Is your organization’s strategic planning a positive and effective process, or does it seem a frustrating waste of time and resources? Or does your organization even bother with strategic planning? It’s common for many organizations who utilize strategic planning to feel that sense that the process has a lack of impact on either their own actions and/or the direction and effectiveness of the organization. What can be done to improve this situation?
First, it’s important to recognize some of the positive benefits from an annual planning process. In addition to identifying and prioritizing some aspects of an organization’s strategy, the process facilitates budget planning and the resource allocations for the coming annual period. This identifies financial and operating targets, which, in turn, may be used to determine compensation planning and guidance for the management team on annual priorities.
What can managers do to improve the strategic planning process? Authors Renee Dye and Olivier Sibony offer ideas in their article “How to Improve Strategic Planning”, in a recent McKinsey Quarterly publication. Here’s their suggestions:
· Start with the issues: deliberately and thoughtfully identify and discuss the strategic issues that will have the greatest impact on future business performance;
· Bring together the right people: include the most knowledgeable and influential participants, stimulating and challenging the participant’s thinking and having honest, open discussions about difficult issues;
· Adapt planning cycles to the needs of each business: not every business unit needs strategic review and re-direction every year—focus on the business units with the greatest need/impact;
· Implement a strategic-performance-management system: put into place teams/systems for accountability, execution and tracking of strategic initiatives;
· Integrate human-resources systems into the strategic plan: Simply monitoring the execution of strategic initiatives is not sufficient; their successful implementation also depends on how managers are evaluated and compensated.
Strategic planning may have a more effective role in organizations that focus both on the formulation as well as the execution of strategy. How effective is strategy in your organization?