.
Then it doesn't matter which way you go, said the Cat.
--- so long as I get somewhere, Alice added as an explanation.
Oh, you're sure to do that, said the Cat, if only you walk long enough.
Eighy-five to 95% of your organization's time is consumed handling the day-to-day. Strategic planning is about managing the small amount of time -- 5% to 15% -- you can squeeze out to invest in making the future what you want it to be versus where chance is taking you. (This is not unlike people's personal lives. They know that they have to invest for their retirement. It would be a great retirement if they could only set aside 30% or 40% of their monthly income but the reality is they need 85% - 110% of their income just to meet current obligations.)
Think of strategic planning as your corporate 401(k) plan. You set aside a regular amount of time and resources to invest for the future. Knowing you have this limited amount, you use the best thinking available to prioritize your investments so they are likely to contribute to the corporate lifestyle you want in 3 to 5 years.
Less is more.
True. Senior management has a limited bandwidth for managing change. Each strategic goal is a commitment to change the status quo, a difficult process in the best of times. Implementing change requires the sustained efforts of the entire senior team. This means keeping the goals, objectives, and action steps in in front of you even in the chaos of the day-to-day.
As part of our process, we document the entire plan and get notebooks back to attendees within four business days of the annual planning meeting. Along with the notebooks is an 8¸ x 11 placard that documents this year's goals, key result measures, and the next 90 days of action steps.
You can regain your strategic focus in less than a minute by simply reading the placard. This is the only way to keep momentum. Too much detail impedes your ability to remain focused.
A professional should facilitate the strategic planning meeting.
True. Unless your only choice is to facilitate yourself or skip strategic planning entirely, you should always use a program such as Myrna Associates' strategic planning service ». As good as your people are, there is a difference between someone who facilitates planning meetings occasionally versus each and every week.
Consider that the major expense of the meeting is the time you and your team spend and the opportunity costs of the decisions you make or don't make. A professional can eliminate the need for additional meetings to finish the job.
Myrna Associates facilitators keep their skills sharp by facilitating planning meetings every week. With our commitment to continuous improvement, the process is constantly enhanced based on the questions, suggestions, feedback, and successes of our clients.