Nutshell: If all plans are doomed to fail, what is strategic planning good for?

Written by
Future Talent Learning

Published
01 Feb 2021

01 Feb 2021 • by Future Talent Learning

Perspectives on strategic planning range from “it’s just another term for doing things” to “it’s the only route to victory”. For most of us, the truth lies somewhere in between, and a key factor in success is our ability to learn and adapt as we go.

As Prussian General Helmut von Moltke observed, in the fog of war “no plan survives first contact with the enemy”. But whether we are on the battlefield or in the boardroom, the exhortation is not then to surrender; it’s to modify the plan and keep on adjusting it so it can carry on leading us to victory.

So if it’s planning more than plans that matters, how can we master the art?

Good strategic planning has the power to highlight problems and opportunities, to help us find and implement solutions, and to guide us in measuring the progress we are making. And while there are many different views on which components make the process most successful, we should probably consider the following four: 

  • Analyse - understanding our purpose, environment and capabilities.
     
  • Create - generating options with the potential to drive growth and profitability.
     
  • Select - deciding which plans are most likely to be successful.
     
  • Implement - turning all that into a coherent plan of action.

In many ways, this echoes Richard Rumelt’s thinking on the kernel of good strategy: a diagnosis, a guiding policy and a set of coherent actions.

For every stage, there is an array of tried-and-tested tools that can help us to answer the essential question: ‘What must we do to win in our market?’ So many, in fact, that they require a separate strategic planning toolkit. Think of it a bit like Mary Poppins’ magical carpetbag: big enough to hold a small folding armchair, a pair of boots and an eiderdown (and more), yet easy to dip into for just the right tool at just the right time.

Phase 1  Analysis

According to US time-management expert and Harvard alumnus Alan Lakein, “planning is bringing the future into the present so that you can do something about it now”.

To achieve this, we must understand our present world in some detail, which means fully grasping our purpose, being aware of the environment we occupy and knowing our capabilities inside out.

Understanding our purpose – the top of the sandwich

We typically articulate our purpose through a combination of vision (what we want to be) and mission (what we want to do). This is underpinned by corporate values and organisational aims and objectives with measurable outcomes.

Having a clear understanding of our purpose can help us to remain coherent even as we move from opportunity to opportunity. Plus it can prevent us from getting bogged down in endless management transactions that take us incrementally further and further from our founding principles. As Amazon’s Jeff Bezos says, we need to consider “what’s not going to change in the next five-to-ten years” as well as what will.

Understanding our environment – the big meaty filling

As well as a keen sense of what we stand for, we also need a thorough understanding of the environment we occupy. 

Again, Bezos shares a useful perspective when he observes that no one is too big to fail: “One day Amazon will fail. Amazon will go bankrupt,” he told his own employees, adding: “We have to try and delay that day for as long as possible.”

Such a delay cannot be achieved if we only look inwards. We must also look outwards towards our competitors and consider the challenges may be heading our way from the distant horizon – as COVID-19 reminds us.

Analysing the near environment – i.e. the industries, sectors, competitors and markets in which we compete for resources and consumers

To understand the likelihood of our product or service becoming or remaining profitable, we need to understand our power in the market relative to current and potential competitors, and to our own suppliers and customers.

One of the most popular and widely used tools for determining this is Michael Porter’s Five Forces framework, first published in the Harvard Business Review in 1979. Porter designed this tool to help us gain a better understanding of who is operating in our space and how strong the barriers to entry are for potential competitors. This, in turn, can help us decide when to capitalise on a known advantage; for example, by charging higher prices or negotiating better terms. The framework also seeks to give us a better understanding of our potential vulnerability in relation to suppliers and customers. Are we depending too heavily on a single supplier, for instance?

Take fast-food chain, KFC. In 2018, “teething problems” with a new delivery contractor meant it ran out of chicken, forcing over half its outlets to close their doors. Distraught chicken lovers took to social media to vent their outrage in what one newspaper dubbed “poultry pandemonium”. Worse still, that year’s financial results revealed a drop of 4.8% in like-for-like sales.

Analysing the far environment – i.e. the external influences that may impact on our organisation

To thrive in today’s marketplace, we also need to examine and anticipate the external influences most likely to impact our organisations.

One of the most useful tools for this is a PESTLE analysis, PESTLE being an acronym for the six main pressures and influences presented by the external environment, namely: political, economic, sociological, technological, legal and environmental. By regularly undertaking a PESTLE analysis, we can better anticipate future business threats and take action to avoid or minimise their impact. We may also be able to spot business opportunities and exploit them more fully.

Alongside this, it’s also wise to undertake scenario planning – i.e. to identify the key environmental influences and drivers of change and to consider a range of plausible future outcomes. This can be particularly useful in helping to challenge any taken-for-granted assumptions. 

Here, it might be pertinent to remember the fate of John Sedgwick, a military officer and Union Army general during the American Civil War. Sedgwick was killed by a sharpshooter at the Battle of Spotsylvania Court House in 1864, having allegedly uttered the ironic last line: “They couldn't hit an elephant at this dist…”

Consideration of what might happen can take the form of “what if” or sensitivity analysis, such as that undertaken by multinational oil and gas company Shell, which has been developing possible visions of the future since the early 1970s. Their ‘Shell Scenarios’ ask “what if?” questions that help their own leaders, academics, governments and other businesses to consider remote but plausible scenarios, to explore new ways forward, and make better decisions on energy and environmental issues in particular.

“While we can't predict the future, science-based creative thinking can give us some clue” says former Shell Scenario team member Dr Angela Wilkinson, from the Smith School of Enterprise and the Environment at Oxford University. So what if we all gave it a go?

Understanding our capabilities – the bottom of the sandwich 

A strategy framed by an understanding of our purpose and environment is also shaped by capabilities.

We can use a SWOT analysis to examine our internal competencies and resources (the strengths and weaknesses), as well as key external influences, (the opportunities and threats). We may also carry out a more in-depth ‘resource audit’ to further establish which competencies we need to acquire or develop, and how we should leverage these to achieve our strategic aims.

Phase 2 – Creation 

Once the analysis phase is complete, the second step in the strategy development process is to generate options.

There will always be a number of strategic options available and each will have consequences which, in turn, will go on to generate further choices. It’s therefore vital that we remain bold in our decision-making, whichever paths we choose to pursue. 

It might help to think of the creation phase as having a funnel shape, starting wide at the top with options at a corporate and operational level and then funnelling down towards specific options for individual markets. We then need to consider how this is underpinned by our existing resources and capabilities and the methods of development available to us.

Options at a corporate and operational level

To leverage our advantage, we should consider the full range of our organisation’s activities and also bear in mind that our plans must be challenging enough to help us stay ahead of our rivals, but also achievable.

For example, we might ask:

  • Which businesses or service functions is it wise to have in our portfolio?
  • How can we add more value to them, compared with what others might offer?
  • Where should we operate, i.e. in the domestic and/or international marketplace?

When our organisation has more than one business, it’s also important to decide where to focus our resources and capital to generate the most value – as well as where to cut our losses. A useful tool to help with this is the Growth Share Matrix, created in 1968 by Boston Consulting Group founder Bruce Henderson.

At the core of the matrix is a table, split into four quadrants, each housing either a low-growth, high-share ‘cow’; a high-growth, high-share ‘star’; a high-growth, low-share ‘question mark’, or a low-share, low-growth ‘pet’. By assigning each of our businesses to one of these quadrants, we can decide which to ‘milk’ for cash to reinvest, which to invest in, which to disregard, and which we should liquidate, divest, or reposition as a matter of priority.  

Options for markets or products/services

Typically, a strategy will fall into one of four categories: market penetration, product development, market development or diversification. We can gain a better understanding of the potential and the risks associated with each using a mapping tool, such as Igor Ansoff’s product/market matrix.

The Ansoff matrix allows us to map our products or services against market needs and geography, and to jiggle free useful insights into which might be most successful, and where. However, staying within existing categories is not the only option and diving into new and unexplored waters could also prove fruitful. 

That’s the argument presented by Chan Kim & Renée Mauborgne in their best-selling book Blue Ocean Strategy. They coined the terms ‘red ocean’ to describe the known market space, which can get crowded, cut-throat and bloody (hence red), and ‘blue ocean’ to describe new and uncontested market space, which is open and rich in opportunity. Some uplifting stories have been built on this model – from Cirque du Soleil to Viagra.

Options for resources and capabilities

If we do decide it’s appropriate to launch new products and services, or to enter new markets, we then need to look at our existing resources and capabilities. It’s important to gauge whether we already have the necessary skills and capacity or whether there are gaps that need to be plugged (remember that SWOT analysis). We might also need to shed resources that are no longer fit for purpose. 

Options for methods of development

We also need to consider the methods of development available to us, such as internal development, mergers and acquisitions, and strategic alliances or partnerships, which could be time or project based. 

While these steps outline a necessary process of order and rigorous analysis, it’s all a bit like vanilla ice cream without the flakes and sprinkles. But is variety always desirable?

Creation requires creativity 

This brings us on to another important question:

Q: How many strategists does it take to change a lightbulb?

A: It depends….

Strategists don’t all look the same and they don’t all agree. But this needn’t be a barrier to progress. 

In his book The Rise and Fall of Strategic Planning, Henry Mintzberg calls for a planner for each side of the brain; on the one hand “a rather analytic convergent type of thinker”, who is able to bring order, communicate clearly and evaluate data. And on the other, a “creative thinker, more divergent”, who seeks to open up the strategy-making process.

For many of us, this won’t mean a whole department of strategists with different mindsets all arguing about how to change the lightbulbs – and everything else. It’s more likely to mean each of us individually developing that ambidextrous mindset which we’ve touched on before and ensuring we are not just ordered in our thinking but creative and original too.  

Originality of thought is a quality we attribute to successful people, from Walt Disney to Oprah Winfrey to Steve Jobs. But when Apple chose “Think different” as the strapline for their highly impactful 1997 advertising campaign, it wasn’t just hoping to recognise mould-breakers such as Muhammad Ali, Maria Callas and Frank Lloyd Wright; it was seeking to inspire all of us to get creative (with a Mac). No wonder “Think different” was still being printed on the back of every iMac box more than 20 years later.

Thinking differently, or more freely, is also advocated by strategist and Basic Arts founder Alex Smith, who suggests that we should avoid carefully following the prescribed multi-step formulas so beloved of management consultants, and instead be guided by a more informal set of ideas, just as skilled navigators might call on various tricks, techniques, and understandings to find their way.

Smith’s ideas offer a highly engaging stepping off point from which to leap, especially when thinking about how to position our company or brand in the market. For example:

‘Weirding the normal versus normal-ing the weird’

This is the idea that all brands or companies fit into one of two boxes: those with whose products and services we are deeply familiar – and who therefore need to ‘weird the normal’ to appear fresh ­– and those who offer something genuinely new and different who need to ‘normal the weird’ to reassure us.

For example, what could be more ‘normal’ (and dull) than the humble suitcase? Yet Away made the Forbes’ 2018 Next Billion-Dollar Startups list just three years after launching by zagging while those around them continued to zig. Crucially, it positioned its brand not as a luggage company, but as a travel brand. It also celebrates its ‘fans’ and keep its products up to date with ongoing data-backed product improvements. And while creating impressive value in the company, Away has also built a compelling social media narrative and a community of enthusiasts who can spot a fellow traveller (with an Away case) at 20 paces. Who would have thought a suitcase could lead such an interesting social life?

On the other hand, there’s ‘weird’ incomer Airbnb. Back in 2007, prevailing wisdom dictated that the last thing any of us wanted to find in our holiday accommodation was a lingering host. However, having rented out air mattresses in their own loft to help pay the rent, founders Joe Gebbia and Brian Chesky discovered that, far from wanting to be left alone, their guests sought out and valued their local knowledge. Perhaps they were onto something... Still, prospective guests still needed reassurance that staying with ‘hosts’ was not only desirable but also safe, while prospective hosts needed to know they were protected from unruly guests. Airbnb has therefore put a lot of effort into cultivating what they call a “transparent community marketplace” to foster feelings of safety and familiarity.

‘Only is better than best’

As with Blue Ocean Strategy, this is the idea that we should always try to be ‘the only X’ rather than ‘the best/fastest/cheapest X’ as this will encourage us to push our strategy to new and exciting places. It’s no use trying to be ‘better’ than our competitors, says Smith: “Better simply means ‘the same’. It means ‘we both do this thing, but we do it a tiny bit more. That doesn’t generate market traction.” Instead, we need to create our own unique space in the market, even if that just means tweaking a familiar product:

  • Think Airstream – a caravan, but make it metal…
  • Think Tesla – an electric car, but make it high performance…
  • Think Curves – a gym, but make it women only…

‘Contrarian value’

This is the idea that value can be gained not only by offering something new, but by being in active disagreement with other brands or companies in the same arenas. As Smith puts it: ‘They think X but we think Y’. This is smart because it’s hard for competitors to then copy what we’ve done without undermining their own position.  

Consider Tyler Brulé’s ‘anti-iPad’ magazine Monocle, launched in 2007, when the assumption in the publishing world was that print was well and truly dead. Flying in the face of click-bait digital, the magazine featured well-researched long-form articles and original photography, printed on high-quality paper. Despite the naysayers, Monocle grew to become a revered media brand, which in 2014 sold a stake to the Japanese media company Nikkei, in a deal that valued the company at $115m (£69.2m). 

Phase 3  Selection

Once we have determined the strategic options available to us, we then need to interrogate our plans and decide where to concentrate our energies.

The esteemed strategist Richard Rumelt sets out four tests of strategic options: consonance, consistency, advantage and feasibility. Professors Gerry Johnson and Kevan Scholes describe three tests: suitability, acceptability and feasibility.

Considering Rumelt versus Johnson and Scholes can help us with plotting our way forward. Initially, are we in the right territory? Then is what we’re planning coherent? Moreover, is it feasible? And do we have a competitive advantage?

Being able to say “yes” to each of these questions is a good indication that we’re on the right track.

Phase 4 – Implementation 

Of course, an organisation only begins to gain a return from the effort invested in strategic planning when the chosen plan is translated into action. It is therefore vital that the implementation phase receives just as much energy and commitment as those that preceded it.

An implementation plan should:

  • state the core strategic aims - the broad set of actions we need to take to implement the strategy.
  • allocate actions to specific owners, with clearly identified roles and responsibilities, well-defined performance measures and properly allocated resources.
  • define how these actions will be measured to ensure the implementation plan is on track and the outcomes are being realised.

We’ll cover all of these points in the nutshells on creating operational plans and measuring performance. 

Everyone has their role to play in implementing the strategic plan:

  • At ‘corporate strategy’ level. Senior management retain ultimate responsibility for the strategy and must ensure that the conditions are in place for operational managers to undertake the necessary actions within their individual business units.
     
  • At ‘business unit strategy’ level. Operational managers must understand the strategic vision and be able to communicate it on to their teams. The more we can inspire and motivate our teams, the more likely we are to help see the strategy through to fruition.
     
  • At ‘team strategy’ level. Each team needs its own clearly-defined strategy to work towards the organisation’s larger strategic goals and objectives. 
     
  • At and individual level. Every employee contributes to the team strategy, which contributes to the business unit strategy, which then feeds into the larger corporate strategy. And every level is necessary and important to the overall success of the organisation.

Despite the importance of having everyone on board, universal buy-in is not easy to achieve because change can be challenging. In addition, people’s willingness to embrace a plan may be affected by corporate culture and by the influence of certain key people. It can also be swayed by whether or not there are systems in place to help individuals develop the skills and behaviours they need to align with the strategy in practice, not just theory.

Having a clear communications plan that outlines how the strategy will be implemented, and how employees and other stakeholders are likely to be affected, can really help to allay concerns and bring people on board.

Useful insights can be gained from stakeholder mapping – the process of mapping identified stakeholders onto a grid showing their level of power, influence and interest, and their probable level of support. This can help us determine where to focus our energies. For example, if a new strategy might entail issuing a large amount of new shares, we may need to determine which existing stakeholders are likely to oppose it given the potential weakening of their voting power.

Showing individuals how their contribution fits into the grander vision can also be a great motivator. A lot of alienation or disengagement in today’s workplace arises from workers not seeing the ‘point’ of their jobs, or understanding how their efforts contribute to a much greater whole, and how that greater whole is useful to society. While it may be more straightforward for nurses and teachers to see the greater good they are part of, those of us making widget X also need to cultivate the same understanding. For example, does widget X keeps things moving, or save people time, or otherwise make life easier for them? What are the benefits in human terms that we are driving for?

That’s why ‘purpose’ is the top slice of the sandwich. And if it isn’t in place, we risk the contents spilling out and making a horrible mess.

The top five reasons why we fail

Even if we achieve universal buy-in there’s still no guarantee that our strategy will be successfully implemented. According to strategic management professor, Robert M Grant, around 70 – 90% of strategies fail to become fully implemented – and here are some of the reasons why.

In at number 5… Poor planning

As writer Lewis Carroll said: “If you don't know where you are going, any road will get you there”. But if we know where we want to go, we need to be on the right road – and building that route from A to B takes thorough planning. For example, resource needs must be identified; people must receive any necessary training; barriers to change must be overcome, and events should occur in a logical sequence. Without such rigour, a bend in the road can quickly become a dead end in the road.

In at number 4… Misaligned behaviour

Everyone involved in implementing a strategy will filter the plans through their own experiences and values. Once these butterfly wings have fluttered, the strategy can move off in differing directions and be hard to realign. There may also be inertia or resistance to change in certain quarters; some people may feel overloaded by change while others see it as an opportunity to pursue their own agendas. It is therefore essential that every effort is made to gain support from all employees at the earliest possible juncture.

In at number 3… Shoddy communication

Clear and timely communication are fundamental to strategic implementation. However, common weaknesses include a lack of clarity as to how the strategy will be implemented (the implementation plan is not clear or detailed enough), a lack of understanding of the strategy (the strategy is not explained well enough or widely enough), and a failure to link change messages to the daily activities of employees (people feel too far removed from the change effort, don’t understand the benefits, and thus lack enthusiasm for it).

In at number 2… Disconnection between theory and practice

All too often, the people who formulate the strategy will not be the ones who are actually implementing it. And some strategies that work brilliantly in theory simply don’t work in practice. Even if they start on track, unpredicted changes may occur, causing the strategy to become misaligned or irrelevant. If this isn’t passed back up the chain, it’s impossible to make the necessary revisions and plans will continue to veer off course. This is when emergent strategy comes into play.

Let’s take the example of the impotence drug Viagra. Who knows what might have become of those little blue pills had the plan to make it a leading high blood pressure treatment been strictly adhered to, rather than adapted in light of the ‘interesting side-effects’ experienced by participants in clinical trials.

In at number 1… Disengaged managers 

Once the analysis, evaluation and formulating are over, managers often take a step back and leave the implementation to others. However, without drive and direction from the top, momentum and focus can quickly be lost. Those responsible for implementation can easily get distracted by day-to-day operational issues and lose enthusiasm for the strategy, causing it to either drift off course or fail to be implemented at all.

The most important thing to remember is that completing the strategy is just the start.

The relentless pursuit of staying ahead

In conclusion, then, Moltke was right. No plan survives first contact with the enemy. But we will, like aspirant Vulcans, live long and prosper if we continue to adapt and update our plans in light of emerging threats and opportunities.

As we saw in the project management module, this requires us to hold our plans lightly and even be prepared to drop them entirely if circumstances demand it.

Unlike Vulcans, we must also balance our logic and reason with humanity and creativity, so that our colleagues, clients, customers, partners and other stakeholders will want to join us on the journey.

Finally, we should always be vigilant for the bullets we think will never reach us. Because sometimes they really can hit an elephant from this distance.

 

Test your understanding 

  • Outline the four components of a successful strategic planning process.
  • Explain the purpose of Michael Porter’s Five Forces framework, giving two ‘pros’ and two ‘cons’,
  • List three of the top five reasons strategies fail and suggest one tactic you could take in each case to mitigate the risk.

What does it mean for you?

  • How ‘ambidextrous’ are you when it comes to strategic thinking? In what ways are you more or less creative/divergent?
  • Reflect on whether your brand a ‘normal’ that needs weirding or a ‘weird’ that needs normal-ing?
  • How connected do you feel to the purpose of your company? What more could it do to make a positive impact on the world and if ‘nothing’, does that matter?

 

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