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Strategic Planning Made "Simple?"
November 04, 2009
By John Spence
"Simplicity is the ultimate sophistication."
—Leonardo da Vinci
There is no reason to make things more complex or difficult than they need to be, especially when it comes to teaching business managers and leaders about strategic planning. Over the course of the last decade, I have had the opportunity to deliver workshops and speeches to more than 300 organizations worldwide, including such firms as Microsoft, IBM, GE, Merrill Lynch, Qualcomm, Abbott, Genentech, and dozens of smaller companies. For several of these organizations I presented specialized leadership programs focused on the key elements of effective strategic planning. What I have come to realize, however, is that what most people think of when they hear the words "strategic planning" is not what actually drives the creation of a successful plan. To me, there are three major misconceptions about what strategic planning is.
Misconception number one: creating "real" strategy is about making bold and risky bets on substantial resource allocations such as expanding into new global markets, purchasing or divesting a company, committing billions to building new facilities, or saving billions by off-shoring substantial parts of the business. The truth of the matter is, few people in an organization ever get to make these sorts of strategic decisions. The vast majority of people in any organization are responsible for creating coherent business-level and departmental strategic plans to support the strategic direction of the overall business.
Misconception number two: strategic planning is about S.W.O.T. analysis, competitive positioning, value chain analysis, etc. Unfortunately, much of what passes for "strategic planning" in most companies is little more than the application of various processes and methodologies to detailed data analysis. Here's the problem: analysis is not strategy. Your people can be fantastic at working the "process," but if the information and ideas they are basing their analysis on are faulty, then, as my friends in the computer field say: GI=GO (garbage in=garbage out).
In other words, if they are not good strategic thinkers, and they don't have a solid grounding of business acumen in the areas of: general and broad business knowledge, competitive intelligence, industry expertise, product expertise, customer expertise, knowledge of emerging trends, best practices, and a wide array of best-in-class benchmarks —then all the flip charts, flow charts, and sticky notes in the world won't help them create an effective business strategy.
Misconception number three: all we have to do is bring everybody together for a two-day "strategy off-site," throw a lot of ideas on the wall, and we'll have a plan put together by happy hour on Friday! Not true. Effective business planning takes time, a tremendous amount of preparation, superior teamwork and communication, and the understanding that the final goal is: Simplicity + Execution.
Making the very complex…awesomely simple
In preparation for writing my new book, "Awesomely Simple: essential business strategies for turning ideas into action," I looked closely at the hundreds of companies I have worked with, and read tens of thousands of pages on strategy and business excellence in an effort to determine the key business strategies successful companies focus on as a foundation for winning in the marketplace. From small two-person start-ups to the top of the fortune 500, and across every imaginable type of industry, it was fascinating to watch a clear pattern emerge around a cluster of core strategies that build the foundation for business success.
As an example, every company wants to develop a strategy that will give them a "sustainable competitive advantage" in the marketplace. But when you try to simplify the strategy of "competitive advantage" you realize products across the globe—even those traditionally considered unique and valuable—are becoming commoditized. Every company, in every industry, is feeling the squeeze of increased competition and well-informed consumers who have unprecedented access to the information needed to make a buying decision.
The old bastions of competitive advantage—location, access to capital, proprietary technology, distribution channels, etc.—are in most cases no longer relevant. The only truly sustainable competitive advantage left to most business today is: The creation of a corporate culture that is solidly built on a foundation of continuous innovation and extreme customer focus, both of which can only be delivered by highly talented, engaged, and motivated employees.
To make it awesomely simple: Talent x Culture = Competitive Advantage
Sustaining that advantage is what the strategic plan is supposed to accomplish by creating strategic initiatives around talent acquisition, talent development, talent retention, and an aggressive innovation agenda. One key strategy, four major strategic objectives—not really that complex (execution of the objectives…now that is a different issue!).
For the last five years I have been a guest lecturer on strategic planning at the Wharton School of Business, and I think it always comes as a disappointment when I try to explain, that contrary to popular belief, strategic planning is not a mystical discipline that only the hyper-brilliant can master, but in actuality, is quite the reverse. Great strategic plans are awesomely simple.
John Spence helps business owners and managers determine the core needs for creating and sustaining a successful organization. He has presented workshops, speeches, and executive coaching to more than 300 organizations worldwide, and has been a guest lecturer at more than 90 colleges and universities across the United States. In his new book, "Awesomely Simple," Spence says he seeks to help executives look at their business and evaluate how it is succeeding in the six areas most critical for lasting success.
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