When you get around to your annual strategic planning process, do you feel like one of the extras in a zombie-apocalypse movie? Looking around the room, you notice the enthusiasm being sucked out of the group. A half-hearted SWOT analysis reveals a too-long laundry list of exactly what the group already knew and nobody actually does anything with it. Then it’s on to the “Strategic Imperatives” or “Strategic Objectives” or some other mishmash of business planning terms that are forced together to sound authoritative. The session concludes with those blank stares that say what’s on everyone’s mind: this looks an awful lot like last year’s plan except for the date. After the meeting, people march out of the conference room like zombies searching to regain the brains that were taken from them three hours ago.
Before we address the causes of zombies in the conference room, let’s start with those that don’t have a strategic plan or any type of formal strategy development process. A McKinsey survey of more than 2,000 executives showed that only 19% of companies have a definite and distinct process for developing strategy. Which means for the majority of organizations, strategy development is a random, crisis-driven event, if it happens at all.
Here’s a common point of rationale from these folks: “We’ve been in business for X years and haven’t done a plan and have been very successful.” This is akin to saying, “I’ve been skydiving for years without a backup parachute and have always had successful jumps.” Yes, it’s going fine now, but what happens when the main parachute doesn’t open, or when your flagship product get’s leapfrogged by the competition? A ten-year study of 103 companies with at least $1 billion in value showed the #1 cause of lost shareholder value, a whopping 81% of the time, was a lack of strategy.
For those organizations that do employ a strategy process, research shows, on average, 67% of their managers believe that their company is bad at developing strategy. To pour a little more salt into that zombie-inflicted head wound, only 40% of employees understand the strategy once it’s been developed and how it relates to their work. Here are three primary contributing factors of poor strategic planning:
1. Arrogance and complacency. After Apple introduced the iPhone, then-Microsoft CEO Steve Ballmer said, “No chance that the iPhone is going to get any significant market share.” Alan Wurtzel, former CEO of now bankrupt Circuit City, noted how their management team refused to acknowledge the rise of Best Buy: “When you think you have all the answers and aren’t ready and willing to challenge yourself and your assumptions, that’s when you fall into trouble.” In both cases, these successful companies believed they were on top to stay, and that their current model for success would withstand new challenges. They were wrong.
2. Not translating strategy. A big issue I encounter during strategic thinking workshops and in keynote speech Q&A sessions is that leaders are not taking the time to translate the corporate strategy to other levels. Leaders are simply passing out the strategy in PowerPoint slide decks with the assumed directive, “Now go forth and strategize.” A 60,000-manager survey found that the most important variable in successful strategy implementation was senior management’s ability to translate strategy to departments and individuals.
3. Unclear intent. Revelation: the intent of the strategy development process is not to create a fancy PowerPoint deck for a dog-and-pony show that never again sees the light of day. The intent of the strategy development process is to clearly and concisely show how you’ll achieve a few key goals given the current market trends, competitive landscape and customer’s desired outcomes. If your process doesn’t produce actionable strategies with clear trade-offs, then it will not drive people’s daily decisions. And if the strategies don’t drive people’s daily activities, then you’ve wasted your time.
Strategic planning has wrongly become the umbrella for strategy development when in fact it is simply one step in the strategy development process. Taking the time to engage your organization in the entire strategy development process will ensure that people are energized, focused and confident in the strategic direction. Left unchecked, status quo strategic planning will continue its zombie-like march through organizations, leaving in its wake the stench of unchallenged assumptions, declining profitability and a business-as-usual mindset.
Five Phases of Strategy Development
To fully utilize the power of strategy, a continual cycle of strategy development and calibration must be in place consisting of the following five phases:
Phase I: Discovery. The discovery phase involves the designation of the strategy development team—the people that are charged with gathering and providing input throughout the process. It includes an outline of the process being used and pre-work to maximize the team’s meeting time. The pre-work involves the collection of intelligence on the market, customers, competitors and the organization itself.
Phase II: Strategic Thinking. The most common reason for organizations turning out strategic plans that don’t move the needle is because they don’t do any strategic thinking. Strategic thinking is the generation of new insights about a business. The strategic thinking phase requires the appropriate selection of a handful of the more than sixty available models and exercises grouped into the following four areas to ensure a comprehensive and methodical approach: market; customers; competitors; and company.
Phase III: Strategic Planning. The strategic planning phase transforms the insights generated through strategic thinking into the action plan that achieves the organization’s goals and objectives. Creating a thick, three-ring binder plan that can also serve as a doorstop is of no value to anyone. Make sure that you have a 1-2 page StrategyPrint, or blueprint for your business, that can be easily used on a daily basis. The reason so many plans are not used is because they aren’t updated and therefore, no longer relevant to the person’s business.
Phase IV: Strategy Rollout. Brilliant strategy means nothing unless everyone in the organization understands it and applies it in their daily activities. The following steps can be used to support the strategy rollout:
1. Development of strategy communication vehicles.
2. Ongoing strategy conversations about the key business issues.
3. Collection and review of feedback regarding the strategy.
4. Incorporation into employees’ daily activities and their corresponding metrics.
5. Periodic pulse-taking to monitor progress and assess effectiveness and relevance.
Phase V: Strategy Tune-ups. I use the term “tune-up” because no one in their right mind would drive their car for a full year without getting an oil change or having brakes, tires, etc. checked. Yet, countless organizations will go a full year before reviewing their strategy. We take better preventive care of our automobiles than our organizations. The strategy tune-up serves as an opportunity to periodically calibrate the plan. Consisting of a ½- to 1-day session on a quarterly basis, the team methodically reviews the key areas of the business to identify significant changes and make adjustments in strategy and tactics.
If you’re still not sure that a formal approach to strategy development is right for your organization, consider the three similarities between the undead (zombies) and the unstrategic:
1. The Undead pursue and try to eat lots of people at a time–they lack priorities. The Unstrategic pursue and try to achieve lots of opportunities at a time–they lack priorities.
2. The Undead lack the discipline to say no–they’ll eat anyone. The Unstrategic lack the discipline to say no–they’ll try and be all things to all customers.
3. The Undead don’t try anything new–they just eat people’s brains. The Unstrategic don’t try anything new–they just do the same things, in the same ways, year after year.
Do you have a simple, concise and clear strategic plan that drives everyone’s daily activities in pursuit of a few key goals? If not, please pass that bowl of brains to your left.