Strategy Nugget #02: Rest in Peace, Strategic Planning
Dear Strategist,
The future is clouded in fog. And it seems the fog is thickening, isn’t it? I have written “rising uncertainty” on so many slides in the last fifteen years that I cannot really stand it anymore. Nothing new so far. But if the future is increasingly hard to predict, why do we still make 5-year strategic plans and then track execution? Is it time to burry strategic planning on that foggy graveyard?
?I believe it's time to reframe #strategy:
I believe we need to change our vocabulary! Replace “strategic planning” and “Long-term financial plan” with “strategy development” and “strategy impact model”. Change your words to change your mindset!
This reframing will also facilitate other important transitions in strategic practice. Many companies strive to shift to a more always-on, more agile strategy process. While conducting “strategic planning” regularly seems strange, regular “strategy development” makes total sense.
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Many companies spent significant effort on creating very detailed, (somewhat) consistent long-term financial plans that get obsolete quickly. Quantifying strategy with a “strategy impact model” signals a relevant level of detail and the inherent uncertainty associated with that exercise.
But wait... we all know that a common problem in strategy is to set an ambition and not having a clear path how to get there. Isn’t that a call for developing a “plan”? I would argue that the framing of “developing a convincing answer to a fundamental strategic question” will also force you to generate a convincing path - but without the issues above.
Practical strategy nugget to take away: “Strategic planning” is dead – long live “strategy development”!
?Let me know your reactions and thoughts!
Sebastian
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Managing Director & CFO | pilot of growth and performance | E-commerce, B2B, Retail | Consumer Goods
2 年Thank you for these reads Sebastians, very stimulating ! Volatility and unpredictability basically imply that it is not the length of the planning horizon that matters but rather the frequency. Whether at strategic (mid-long term) or tactical (mid-short term) levels, decision-makers and FP&A should not try to guess the future too long too much, and focus instead of being reactive and simulate fast to make the best agile decisions. Uncertainty will hit soon anyway in the form of unplanned events that will force to repeat this "agile guessing" process.? What really matters is that this "agile guessing" process becomes an opportunity to get decision-makers to stop for a moment, reflect on the future (after understanding well the past and the present - hence the urge of a fair level of transparency) and align on the best scenarios to create value. It doesn't have to touch all levels of the organization, but rather focus on areas where this is needed.? In the end, agility in FP&A means: ability to choose the scope you want, the granularity you need at the frequency you need, that is the only way to cater for the infinity of situations that can arise.?
Vice President, Business Control (FP&A) and Business Development
2 年Interesting article, although I miss what is for me a fundamental difference between a strategy and a business plan: analyzing and responding to competition (as well as to the environment, which can probably be described as "the fog"). IMHO, one would hope that the hiker had taken a look at the weather forecast and historical data and was not completely unprepared to the fog. In a competitive environment one might want to think about the predators that can be hidden in the fog. If you see the hike as a race, since markets are competitive, then the responses of the other players, and to their moves, should be gauged. Looking forward to your reframing of the five forces.
Managing Director & Partner | Expert in business transformation, growth acceleration, and operating model design & implementation
2 年Well said!