Volume No. 49

Are Our Strategic Plans Selling Us Short?

This morning in the Northeast, we had another taste of Fall in the air. I’m sure it was just a fake-out, as the temp climbed back up into the upper 70’s. I know our friends down south, particularly those in the hot and humid “Big Easy,” see that as early winter. For the rest of us, it was a nice departure from the sweltering dog days of summer.

Being a native of the south, one of the things I like about the Northeast is the change in seasons. Not only do I like the change in weather patterns, but all of the other signs of change that come with it. Pretty soon, the leaves will be changing, the days will be cooler, and before long, the holidays will be in sight. I think all of us, deep inside, like the change that occurs in the seasons. And as much as we probably hate to admit it sometimes, some of us actually like change itself.

For performance managers, the change in seasons – particularly summer into fall – also means our lives are about to become pretty hectic. I like to think of it as our “tax season.” We start thinking about updating our strategic plan, preparing initiatives for the next year, and getting started on that old dreaded budget. And while we don’t look forward to the long hours that accompany it, this period of the year actually gives some of us the renewal we need to keep pressing ahead.

One of the things that has always fascinated me is the dichotomy that exists between planning and change – a contradiction, if you will, between change (which by its nature is dynamic), and strategic plans (which have historically been rather static, at least from the standpoint of the plan that results).

Historically, planning was thought of as an activity that was designed to reduce uncertainty, or “manage change,” if you will. Of course, our plans have all the basics – vision, mission, objectives, strategies, initiatives, tactics, financial projections, operational implications, performance measures, targets, and implementation plans. For organizations of our size, that’s a lot of STUFF…so it should be no surprise that many of our organizations take most of the fall and early winter to build, refine, or update our plans – both long and short term. And by December or early January, we have a work product that is based on extensive analysis of all that stuff – THE PLAN – which is often memorialized in a physical document (the proverbial “planning binder,” and the even more important “almighty budget”).

There is nothing inherently wrong with preparing a plan and using it to guide the organization forward. Memorializing our vision, strategies, and tactics is not only necessary, but is by all accounts a good thing to do. But its what you do with that plan, and how you use it, that can make all the difference in the world.

Unfortunately, many organizations allow their plan to get “fixed” into the culture of the business. The plan remains on the bookshelf, only to get referenced periodically to validate our actions and thinking. In many cases, the plan almost acts as a history book, or “bible” for our strategic thinking. And that’s where the problem arises.

Optimally, strategic plans should be dynamic, living documents. While it may seem odd to some, I am not a real advocate of documents that “memorialize” the strategy. I’d rather see the documentation focus on the assumptions, and the strategic options we would employ as these assumptions pan out or change. This kind of “options oriented plan” puts more emphasis on the process and the underlying assumptions, than it does on memorializing the strategies and tactics chosen to respond to a fixed set of assumptions. “Options based planning” and its close relative “Scenario Planning” are both examples of dynamic planning. In both form and function, they are far more conducive with the reality of change that occurs daily in our business lives.

I offer these 10 questions to help you discern whether or not your strategic plan is “dynamic” or “static” from the standpoint of dealing with the realities of business and environmental uncertainties and change:

1. To what extent does your vision, mission, and key objectives “guide” versus “prescribe?” I like to think of this as an airliner on autopilot, in which the system maintains the altitude and attitude of the plane within a band of acceptable limits that correlate to the set parameters. It is acceptable for the plane to deviate slightly, as long as it is within close proximity to the preset parameters, thus avoiding undue stress on the aircraft.

2. Does your organization have a “compelling narrative” – a strategic story that aligns with core elements of your strategic plan? In other words, how easily can your overarching strategy, mission, and key objectives be translated into a “30 second elevator speech” by each of your executives and key stakeholders? Or would their natural response be to go search for the most current strategic planning binder? Does your narrative contain a good description of “what success looks like?“ Does it reflect overarching principles, or a prescribed set of tactics? (At this level, the former is preferred to the latter in what we call “dynamic planning.”)

3. How aligned would that narrative be from stakeholder to stakeholder, and executive to executive? Is the core theme, “embodied” into the fabric of the organization? And can it be repeated, at least thematically laterally and vertically across the organization? Do your stakeholders understand the tactical flexibility that they have in implementing the strategic vision, or are they looking for a prescribed set of “to do’s?” Remember, a good strategic foundation/ narrative, does not prescribe tactics, but establishes a strategic direction in a way that allows lower levels of the organization to identify, relate to, and ultimately link into with corresponding tactics. It doesn’t define their specific actions. A good narrative will produce those naturally in the tactical phases of your process.

4. Does your plan allow for changes in the operating environment, or is dependent on today’s snapshot of the current situation? For example, is the plan to become a competitive provider of business services (something that is based on today’s competitors and their position), or the low cost provider (which allows for the realities of new competitors and business models)?

5. How balanced is your strategic plan and roadmap? Rarely does a focus on a single measure survive past the current operating environment. In the above example, would we focus exclusively on cost, or would our strategic ambition include other areas like service delivery and customer retention? In the “autopilot example” in step 1, the plane does not fixate on only altitude, but also involves attitude, pitch, and other variables in its parameters.

6. Do the intermediate levels of your plan embrace the potential for different scenarios and contingencies? That is, do you have multiple options for achieving the same business model and outcome? It’s OK to have higher levels of importance geared to one of your strategies or tactics. But to become fixated on one strategy that has a 60% probability of success is shortsighted.

7. Does your planning process include some analysis of options value/ alternatives? Options strategy can be of enormous value in a strategic planning process, and the lessons learned here can be significant. For example, one of my past clients was able to discern the difference between saving a dollar of O&M versus saving a dollar of capital- almost a 7:1 tradeoff. Using that kind of analysis can really inform your planning and subsequent decision making processes.

8. Do your roll-down performance measures reflect the same level of balance, flexibility, and outcome orientation as your top-level plan does? This is really a reflection of how “connected your plan is” throughout various levels of the plan architecture. But it also says volumes about the degree of balance between your objectives and the level of completeness in your tactical and operating plans. For example, if your tactical plans and performance targets were achieved, would there be a corresponding level of success for each of the key strategic options identified for implementation?

9.  How often do you review/ iterate your plan in an effort to “rebalance” and evaluate changes in contingency options? For example, does the review look like a once a year “dusting off” of the plan, or do you continuously review (monthly or quarterly) the relevance and changes to key assumptions and scenarios?

10. Does your plan and performance measurement system have “strategic staying power?” Can you effectively differentiate between a static plan that doesn’t change, and what we call “strategic staying power?” By the latter, we mean that once measure have been put in place and are renewed during plan review, do those measures survive changes in organization and personnel? One of our clients actually employed a system that implemented a “vesting approach” where managers were compensated on success of a particular measure whether or not they still had direct accountability for that area. This helped compensate for rapid turnover environments in which managers would otherwise remain shortsighted as they “eyed” future opportunities. Instead, they ended up with high degrees of “carry-forward alignment” and teamwork in helping their successors achieve success.

In short, you don’t want your plan to get so locked onto a specific tactic or objective, and lose sight of other options and contingencies that would contribute equally or more to your overarching definition of success.

I know there are some that see a “lock in, and implement at all costs” approach as far superior in that it maintains focus and eliminates the distraction of continuously iterating the plan. They may see the embedded flexibility here as a bit of a contradiction- something that prevents strategic focus. If you are in that camp, I would encourage you to look more closely at the distinction between different levels of the process. While I do endorse analysis, definition of options, and contingencies, I do concur with “locking in” on the business model, strategic intent, and the overarching narrative of the business. At the same time, however, I like to see a process that allows for identifying various ways to achieve the planned outcome, ways of dealing will fall-back contingencies and the ability to revisit the underlying foundation as a last resort when operating or environmental conditions change.

And above all, remember this – planning is a process, not an outcome. If you maintain that perspective, it will be a lot easier to implement a planning solution that is dynamic, flexible, and effectively drives long term success.

Tomorrow, the temperature in the Northeast is expected to be back into the upper 80’s/low 90’s. Some of my plans will change based on that. My plans for the weekend might look more like a “summer plan” than a “fall plan.” We roll with the changes in the environment we live in. We accept change, and if our mindset remains open, we can actually thrive on it.

As I look at the news today, there are many down on the South Central and South West Gulf Coast whose plans will no doubt be changing this weekend with the approach of Hurricane Rita. Our thoughts and prayers are certainly with them. That said, there is no better way to explain the importance of a flexible planning perspective, than to look at what our brethren down south have been dealing with for weeks. We can learn much from them, in particular those who can roll with the punches and still keep perspective on what really matters – principle wise. Those are the true heroes from which we can learn much.

Author: Bob Champagne is a Vice President of Performance Management Solutions with UMS Group, Inc., a privately held international management consulting organization specializing in Performance Management tools, systems, and solutions. Included in UMS Group's product portfolio are a wide variety of performance tracking, reporting, and benchmarking solutions, as well as customized performance assessments and diagnostic services. UMS Group has consulted with hundreds of companies across numerous industries and geographies. Visit UMS Group at http://www.umsgroup.com or contact us directly at 973-335-3555.