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Sunday, August 21, 2016

How Much REAL Strategic Planning Is Done?

Ideally, companies, institutions, and even people should engage in strategic planning. Put simply, it is concerned with identifying and then achieving long term objectives of your organization. This should not be confused with organizational planning which may be for the next 90 days (the quarterly report to Wall Street) or for the next year. Strategic planning is a long term forecast going out five years or more. In fact, a few companies, such as Exxon Mobil, AT&T, Microsoft, and Verizon likely look out 50 years in terms of planning.

Is 50 years absurd? Not really, in many cases. Take Exxon Mobil, for example. Fifty years from now they will likely be a significant player in energy production, transmission and sales. Several years back they made a multi-billion dollar acquisition of a large natural gas player. It has not paid off big time yet but the world appears to be moving to using more natural gas as it burns cleaner than oil or coal. Should alternative energy sources such as wind, solar, or hydrogen get more competitive with fossil fuels, you can bet that they will be there and they will have prepared for it decades before. Newer tech players in the business world such as Apple, Google and Facebook have surely begun to embrace long term planning. One key is that with the world changing so rapidly it is unlikely that your company as you know it will exist in 20 years or more. So, you have to hedge your bets and plan for the future. Such change is not a new thing. William Wrigley was selling baking powder well over a hundred years ago. To induce buyers, he ran a special where the purchaser received two free packs of chewing gum with each purchase of baking powder. The response was huge, he had the Eureka moment where he realized that he was in the wrong business, and created an empire with gum that was worth billions and recently went private.

I did find one long term plan some years back that was clearly in la-la land. Japan’s Matsushita Corporation (now Panasonic since 2008) said they had strategic plans going out 250 years in to the future. Initially, I thought it was a typo and they were saying 25 years. Nope. I had to laugh out loud. The changes that will occur over the next 250 will defy even a science fiction writer. Did their plan include selling space heaters on Jupiter? Give me a break!

Strategic plans incorporate objectives, strategies and tactics. All companies have objectives. They may include increasing sales, growing market share, or finding a niche where they can protect themselves from competition.

How do you achieve these objectives? That is through a strategy or grand plan. A surprising number of companies fall down here. They “fly by the seat of their pants” and react to competition but fail to lay out a coherent strategy. Part of the problem is that often their have unrealistic objectives.

Expressing your grand plan or strategy locally or on a micro level is the province of tactics. Here way too many people use terms strategies and tactics interchangeably. Also, I have sat in way too many painful meetings where managers spent hours mulling over whether a part of the plan was a strategy or a tactic. If they had a real plan, they would know.

If you spend time with small business operators or entrepreneurs, you rarely see  even a semiformal strategic plan. Many will point to their temple and say something like “it is all up here.” Not a good idea. Think about it. If someone dies suddenly, there is no plan for heirs to carry on. If you get a plan down on paper, even a simplistic one, you are forced to think about it. Show it to associates or a business savvy friend and you will get some healthy push-back and you will be forced to refine your plan. Also, a plan also implies commitment. I heard from a reader this week who wrote the following: “This may sound weird, but my plan is a contract with myself. I read it over once a week and force my CFO to review it monthly. Am I meeting my objectives? Do I have to shift gears? The written plan forces me to have discipline.”


With strategic planning, you need to follow-up. A “set it and forget it” mentality is deadly especially in a competitive environment. So, the best strategic plan needs to be followed up with strategic management, if you will.

There are key questions to ask when putting together a plan and they include:

--What is our share of the market and how strong is the market?

--Do our competitors pose a big threat and have we really identified all of them?

--Do our customers really like us? Where are we strong and where are we weak? Research can help a lot here and many CEO’s and top management are almost delusional about their image. A brutally honest consultant can help as well.

--What do we need to change to adapt to the future? Can we do it?

--What might happen if we continue with the status quo?

So, in answer to our title of this post, “How much real strategic planning is done?” My opinion is not nearly enough for companies of all sizes.

If you would like to contact Don Cole directly, you may reach him at doncolemedia@gmail.com

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