Managers need to look at the way ahead, rather than just responding to everyday challenges.
Ninety per cent of new initiatives fail to have a lasting impact in organisations, leadership guru John Kotter writes in his new book, A Sense of Urgency. One of the key reasons for such a poor success rate lies in the amount of time and effort that organisations put into strategic planning.
Over the past two years the global business community has undergone the most dramatic change in its history.
Far reaching changes in technology, financial services and customer attitudes are likely to send ripples through consumer and business-to-business markets for the next decade or more. These winds of change are buffeting New Zealand businesses and the winds are not about to abate any time soon.
Change can provide great opportunity and great risk.
Failure to create longer-term plans may mean you miss out on the former and suffer from the latter. And because of these changes, companies regularly need to undertake rigorous strategic planning.
Not only is this required to redefine their position and future direction today, but to constantly monitor their direction from this point forward.
It is generally recognised that a big part of a chief executive's role is to determine the strategic direction and vision of the company. They will typically involve their senior management in the process.
Naturally, the better the process, and the more time spent on planning, the more likely that the change process will be successful.
Numerous surveys have shown that businesses spend a small fraction of their senior management time on preparing strategy for their companies. It is surprising that senior managers allocate so little time for collecting data and obtaining inputs from their subordinates.
Yes, putting aside one day or 3 per cent of one month for the entire management team seems like a big contribution, but annualised this amount of time is about one quarter of a working day per person. All up, it is unlikely to be more time than is spent idly chit-chatting over the coffee machine during the course of a year.
There is no correct amount of time or fixed percentage of a senior executive's time that should be spent on strategy. Rather, the time allocated should be a reflection of the task and the outputs required.
Let's start at the end. The outcomes we want after developing our strategy are as follows:
* Company-wide consensus on three or four high level strategic thrusts that will provide allow the company to survive and prosper in the future
* A plan for communicating the strategy clearly to all stakeholders
* A set of actions that utilise Smart principles (Specific, Measurable, Achievable, Realistic and Time based)
* Allocation of responsibilities for these action items and timeframes for completion
* A method of reviewing the progress of the strategic plan over time.
There are significant overheads to obtaining good strategic planning outcomes as outlined above such as preparation, analysis, discussion, decision making, documenting, communicating and actioning.
Some may argue that managers develop strategy every day. Much of this strategy, however, is what is called emergent strategy. Without constant revising of the objectives of the business, this can be very dangerous.
To use an analogy, let's imagine that we are trying to find a lodge in the bush. That is our strategic objective. We enter the thick bush and we have to make decisions as we reach every fork in the path. These small decisions are emergent strategy decisions. We base our emergent strategy on whether we think the lodge is in the direction of one of the paths.
But what if the choices at a fork are parallel to the lodge? After some time, if we were able to get in a helicopter above the bush and had a look at the walker's route we may see them clearly walking in a circle - or possibly in the opposite direction to the lodge. The helicopter view allows us to see our goal of getting to our destination, as well as identifying potential obstacles in our way.
Sadly some businesses are lost in the bush. Others are not even looking for a lodge. Others are just trying to stay alive while walking. Some have been looking for so long the lodge has closed down.
Funny, yes. Uncommon, no.
A strategic planning process is the equivalent of the helicopter.
The longer we can stay up in the air and consider the terrain and our objective as well as taking note of our supplies and capabilities, the more likely we are to get to the lodge in the shortest available time.
The strategic planning process allows us to take stock of our position and look dispassionately at where we are going.
With the right process your company can create new initiatives to take the business forward.
Rather than becoming part of the statistics of failure in executing change, as Kotter identifies, you can ensure that your change initiatives flourish.
Craig McIvor is the managing director of Corporate Management Advice which assists businesses with growth strategies
managementadvice.org
