It is the season of corporate planning in most companies with various senior leadership teams moving to offsite locations reflecting on their strategic vision. Nowadays not only the CEO’s leadership team develops strategic plans but almost any function.
In fact I was asked to comment on a “Strat Plan” of an IT department at a client and I had to point out that their most important project “retiring AS400 servers” really had no strategic value.
Strategy is the most overused business term and most people forget that in business it means competitive advantage or as Michael Porter defined it:
It means deliberately choosing a different set of activities to deliver a unique mix of value.
I have to agree with Tom Peters when he argues that most strategic planning efforts really aren’t strategic at all and he quotes various strategy gurus to prove the point. Henry Mintzberg (former chairman of Strategic Planning Society) in his classic book warned about the decline of strategic planning 12 years ago and it came to roost.
You know you are working on something strategic if the knowledge of your strategic plan would have directors breaking out in sweat in boardrooms at your competition.
Let’s just call most of the annual planning efforts operating plans. I do not think it is a derogatory word and while it may take away some of the sense of significance of the drafters of such plan it does remind us that gaining competitive ground needs something extra to happen.
The notion that operating plans are strategic plans build on various favorite myths (and probably many more):
Senior management role makes you strategic. You need to think about it. Unless you are brought on board from a strategy firm or your company’s corporate development or M&A team you have not spent any time thinking about strategy. This is not a skill you grow on the day of your promotion. Many organizations (typically sales and product development) naturally have competitive streaks but they hardly dominate.
Long term plans are strategic. No. Plans that edge out competition are strategic. Everything else is tactical. Well, long term plans are long term with broader margins of error and lower accuracy. Unless they focus on what gives you practical advantage in the market they have no strategic relevance.
We are clear on our competitive advantage. You can ask various groups in the same company about their competitive advantage and you will get answers ranging from “we hire the best”, “we are lowest cost operation”, “we have the best channels”, “best products” and almost always “great service”. Almost never the same answer. Therefore it will not add up to a plan.
Strategy happens at the top. Well, no. Strategy happens in the trenches and while strategic thinking should happen on the top most often only the governance (metrics, targets) are established by the CxO team. Very often the line organizations are left to their own devices on figuring out how they are going to reach those targets and by doing so actually formulate strategy (which is about beating the competition).
Technorati Tags: business models, Competitive advantage, Henry Mintzberg, leadership, Strategic Planning
[...] It’s the season for strategic planning for most companies. Despite what I stated in my earlier post I still believe that business model changes are happening at an increasing rate. If you are like most companies, strategic planning takes place at some offsite in a reasonable climate with the leadership brainstorming away. [...]