Building the Bridge from Vision to Results
Ten Pillars of Successful Strategic Planning
by Robert Silverman

When approached correctly, an integrated strategic planning process can become the critical driver of sustained success for companies at all levels of maturity. For multi-business-unit firms in particular, it can be the source of organizational alignment that helps the company evolve into a strategically focused organization. It can provide the roadmap that links a shared corporate vision down to executable objectives and measures that drive operating results and growth. It can be the critical driver for companies trying to reach their next level of success or a roadmap for companies looking to acquire or be acquired.

However, when done wrong, strategic planning can be a colossal waste of time that drains corporate resources and focus away from critical priorities. How, then, can executives be sure to make the process successful?

What follows is a common sense discussion of what I have found to be the ten pillars of successful integrated strategic planning.

  1. Don’t Wait for the Rain

    Many firms convince themselves that they do not need to go through a strategic planning process because things are going well or well enough. However, to paraphrase JFK, the time to fix the roof is before it starts raining. The problem is, that without management attention, things age quickly and badly in a business. As Harvard Business School’s Benson Shapiro once put it, when left to their own natural aging processes, revenues rot, costs climb, teams tire, service sinks and profits plummet and all of this can happen quite rapidly.

    If you consider the prevailing wisdom that strategies take from 9-15 months to implement and organization change takes 12 to 24 months to take root, it is clear that it is dangerous to wait until there are problems. The strategy process is akin to good health and exercise: there is never enough time, the payoff always seems to be too far off for the investment and there always seem to be immediate priorities that make it easy to push it off until tomorrow. But, tomorrow can be too late.

  2. Beware of “Myopic Incrementalism”

    A common approach to planning for many firms is to simply put a financial number up on the wall and direct the business units to plan and execute toward that number. The strategy devolves into “become a $1 Billion firm in three years” or “grow by 10% per year.” However, this approach makes it easy to lose track of where you are and where you need to go. I call this “myopic incrementalism” because it gives very little strategic direction to executives and can lead to non-strategic, myopic or incremental thinking. As a result, the company ends up with business unit plans that are operational, tactical and short-sighted in nature, focusing only on incremental growth activities that only move the boat just a little bit further out to sea.

  3. Strategy is About Aligning Moving Parts

    A business has many moving parts and can only become a high-performing machine when all of these parts are operating in harmony. Many companies focus too narrowly on specific areas (e.g., financial results, discrete business unit performance, operational efficiency, sales and marketing, acquisitions, IT investments, HR programs, or organizational effectiveness) without addressing the overall strategy holistically.

    Just one example of this narrow field of vision is evidenced by recent studies by David Norton and Robert Kaplan that 67% of HR and IT strategies are not developed in alignment with business unit or corporate strategies.

    To be effective, a strategy needs to be holistic, with all of the company’s core business drivers aligned and balanced. Companies often find themselves continually changing sales and marketing models, strategic alliances or organization charts in the same way you might end up continually replacing tires on a car that is out of alignment.

  4. Strategy Requires Clear Context

    Organizations often develop a strategy while skipping the critical steps of an unbiased internal assessment and a strong understanding of the evolving direction of their market and ecosystem. To be successful, a strategy needs to be firmly aligned with the core capabilities of the company executing it. Without an unbiased internal assessment and benchmarking that gives the executive team a clear understanding of their core assets, limitations, business drivers, culture, capabilities and capacity, companies risk implementing strategies that are sub-optimal or not executable.

    Likewise, it is critical to build the strategy upon a clear perspective of the direction (not just the current state) of the company’s markets and ecosystem, which can change the fundamental ways in which you assess your business. As an example, a services company migrating along a shift toward increased product bundling and resell may need to fundamentally change how it looks at revenue productivity.

  5. The Brilliance is in the Questions

    All too often, organizations short-cut the strategic planning process by asking the same old questions in the same old way, which inevitably results in the same stale answers. The brilliance of a successful strategy is not so much in the answers but in the questions that are asked.

    Companies often mistakenly only ask questions they already know the answer to or, in the worst case, only ask questions that measure what they know they are good at. It is further critical to question the status quo and all assumptions engrained into the management team because of past success or failures. I’ve seen clients make profound changes in how they view themselves, their markets, their business drivers and their measures of success simply by asking different questions or even asking questions differently.

  6. It’s Not the Tool, It’s How You Use It

    There are dozens of very valuable analytical models and tools available. However, these merely guide specific parts of the strategic thinking process and should not be mistaken for the strategy itself. Moreover, each has its own particular strengths, weaknesses and optimal application and can be dangerous if used incorrectly or out of context with the overall planning process.

    For example, a Growth-Share matrix analysis may imply that a company’s core business is a cash cow that should be milked to fund investment in new markets where a more thorough Five-Forces analysis would have identified shifting market dynamics and new entrants that threaten to wipe away that very same core business in the absence of investment. Underlying all of these pillars is the core principle that is the foundation of successful strategic planning: strategy is a process, not just a deliverable.

  7. Strategy and Execution Each Have Little Value Without the Other

    A strategy is more than a vision. The success of a strategy comes in its execution. Execution is what makes the strategy real. The only way a strategy is successful is if the organization has the understanding, direction and tools to correctly execute it. The flip side of this is that companies that execute without a vision can run smoothly and perfectly right into the wall. To paraphrase an old proverb, a vision without execution is a daydream…but execution without a vision is a nightmare. The goal is to link strategy down to execution and the pillars that follow address what is needed for this to happen.

  8. Be Explicit (If a Tree Falls…….)

    Often, leaders believe they have a strategy and, while it is not explicitly communicated throughout the organization, they believe people generally understand what the firm is trying to achieve. Unfortunately, when I see clients with that mindset, I generally know that I will find issues. Clear, explicit and ongoing communication of the strategy is the pre-requisite for linking strategy down to execution. A survey by Kaplan and Norton also found that, on average, 95% of a company’s employees are unaware of, or do not understand, its strategy. Without an explicit strategy that has been developed inclusively with the management team and communicated throughout the organization, it is far too easy for the organization to not know or fully understand the strategy, let alone correctly interpret the strategy in order to properly execute it.

  9. Performance Objectives are the Language

    Performance objectives are the most powerful and least leveraged mechanism to link strategy to execution. Performance objectives provide a universally understood language to communicate a strategy throughout the organization and are the key to ensuring that the strategy is executed. However, performance measures are often rendered strategically ineffective because they are not viewed in this context. They are often developed independently of the strategy process. They are often short-term, operational and tactical in nature. They are often communicated topdown, without the two-way communication valuable to ensure clear understanding and buy-in. They are often not aligned across business units or down levels of the organization. Finally, they are often primarily financial in nature and not balanced across the more holistic dimensions that will drive sustained growth.

    The surveys performed by Norton and Kaplan further found that, on average, 70% of middle managers and 90% of frontline employees have no performance incentive links the success or failure of their company’s strategy implementation. Companies that do not build performance objectives within the context of a larger, integrated strategic plan miss a tremendous opportunity.

  10. People Execute Strategies

    People make strategies successful more often than strategies make people successful. One of the most critical dynamics determining success or failure of a business strategy is the cohesive leadership of the people running it and the execution of the people on the front lines. Organizational limitations and barriers are often the largest hurdle to strategic success. However, this dynamic is often underestimated or even overlooked in developing the strategy. This is unfortunate because, when done right, the strategic planning process can actually bring these issues to the table.

    Beyond the sheer power of leveraging the experience and insights of your most valuable leaders, the strategic planning process is a tremendous opportunity to crystallize a shared vision, build a greater sense of joint-ownership, increase communication and understanding and build a cohesive leadership team focused on moving the business in the right direction.

The Core Underlying Foundation: Strategy is a Process

Underlying all of these pillars is the core principle that is the foundation of successful strategic planning: strategy is a process. Strategy is much more than a deliverable. It is process that must be engrained into the fabric and business of the organization. The value of going through an integrated strategic planning process comes from bringing the management team together to define and embrace the vision, roadmap and milestones that will fundamentally guide the company into a successful future. More than the deliverable, an important product of the strategy process should be a cohesive management team with a shared vision and direction and the ability to think strategically about the decisions they make.

As Dwight D. Eisenhower once said, “Plans are nothing. Planning is everything.”


Robert Silverman is CEO and Founder of ReachSolutions (www.reachsolutions.com), a management consultancy providing strategic, organizational and operational consulting to Fortune 500 firms. He can be reached at Robert_Silverman@reachsolutions.com .

Many more articles in Strategic Planning in The CEO Refresher Archives

   


Copyright 2006 by Robert Silverman. All rights reserved.

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