Mar 15, 2007

CEOs Demand Improved Strategic Planning

The past two decades have seen global industries realign in disorienting ways for many management teams. The outcome has been predictable: consolidation has run its course; prices and margins are miserably low. Incumbent players continue their struggle to find an optimal management model. Executives are refocusing on growth and differentiation.

As a result, CEOs and their strategic planning czars say that they now find themselves face-to-face with a pressing need to cross what feels like an organizational chasm. They are being forced to steer their company’s transition to its next phase of growth and evolution, but fear that traditional planning tools and methodologies are outdated or ineffective. Our research indicates they are looking for answers to three critical questions:

  • What is an optimal planning process, and how can their company increase the cohesiveness and strategic content of its annual business plan?
  • How can their senior executives increase their influence over – if not control of - the company’s strategic and tactical direction, while simultaneously respecting and maintaining a culture of decentralized action and accountability?
  • What practical steps can be taken immediately to add strategic depth to what is typically a financial numbers-oriented business planning effort?

In fact, recent Chicago Strategy research indicates that the most effective planning processes move companies forward on a more efficient, effective, profitable – and cohesive -growth path. More importantly, an effective planning process helps CEOs put in place a business model that increases the company’s competitiveness and differentiation in the marketplace. Any attempt to reduce the planning process to a set of company-wide “templates” is considered seriously misguided.

Executives described a successful approach to strategic planning as one that accomplishes four top priorities:

Priority I: Develop, communicate, and implement a planning process that increases corporate influence and direction, and is embraced positively by leaders and decision makers throughout the organization.

Priority II: Use the annual planning process as an opportunity to provide leadership development that helps managers be more accountable for the development and implementation of company strategy.

Priority III: Build alignment across functional, geographic, and operating groups on clear strategies, actions and priorities for reaching the company’s targeted results.

Priority IV: Create specific business plans that tie disparate parts of the organization into a consistent, logical, cohesive, and actionable set of plans and steps.

The strongest need senior executives expressed was a need for strategic planning that was inclusive and got managers throughout their companies actively involved in the process. They knew intuitively that burdening an organization with cleverly-designed planning questionnaires did nothing more than generate formulaic responses at best, and organizational frustration and enduring ill will at worst.

The CEOs' Bottom line:There simply is no organizational substitute for well-structured strategic dialogue and debate.

No comments: