A New Look at Strategic Planning: Practical Strategizing

The ubiquity of strategic planning has made the words “strategy” and “plan” nearly inseparable in a business context. This is due in no small part to the wide-ranging influence strategic plans have (or should have) on decision-making.

In this blogpost, we’ll look at the common understanding and execution of “strategic planning”. After some reflection and research, we felt it to be a contradiction in terms. We changed our tune and will share our new angle with you. After that, we suggest Lean PPM as a new method to make sure an company’s plans align with its strategy.

Table of Contents:

1. The Goal: Flexible, Emergent Strategy to Guide (Not Prescribe!) Your Portfolio
2. The Problem: From Confidence to Indifference
3. A New Conception of Strategic Planning: Just Focus on Strategy
4. Get Strategizing: A Few Pointers
5. Strategy Is Great, but What about Planning?
6. What About Strategic Planning Software?
7. Key Takeaways

The Goal: Flexible, Emergent Strategy to Guide (Not Prescribe!) Your Portfolio

The goal of strategic planning is to align your project portfolio with an overarching, forward-looking vision of your market. This vision should take market developments and competitor activities into account.

This is something we’ve talked about before, and we’re not alone on this. Still, 48% of leaders spend less than one day a month discussing their organization’s strategy even though 61% rank strategy as equally or more important than execution.

One reason for the lack of strategy discussions may be an excessive reliance on strategic planning.

Many organizations draft strategic plans on a regular basis every three to five years. Leaders outline concrete, quantitative goals they want to achieve over that timeframe. The idea is to propose a suitable direction for the business going forward. This proposed strategy guides decisions according to a common game plan.

Given the importance of the strategic plan to future decision-making, many leaders seek to make it as comprehensive as possible. It can evolve into a Leviathan of a document, comprised of financial forecasts, cost reports and revenue goals that can get as granular as individual salespeople and their channels. The more forecasting a company does, and the more detailed this forecasting becomes, the more likely it is that your plans and calculations will diverge from reality — a spreadsheet is a model, not a safety blanket.

The Problem: From Confidence to Indifference

Despite this, many approaches to strategic planning package it as a simple matter of adhering to the “5 steps” or the “7 elements” of strategic planning. These perspectives tend to have a fixed end goal in mind and attempt to pack the unknowable into a set structure.

As its accuracy gets lower and this predetermined end goal becomes more unrealistic, stakeholders shove the plan further and further to the back of the drawer. Colleagues grow reluctant to discuss company strategy at all, people forget about the plan and departments start pursuing their own initiatives.

At a certain point, managers begin to wonder what the point of strategic planning is at all. If their plans are wrong every time, they could instead focus on running the business and simply pivot around problems as they arise. This impulse is not a bad one — it’s important for plans to be flexible and businesses to adapt in the face of change — but it can easily transform into an approach that values quick wins and kneejerk reactions to competitors.

With this in mind, we’d like to propose a new conception, loosely based on the American Management Association’s 4 P’s of strategic management, that focuses on flexible, emergent strategy instead of total control or utter chaos.

A New Conception of Strategic Planning: Just Focus on Strategy

These traps in strategic planning are difficult to notice. In the interest of avoiding these traps, Roger L. Martin, who published a great think piece on this topic in Harvard Business Review, proposes a new definition of strategic planning.

Martin divides the word up into its components, strategy and planning, and explains that the two have nothing to do with one another.

A strategy is comprised of action, context and beliefs. It informs how a “player” or company can navigate (action) future business environments (context). The best players make choices based on their own belief(s) about what is likely to happen. Because It is based in beliefs, it is uncertain by definition.

Planning in its simplest terms concerns the plans and projects business leaders would like to pursue. Once determined, planning outlines the steps they intend to take to realize them.

Planning focuses on the concrete, things like expected cash flows and resource bottlenecks. It is generally a more data-driven process that managers have control over. Planning focuses on the known and “the secure”.

The uncertainty inherent to strategizing is what leads so many business leaders to focus on the “planning” part of “strategic planning”. This puts the cart before the horse though, as planning without a vision for the future will cause you to miss critical opportunities.

Our advice? Scrap strategic planning; the only strategic planning tool you need is a strategy itself.

Get Strategizing: A Few Pointers

On board, but unsure how to strategize? There are a few key things to keep in mind:

• Keep the strategy simple.

  Scrap the planning binder and all the financial forecasting. Pare down the strategy to answer two simple questions: which customers to win and how to win them.
  Once you’ve answered those questions and have drafted a “cocktail napkin strategy,” you can move on to the next steps. First, evaluate which of your current projects don’t contribute to these goals. Then, do some high-level financial forecasting to figure out which proposed projects are the most promising. Finally, adjust your portfolio and get going!

• Don’t be a perfectionist.

  This goes hand-in-hand with the first tip: By keeping things simple, you can free yourself from the pressure to meet every single goal laid out in a strategic plan. When it comes to strategy, it’s more important to adapt to new information than it is to check every box.
  Strategy becomes more about staying adaptable in the interest of achieving your long-term goals than about following a plan to the letter. Furthermore, companies save time on drafting and updating detailed planning documents that lack predictive power anyways. All of this creates an emergent strategy and allows for easier strategy execution.

• Be clear and concise.

  It becomes easy for stakeholders to grasp the strategy and take initiative when you make the logic and goals of the strategy explicit. When you base a strategy on a few simple premises instead of a series of spreadsheets, you make it easier to adjust that strategy and communicate why when circumstances change.

Strategizing isn’t about prescribing every single department with a flawless plan of action, but encouraging goal-oriented, forward-thinking decision-making. By keeping the points above in mind, you’ll make your organization’s strategy more approachable and resilient in the face of change.

Strategy Is Great, but What about Planning?

As you may have realized, this understanding of strategic planning does away with the “planning” in its name almost entirely. At the end of the day, strategy and planning don’t really have anything to do with each other anyway. As we explained above, strategy is more theoretical and abstract. It asks leaders to formulate what they believe will happen in their market and to identify the opportunities that provide them with the greatest benefit if those predictions come true.

Planning and all its variations, on the other hand, focus on controlling concrete things, like costs and value streams. In simplifying strategic planning to mere strategy, it realizes its purpose as a guide through future uncertainty instead of a ruler to measure every inch of progress.

That being said, a company can’t and shouldn’t do away with planning altogether. You should continue to use planning processes to determine which projects to pursue. You can also use planning processes to evaluate profitability after execution. But try to avoid the impulse to plan and forecast every revenue stream years in advance.

The high level of detail in a strategic plan was intended to bridge the gap between higher-level strategy and day-to-day planning. If we do away with this kind of strategic planning and just focus on strategy, how can we align our plans with our simple strategy going forward?

Filling the Gap Between Strategy and Planning with LeanPPM

At Meisterplan, we believe that Lean PPM is the solution here. We’ve written a whole lot about Lean PPM. How does this concept fit in with this new conceptualization of strategy, though?

Luckily, it’s pretty hand-in-glove. The diagram below will help make this clear:

Strategy sits on top of the decision-making process. As you can see, it has a one-way relationship with the decision-making stage. This is because strategy is a process focused on the external.

When steering a ship, the looks at the water around him. Based on the horizon and the tack of the wind, he relays orders to the rest of the crew. They then make decisions on how to tie the sails, which to unfurl, and so on and so forth.

The goings-on in the ocean around a ship should influence how a captain navigates. In the same way, executives and stakeholders need to steer their company based on the realities of their market. This is the crux of the relationship between strategy and decision making. 

This integrates a dynamic, emergent strategy approach into the equation. It is not about strategizing once every few years and checking now and again what the strategy was. It requires business leaders to have a pulse on the world and the market, to adapt their strategy as circumstances change and to pass this information on to decision-makers.

Although this isn’t as much time and effort as the traditional slog of strategic planning, it is nevertheless intensive and time-consuming. The best way to make time for strategizing is to reduce the effort needed on the planning side of things. The easiest way to do this? Using a software that creates transparency and facilitates emergent planning processes. 

What About Strategic Planning Software?

Planning is a long and complicated process at every organization. It requires a lot of communication and excellent coordination. This communication and coordination across teams and departments often takes much time, negotiation and spreadsheet comparisons.

Get a program that can tell you which plans are ongoing and what stage they’re at. This way, you reduce the overall time spent on planning and can spend it gathering information instead. In doing so, you can use your time to adapt your strategy and keep it emergent. Meisterplan’s custom views provide an overview of where your projects are at so you can get back to strategizing.

Key Takeaways

We’ve covered a lot in this post. Here’s a few things to keep in mind the next time you approach strategic planning in your organization.

• Try drafting a short strategy instead of a strategic planning document. Leave the planning for a later stage.
• Keep the strategy clear and concise. Explain your assumptions, the information you are using to make your decisions and how you have arrived at these conclusions.
• Make sure your strategy stays emergent. Keep surveilling the world around you for events that may present problems for your strategy or new opportunities for your company and pivot accordingly.
• Consider acquiring a portfolio and project management software to make the planning side of things easier.
• Take a look at other approaches but keep one thing in mind: strategy is inherently uncertain. No amount of planning, no matter how thorough, can eliminate the unknown.

Best of luck with your strategizing!