Changing the Way the World Thinks about Strategy

Strategic planning problems - what people get wrong in strategic planning

Most people I encounter in business tell me they do strategic planning.  When they describe their process, however, I can quickly identify key issues they will have with their planning and how to address it with a few key questions (or thought processes).

Let me share my 30 years experience and conversations I’ve had with thousands of people in different industries. Here are some common issues I see:

The main issues we encounter boil down to just four areas:  Information, Buy-in, Process and Strategy Execution.  While execution is by far the most common (most companies only achieve 30% of the strategic objectives they set), the others are sometimes hard to spot, and will contribute to problems with execution in their own way.

This week, I’ll just look at the first problem area, information.  I will examine the remaining three areas in subsequent postings.

Information is key to a rational planning process.  If you make important decisions without information, your planning can end up just being a fantasy about how you’d like things to go.  Additionally, team members need to have a shared foundation of information to efficiently make good strategic decisions.  These are the three most common issues we find:

  1. The wrong amount of information. This can be too little or too much.  How much is enough?  My sense of this is that you need enough information to create a valid, usable picture of the key systems behind your strategy.  By systems, I mean the things that drive customer behaviors, supplier markets, operations and the economy in general.  How these systems are today, and how they will change in the future, are the most important things a team needs to understand to create a winning strategy
  2. Assumptions and data. Most people mix assumptions in with their data.  Assumptions are temporary estimates of probable future developments, and they are not immutable facts.  So many strategy disasters begin with assumption errors that many try to avoid putting any assumptions in their planning process – but this is a mistake, too.  In order to plan for the future, you must make assumptions.  The key to avoiding most assumption errors is to be clear about which assumptions you are making and building flexibility into your plans so you can adapt to changes in this information.
  3. Sources and estimates. People tend to want to find definitive sources that tell us how big a market is, or what competitors’ market shares are.  For all but the largest (mostly commodity) markets, this data simply doesn’t exist.  That means that you will need to make intelligent estimates about some data.  Fortunately, you don’t have to be perfectly accurate in your estimates (though it helps).  Unfortunately, most people are intimidated by the process of making good estimates from a skeleton of reliable data.  One of the key pitfalls here is spending too much time and money trying to get perfect data, when it is largely impossible and usually unnecessary.

Have you encounterd other issues with information that has led to strategic problems?  I’d love to hear about your experiences.  Also, if you’d like to discuss how we avoid these issues in the Simplfied Strategic Planning process, feel free to reach out.  There is no charge for a short conversation about the issues you’re seeing in your planning process, and we are always happy to offer solutions.

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