Why Strategic Planning (by itself) Does Not Work

by smartamarketing

Dr Brian Monger

Most managers labour under a myriad of short-term pressures. Daily schedules are full to the bursting point; crises of various magnitudes have to be handled; customers demand action; fires must be fought. In some companies, daily (even hourly) fluctuations in stock prices are monitored closely, and action taken accordingly. Not surprisingly, as much as nine-tenths of a typical organisation’s energy is devoted to managing day-to-day operations. As more than one manager has ruefully observed, “If the organisation don’t get through this month, a six month plan isn’t going to be useful”. Because of their natural tendency to focus on the short term, managers must often be forced to pay attention to the long run if it is not to be lost in the shuffle.

Strategic planning can be a shallow exercise. It is all too usual for a slick report with beautiful graphics to be produced, filed, and forgotten. This phenomenon seems to be especially common when the plan was drawn up by the strategic planning department or (even worse) when an outside consulting group has done most of the work. There are important roles for consultants and staff planning specialists in the strategic planning process. Their specialised skills can be extremely useful in structuring the process and obtaining and analysing critical data. They often serve as highly effective catalysts, in effect, forcing the organisation to expand its horizons beyond the day-to-day. But it is bad policy to have such specialists take the lead in developing the strategy or writing the plan. While many managers would be delighted to have them do so an organisation that succumbs to this temptation would almost certainly be better off without a plan.

Unless the managers who are to be responsible for implementing the plan have been deeply involved in its preparation, it is highly unlikely that the plan will have significant impact. Successful implementation of strategy requires shared understanding of the information driving the firm’s business, as well as consensus concerning the organisation’s mission, goals, key programs, and resource allocations.

Even when managers are involved in the planning process, however, the resulting plans and tactics may be inconsistent with the organisation’s measurement processes and/or incentive structures. In the newspaper industry, for example, it is common for strategic plans to call for increases in circulation and readership, but for bonuses to be paid almost solely on the basis of annual profits. Since increasing circulation generally requires marketing investment that is unlikely to pay off until subsequent years, it is not surprising that many newspaper publishers put far less emphasis on building circulation than is called for in their strategic plans.

Managers must be able and willing to carry out the actions called for in their strategic plan, or it simply will not happen. If they feel threatened by the planning process (e.g., if it requires that their organisational unit be compared with “best of breed” or if it seems likely to lead to a loss of resources), they are likely to deliberately impede it. For the strategic planning process to be effective, managers at all levels must “buy into” the plan. Operational managers (salespeople, brand managers, market research managers), middle managers (group brand managers, sales managers, advertising directors), and top managers (the senior managers responsible for marketing, R&D, and manufacturing,  and even the chief operating officer and chief executive officer or managing director) must all understand the planning process fully, feel they have had a real opportunity to contribute to the plan, and agree, at least in broad outline, with its conclusions.

Another major impediment to effective strategic planning is the lack of sufficient data. In these circumstances, it is necessary to decide whether to use those data that are available, and supplement them with managerial judgment, or to operate without strategic direction. The organisation feel it is better to identify critical information and success factors, obtain the best information available, and formulate at least a draft strategic plan. One outcome of this process is likely to be a clearer recognition of what additional data are required and, hopefully, a plan to acquire such data. Clearly, timely monitoring, control, and revision are especially important when implementing a strategy developed with less than adequate data.

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