Strategic Plans Suck

TL;DR: Running a company is a complex problem. Complex problems do not benefit from traditional planning/analysis. We know this in product development and have moved away from predictive planning practices, but for some reason they still persist at the Strategic Planning level.

Strategic Planning, the way it’s traditionally implemented by many companies, is a huge source of waste. It simply doesn’t work. Worse, the amount of time most management teams spend in strategic planning is astronomical. Some organizations I’ve seen actually have a multi-month process that outputs a 1+ year strategic plan. Surely talking about strategy is important, but the traditional “documented strategic plan the company will execute to” is a relic of management from less complex times. We live in a different world now.

Traditional Strategic Planning makes the following assumptions:

-  The market will remain constant for the next year
-  Your customers and their buying habits will not change
-  You will have the same employees you have now to execute the plan in the future
-  Your competition will move slower than you
-  We can know now what will be best in the future

Plans have no business value (your customer isn't going to pay you for the strategic plan, only for the actions that might emerge from it). And even the companies that do a good job planning spend equally as much time adjusting and reacting during the course of the year. Here are a few things that do have business value in relation to strategy, and tactics for what you might try instead of traditional strategic planning.


Information Has Value

If we had all the information needed to make a decision and act upon it, we wouldn’t actually need a plan in advance. The fact that we sit down and discuss plans at length means, by definition, we do not have all the information we need to make a decision. With the information, we can’t possibly decide now what will be best in the future. Additionally, once we get the requisite info, it’s a statistical certainty that any plan we had will change.

Suggested Tactic: Our time is better spent seeking out the needed information instead of planning. State a testable strategic hypothesis, and start gathering the data you need to make a go/no-go decision to execute. Aim for hypothesis that will generate the most surprising information, as the value of information is directly related to how much it surprises you.

Lead Time Has Value

Just like the goal for product development is “sustainably short lead time” so to should be the goal of a management team. Go from new information to decision made to action in the quickest way you possibly can. Alot of the waste in traditional strategic planning is that there could be a 1+year cost-of-delay between the plan and the execution of the ideas to generate actual business value.

Suggested Tactic: Build strategy into the normal operation of your management team. Lencioni’s “The Advantage” model would call these ad-hoc topical meetings or quarterly offsites. Unless you’re in an incredibly stable market, I’d suggest at least monthly if not weekly strategy-focused meetings. While some discussion and analysis is needed, the output of these meetings must be decisions made on what to execute on (and what to ignore). Too much discussion and analysis is delaying the total lead time towards realizing business value.

Options Have Value.

The idea of “real options” as a way to think about a set of problems and possibilities is a great model. All of the strategies and ideas you have in your organization can all be thought of as options. We can manage these strategic options the same way we would financial options – in real time and empirically. See below for further reading, but the basics are: Options have Value so we want many possibilities, Options Expire and we need to know by when decisions are required, and Options should not be committed to unless you are sure they will pay off.

Suggested Tactic: Keep an options board – a big visible list of strategy options, their perceived value, the info you’d need to assess their actual value, their expiration date, and date of last reasonable decision point. This board could be the backdrop to every strategy meeting.

Strategy Follows Structure

Strategy can be emergent and real-time if you have the right organizational structure and values/vision are in clear and known. No strategic planning needed. This is a key take away from Stanley McCrystal’s book, Team of Teams. And it scales. I can’t stress this enough – it scales in all industries and for any type of strategy work you’re doing. If you feel that a strategic plan is necessary for action to happen at your company, perhaps the root cause is the structure of your company, not the planning process.

Suggested Tactic: Spend your time as a management team consistently reinforcing vision/values, and use small empowered teams that are able to make game-time decisions without seeking permission from anybody.


Further Reading: