Strategic planning has a long history—and a dismal track record. Just about every company does it, obviously because they think it’s important, yet it’s value is highly questionable.
Ask almost any senior manager, “Is planning important to your company?” and you’ll get a strange look and a resounding “Yes.” But ask, “What exactly does it do for you?” and the answer is likely to be vague and unconvincing. Even when you do get a confident story, it’s easy to poke holes in it. There’s almost always a gap between intentions, expectations, and results.
In many firms strategy is reduced to an annual ritual tied to the budget cycle rather than timed to deal with critical challenges. It’s a stop-start activity that distracts people from “real work,” incites political games, and results in boring PowerPoint presentations and piles of paper which no one looks at again. While it’s happening, new challenges keep arising and decisions are made that override what was decided the year before. When it’s done, there’s a huge sigh of relief.
What should be a very serious matter is a recurring joke. “The Stratplan” is a calendar event more notable for what goes into it than what comes out of it. The best that can be said of it is that it keeps a lot of people busy while life goes on.
In consulting assignments and business school classes, I typically get questions like these:
- Does planning work?
- What’s the best process?
- Who should be involved?
- How can you communicate the plan throughout an organization?
- How long should a plan last, and when should you change it?
- How can you improve execution?
- How can a balance be struck between planning and innovation?
- What’s the best way to measure strategy?
This used to surprise me. After all, “everyone knows” that strategy is the overarching management discipline, the one that comes before all other and informs every management decision and action.
It’s a topic that has been researched and commented on for decades by academics, business leaders and journalists. There are countless books, articles and courses on it, and more than enough models, frameworks and opinions to provide the guidance any manager could want.
But having watched countless high-level executives struggle to make sense of strategy, I’ve come to the view that in their quest for better tools and techniques they have utterly confused themselves and everyone around them. Equally serious, their ceaseless experimentation keeps them from ever mastering and embedding any single approach that will serve them over time.
The questions above are not profound ones: they deal with what you might at best call “the basics.” So surely the answers should be well known to anyone with even limited exposure to strategy theory and a modicum of experience in making and executing strategy. But clearly they’re not. This very important—and very influential—subject is shrouded in mystery and mumbo-jumbo.
To develop strategy, managers tend to use an arbitrary mix of familiar tools and fashionable new ideas. SWOT analysis seems mandatory and Porter’s five forces framework is popular. During the past three decades, the vision, mission, values approach has gained a strong hold. Terms like core competence, agility, strategy maps, and balanced scorecards are tossed about.
In the introduction to Competence-Based Competition, a 1994 book they edited for the Strategic Management Society, Gary Hamel and Aimé Heene said this:
“After almost 40 years of development and theory building, the field of strategic management is today, more than ever, characterized by contrasting and sometimes competing paradigms … the strategy field seems to be as far away as ever from a ‘grand unified theory’ of competitiveness. Indeed, there is still much divergence of opinion within the strategy field on questions as basic as ‘what is a theory of strategic management about?’ and, more importantly, ‘what should a theory of strategic management be about?’”
A few years later, Hamel, one of the most prominent strategy gurus of all, wrote in the Financial Times that “The dirty little secret is that we don’t have a theory of strategy creation. We don’t know how it’s done.”
I disagree with both these comments. Hamel and Heene are right to say that there are many opinions about strategy theory, but there are not many strategy theories. In fact, there are just a few—and they underpin all the other stuff that “thought leaders” spin as breakthrough ideas. The real “dirty little secret” about strategy creation is we know more than enough about it but just don’t do it very well!