Each month, "Management Matters" addresses management and leadership issues essential to achieving exceptional business results while growing and developing people. Please enjoy "Management Matters", and pass it on!
All Content © LeaderPoint
This is a terrible installment of this e-newsletter. For several reasons. First, strategy is a conceptual topic that cannot be addressed or understood in a casual, quick read. Second, there's an inherent flaw in the idea that conceiving a "perfect" plan will in any way ensure success. It isn't the plan that is important, but the PLANNING. The thinking. And then the execution. Also, no newsletter can teach you to think.
Next, the proposition that strategic planning has a series of steps is ridiculous. There are a set of elements that can facilitate the thinking, but this thinking is usually not sequential. Finally, this article is way too long for an e-newsletter. And it's still not long enough. We know, because it is difficult to adequately address this subject even in the multiple-day courses that we conduct.
Once you have read this issue, perhaps you will agree that it's as lousy as we say it is.
Last month we looked at analytics, and how business intelligence can be used to improve decision making in many areas of a business. But even keen analytic tools are not sufficient for strategy making or strategic planning. Let’s look at what is essential for strategic planning, and why this is a critical skill for general managers.
Strategic planning is essential for managers at all levels, because they are accountable for future results -- predominantly through recognizing opportunities and responding to threats. The limitation of most analytic tools is that they are usually unreliable indicators for the uncertain future. In talking about Procter & Gamble’s revival plan for its skin care product Oil of Olay, Chief Executive Arthur Lafley claimed that market research was of little use in conceiving of a successful strategy to reposition the brand. Reflected Lafley, “We couldn’t do any market research on the 'masstige' market (a new channel that combined mass market and prestige retail strategies), because it didn’t exist. We created it, and the choice involved some risk.”1
Even though planning is critically important, it is not done enough, especially strategic planning. And strategic planning has never been more needed among managers across all industries, because the pace of change keeps accelerating. Strategic thinking and planning can be done at any level of an enterprise: corporate, business unit, department or project; so yes, even mid-level managers can and should strategically plan.
While the tendency is to first work at execution and tactics, thinking strategically is the best way to gain clarity on potential opportunities and threats -- and how they fit within the context and set of capabilities that are required. Here are some elements of thinking and planning strategically:
In summary, strategic planning -- identifying and articulating how to seize opportunities and respond to threats -- should be a significant part of the general manager’s job at any level. Plans crafted from the strategic perspective are not linear or analytics-based, but involve critical thinking, synthesis and creativity.
- Seeing Opportunities and Threats. The purpose of strategic planning is to seize opportunities and respond to threats. Both opportunities and threats exist outside the company, business or project, but they can have a dramatic impact on that entity’s success. While tactical planning focuses on what to do now (strategic decisions about the future have already been made), strategic planning is about seeing and understanding the environment in which the entity exists. This can lead to the ability to see threats and opportunities, and anticipate the impact they can have.
To identify viable opportunities, consider the environment, and these three questions: 1) Is this needed, and why? 2) What challenges could be overcome? 3) What could be seized here? Be clear and concrete rather than vague and abstract, but also don’t try to solve the problem by thinking tactically. The planning pitfall for many managers is a bias to action -- to start planning what to do first, usually based on a series of assumptions that may not be valid in the future. The strategic perspective ultimately tells why there is an opportunity to be pursued. So don't just do something; sit there! And think.
- Determine the Domain (or scope). Roger Martin writes that the two critical strategic choices general managers must make are “where to play” and “how to win.”2 These questions relates to scope and understanding exactly where you will focus your efforts. We think there are three questions to be considered in deciding the scope or domain:
- For Whom? Whose needs will be served? Where does the need exist? This may be external or internal to the company, but the plan will serve some “market” need. State it by describing the specifications of those who share the need. Do it with no more than a sentence or phrase. Conciseness here will help bring clarity.
- What will be done? Identify what will meet or fulfill the need -– the specifications. This could be a product or service. It could be a process or system.
- How will it be done? What special technology or means will need to be employed to do this? What will allow the plan to do what is necessary to address the market need?
Successful domains are clear and specific regarding where, what and how to engage -- which necessarily clarifies where, what and how not to engage. The idea is to narrow the scope. Broad, vague, general domains rarely succeed, so resist the temptation to try to be all things to all people. Try instead to be something specific to someone specific.
- Determine the Strategic Objective. This is the set of relationships required for success. An effective strategy requires the involvement of entities outside the control of the manager and his or her unit. This step, like the others, is conceptual and can be aided by use of a map or diagram. The question is, “Who outside the domain’s authority is strategic to the success of the plan?”
The objective is to gain the necessary contributions from these entities by doing or providing something to elicit those contributions. These relationships must be richer than those that are merely transactional (which may also be necessary but are not strategic). The pitfall for this stage is to have an over-complicated map with lots of entities and/or intersecting relationships. Simplicity and clarity are hallmarks of a good plan, as opposed to clutter and ambiguity.
- Identify Required Capabilities. To meet the objective, the entity will need a set of capabilities. Don’t think of specific tactics but the capabilities needed to serve the relationships identified in the previous step. Sometimes these capabilities can be outsourced; if that outsource relationship is strategic rather than transactional, then it may need to be added to the strategic map. This is part of the evolutionary thinking of strategic planning. Elements occur to you and become clear as you think through the plan. Remember, this thinking is not necessarily linear.
- Develop the Strategy. This is the sequential description of the plan. Tie the previous steps together to articulate how the initiative will meet the need that you have identified. Specifically, how will it use the capabilities to maintain the required relationships depicted on the map. Again keep it conceptual, concrete, and no longer than a paragraph or two. Anyone -- even with no technical knowledge of the business or project -- should be able to understand the strategy clearly, because it is not tactical or operational, but conceptual -- the "bigger picture." The strategy can also be instrumental in communicating plans and accountabilities to stakeholders and direct reports.
- Identify Measurements. What will indicate success for this plan? What will you pay attention to, measure and give feedback on? Determining the concrete outcomes that must be measured will provide the added benefit of allowing you to assign significant parts of the work to others.
This thinking is essential for guiding a project, a department, a division, or a company into a future of unpredictable change. Strategic planning is a skill that can only be honed through practice, experience and reflection. It requires disciplined thinking, a tolerance for risk and uncertainty, the courage to make decisions with very little data, and a willingness to be wrong again and again and again. And you sure can't learn to do it by reading a lousy newsletter.
1A.G. Lafley [with Roger Martin], Audio Webinar, “A Playbook for Winning,” Harvard Business Review, February 26, 2013.
2Roger Martin, “Why most CEOs are bad at strategy,” HBR blog, January 6, 2010.
For more information about LeaderPoint, and to access our Reading Room of management articles, visit www.leaderpoint.biz, or call 913-384-3212.