Strategic planning is one of the most abused, mis-used and mis-understood words in the modern business vocabulary. But does strategy, and strategic planning, really deserve its poor reputation?
In many of the discussions I hear about strategy and its shortcomings, the analysis and commentary is focussed on long run resource allocation and budgeting, also known as a business plan. Not strategic planning. And therein lies the issue for strategy. It remains poorly understood and condemned for the sins of others.
In its essence, strategic planning is a process to allow your organisation the best chance of achieving a substantially higher performance than it currently enjoys.
A business plan sets out the details of our clients, our resources, our business model and our budgets. It sets out how we work, what our goals are and addresses risk and ambiguity. It keeps us on our current path, sometimes tweaking it a little. It helps us focus on the one percenters – those small changes that keep tightening up our profits and survivability.
In contrast, a strategic plan helps our organisation to identify those emerging opportunities that might provide us with a rare chance to significantly change our business and to lead the competition. Then it makes sure we can not only recognise, but capitalise, on such an opportunity. This might be first-mover advantage, or first-right-mover advantage.
In this sense a strategic plan needs to combine two key elements:
Knowledge and intelligence – constant monitoring and evaluation of our working environment to identify emerging change drivers and to evaluate how they will move our business environment and possibly create an opportunity.
A pool of skilled people who can both assess the intelligence and knowledge as it is collated, and also help us to utilise this information.
Every wildly successful business understands the difference between a business plan and a strategic plan - and they have, and leverage, both.
Strategic planning is at the heart of how Steve Jobs saw a change in consumer sentiment driven by MP3, experimented in Pixar, then brought it all together with the iPod. Strategic planning is how a Toowoomba house builder saw the opportunity to build houses very quickly using prefabricated walls and so reduce the cost and time of building; Strategic planning is how a Brisbane surveyor saw that a new regulation was driving the demand for specific surveying processes was growing, and so he systematised it so that his business could grow rapidly.
Had these extraordinary businesses been so focused just on doing the everyday tasks, they would never has seen the chance for extraordinary opportunities. Strategic planning, done properly, makes our organisations’ leaders take the time to seek the extraordinary opportunities and to lift us to a different performance level.
Business planning will not, and is not designed, to do this.
Think about it… Do you have a strategic plan, or a business plan called a strategic plan?