By Robert W. Bradford, President/CEO
At the Center for Simplified Strategic Planning, we have always valued simplicity. Lately, however, we have noticed the growing popularity of extremely brief strategic plans -many of them touting themselves as “one page strategic planning”. While some strategies could indeed be summarized in a single page, my own belief is that there is such a thing as oversimplification in strategic planning. There are many reasons why an OVERsimplified plan is inferior to one with more detail – today I am going to examine just one of these reasons.
A strategic plan must encompass the directional intent of the team that produced it. To succeed, it also must incorporate adequate understanding of the factors – both environmental and internal – which will affect the organization’s ability to fulfill the intent of the planning team??. To be a useful tool, the plan must also be understandable by team members at various points in the execution of the plan.
This last attribute – the communicability of the plan – is one of the most important reasons to incorporate far more than one page of data in your strategic planning. To really execute well, your team will often need to know more than just what the strategy is – they really need to know WHY the strategies are what they are. This cannot adequately be done without including the salient environmental and internal data in your plan – as well as some of the analysis that leads from the data to the concluding strategies you developed.
Far too often, I’ve seen teams use cryptic notes in their strategic planning documents and then scratch their heads a few months later wondering why they devised the strategy they did. Yes, it’s possible to piece the analysis together, if your managers are smart and have good memories. But this means that a good deal of your strategic thinking time will be wasted on rehashing the same analysis over and over, instead of extending your thinking into an improved vision for your organization.
Communication is critical to strategic success in another way that comes up fairly frequently: when you focus too much of your attention on a shortened statement of desired results, the law of unintended consequences kicks in. This is most often apparent in the constant struggle between growth and profitability in business plans. My experience bears out that very high growth and very high profitability rarely correlate. In fact, when we looked at a summary of results among the long-term clients of the Center for Simplified Strategic Planning, we found that the top quartile in profit growth was always in the bottom quartile in volume growth – and vice versa.
A very simple, and often encountered example of how the law of unintended consequences pops up in an oversimplified strategy was well-stated by one of my clients, who said “Our strategy was to grow by 30 percent a year for five years, and we accomplished that despite terrible issues in our industry – but I wish we had listened to your admonishments to focus on profit, as well.” The client’s highly focused efforts to grow their sales volume succeeded – and they executed very well – but their profit margins declined continuously as their appetite for growth drove them to take on less desirable customers. Accepting the need for a more complex strategy enabled this client to resume a steady 15% growth rate in both profit and volume, with much healthier long-term prospects for success.
I am not agitating here for a strategic plan that is a huge, thick file of notes explaining every nuance of your decision making process, but I am suggesting that including enough pages of analysis and data will help your team’s strategic thinking now and in the future.
The key here is to balance richness with usability. An extremely rich plan is too long – but for most organizations, the desire for simplicity may cause you to oversimplify your plan to the absurdly short “Go make money”, which, while easy to understand, creates no value as a management tool.