Issue 2.10 | June 2011
In this Article: the why, the what and the how of strategic planning.
by Jonathan Wilson
Far in the distance, palm trees and jungle hung over the blue Pacific waters. The sun rode high in the sky, casting its warm tropical light onto our outrigger canoe that rode the ocean swells. This would have been a scene of bliss, if it had not been for the fact that our boat was adrift. The long canoe with its outrigger pontoons wallowed in the large swells. Of the ten people in the boat, everyone was seasick except the fisherman busy trying to fix his outboard engine, a young man called David and myself. Northwards lay thousands of kilometres of water before landfall in the Philippines. Two kilometres south of us the ocean surged white against a row of cliffs. Slowly, the current carried us in the direction of a promontory at the eastern end of the cliffs. The engine was unresponsive to the fisherman’s attentions, and he had neglected to bring paddles. Prospects did not look good.
Scanning the horizon carefully, David and I noticed a place where a waterfall cascaded over the cliffs. At its base, barely visible to the naked eye, lay a small beach, perhaps 30 metres wide. David and I knew what we had to do. Putting flippers on, we slipped into the water, one on each side of the long canoe, hung onto the cross beams of the outriggers, and began a slow swim forward.
This is a tale about strategic planning – its why, its what and its how. It is tempting in business to focus on fixing the outboard engine when the company is wallowing in troubled economic waters and the roar of surf carries on the wind from a dangerous shore. It is crucial, rather, for a company to take pause and, on a routine basis, scan the horizon. Strategic planning is the act of scanning the horizon, deciding where on the horizon you want to go, and making a plan for how to get there.
The Why, the What and the How of Strategic Planning
On one level, the why of strategic planning is obvious: it is unlikely you will reach a destination you didn’t plan to get to. But too often, the goal of senior executives is nothing more than to move the company forward. But “forward” could be out to sea, onto the rocks, or anywhere else that lies in front of the bows. When they serve as the primary goal of the company, quarterly earnings are one example of this kind of meaningless objective.
Scanning the horizon is a leadership act. It is the interpretation of the future, and what to do about it. For this reason, the what (“what should we prioritize?”) of strategic planning is two-fold. Firstly, a company needs to undertake rigorous self-analysis if it is to determine what to do about the things it sees unfolding on the horizon. It needs to know its soul – what it does best, why it does what it does best, and how this creates the best value for customers. Clear and accurate self-knowledge allows us to intelligently engage the realities we face ahead. Secondly, a company needs to build as holistic a picture as possible of what lies ahead and what lies in-between: socio-political, economic, environmental, cultural, etc. This requires taking seriously both hard data and the intuition of seasoned observers. It needs input from those positioned to question our assumptions and biases.
Defining present and future reality is one thing. Determining how to get there is quite another. A strategic plan should account for the major areas that typically drive organizational performance – customers, suppliers, organizational processes and organizational learning (or agility). To be useful in implementation, it should define milestones that will indicate progress in the direction of key goals. It should identify the linkages between desired outputs and the activities that will generate those outputs. It should determine how to measure outputs. Although it is important to use metrics to gauge and even reward employee performance, care should be taken to ensure the metrics are appropriate. David and I could have been rewarded for getting our boat to a certain point by a certain time, but unforeseeable factors, such as currents and weather, could have hindered us from doing so. Or we could have been rewarded for swimming as hard as possible in the right direction and making adjustments whenever necessary. Sometimes the most relevant employee assessments measure performance-critical behaviours, not just outputs.
Planning is Thinking
Nevertheless, the future cannot be controlled. Anyone who stakes their company’s success on the quality of its strategic plan is likely to be let down. Planning is essential if your company is to perform with excellence. Sticking to the plan, however, could ruin it. The primary function of strategic planning should be that it provides us with a framework with which to think effectively. The company that routinely and rigorously thinks is best positioned to adapt to the kind of rapid changes that characterize our world. We have to think comprehensively, and in multiple dimensions, hard and soft: about where things are headed, about our unique strengths and weaknesses as a business, about what matters most in life, and about what will work best if we are to deliver the results we desire. Thinking is the discipline that will drive strategic and adaptive action.
Winning rarely comes easily. It was a long swim, from open sea to the narrow beach embraced on each side by a long line of cliffs. Some of us were badly burnt from the sun. Only when we entered the little cove could we truly say we were safe – that we had succeeded. Till then, everything hung in the balance. Strategic planning is not a guarantee of an easy ride. Instead, it is the stewarding of our minds and resources to the best ends possible given the circumstances we find ourselves in.
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