Five Strategy Pitfalls in Strategic Planning

Do you feel as if you are slogging along instead of buzzing? It is business as usual but things are just not clicking? Sales are OK but not great. If this scenario resonates with you, then it is time to tap your strategic reserves. 

You need to drill deep, though, if you seek to isolate the real problems behind your sluggish performance. More often than not, strategy is formulated from a knee-jerk reaction to changes in the environment — low-cost manufacturing in China is eroding your competiveness, or your competition has introduced a new product with the market disruption power of the iPad. Causality should be considered in strategy, but it should never dictate it.

Good strategic planning is developed by understanding why you were vulnerable to these external factors in the first place. And only those with a deep understanding of your internal and external terrain can expose the underlying problems. Yet today, when we develop strategy, we are increasingly relying more on models than local know-how. Most of the pitfalls in strategic planning relate to leaving out the stakeholders — executives, management, staff, customers, and so on — from the planning process. 

Overdependence on the models

While the integration of technology into all facets of strategic planning has added tremendous value, it alone is not the solution for dealing with the increased complexity in today’s marketplace. Strategic planners are grappling with more diverse product offerings, increased competition, and more complex supply chains. And, of course, there is a model for that. Monte Carlo, competency modeling, and real options are all useful tools for drilling down into increased complexity. 

Moreover, it seems as if there is an enterprise software solution for everything. But the complexity of today’s challenges does not neatly fit into a database silo or algorithm. What you need is better thinking, and that thinking comes from people who are genuinely engaged in the process. Engagement requires a genuine alignment of the values and goals of the organization with those of stakeholders. 

The power of corporate culture

Everyone in the business media has been weighing in lately on whether culture has a greater impact than strategy on business results. The consensus is that culture trumps strategy if left unattended. The obvious response, therefore, is to ensure that corporate culture is taken into account in strategy planning. If your strategy involves elements that are counter to culture, it is more likely to be derailed by internal discontents. But if you have a bad strategy, all the employee motivation and health-club memberships in the world are not going to increase your sales. 

My advice then is to ensure that the strategy is aligned with your corporate culture. The way to accomplish this is to involve internal stakeholders in the strategy planning process. 

Oops, we forgot the leadership

Strategy used to be the domain of the boardroom and the executive office, alongside analysts who would crunch the numbers and report them to the higher-ups who would then decide how to use the data. Today, students start doing SWOT analysis in high school, and after four more years of SWOTs, graduate to strategy teams in corporations. Empowered, they perform business analysis and formulate the strategy for their divisions. 

Conducting the analysis closer to the business unit is smart strategy and execution but it can be risky if units operate in isolation. It is the leader’s job to link strategy to overall objectives and streamline planning. Telltale signs that that your pistons are not all firing together are failed products, lost customers or markets, failed bids for new business, and higher employee turnover. 

Manager buy-in

The disenfranchised manager is not a new problem to strategy execution. Managers need to understand why they are executing the strategy. One does not have to be a sports fan to know that the manager is the first one fired if the game strategy does not work out. Unlike managers of the Red Sox, Astros, and Indians this season, corporate-manager firings seldom hit the headlines, but these frontline managers understand that they are easy scapegoats, too. 

Manager involvement in strategy, however, should never be an issue. The identification of the underlying problems and formulation of solutions should take place at each level of the organization during strategic planning. Every manager should have a written plan for their area of responsibility.

Customer engagement

If you are communicating effectively with your customers, then you are doing the listening. The introduction of new products and price-cutting strategies from your competitors should not come as a surprise. Your customer will already have described the product to you. 

If you are not drilling down to your organizational lifeline and getting a pulse of what is happening from key stakeholders, then you are essentially playing the horses. You only have a 50/50 chance of reaching your destination. To improve those odds, you need to conduct strategic planning with those who are intimately familiar with the local geography.

Good strategic planning is never easy, never short term, and never episodic. It should roll from year to year, engage your best thinkers and doers, and be communicated relentlessly throughout the organization.       

Thomas Walsh, Ph.D. is president of Grenell Consulting Group, a regional firm specializing in maximizing the performance of organizations and their key contributors. Email Walsh at tcwalshphd@grenell.com