How Relevant is Long- Range Strategic Planning?
Summing Up
How Can Strategic Planning be Adapted to Changing Needs?
Strategic
planning concepts and the notion of long-range planning will continue to be
integral parts of responsible management. But they may require a substantial
rethinking if they are to remain relevant. For example, they will have to be
applied more selectively, depending on such things as the industry, the nature
of competition, and the speed with which a particular organization's
environment is changing. And there is a question about whether a sufficient
cadre of managers is being prepared to do this. These are conclusions resulting
from a reading of responses to this month's column.
In
defense of strategic planning, Greg Martin said, "Same story, different
day: in times of change it is practically irresistible to not throw the baby
out with the bathwater. While technology has and will continue to accelerate
the pace of change it can also be cleverly
leveraged to facilitate an iterative, evergreen process of strategy formulation
and implementation."
David
Wittenberg added, "Strategic planning, especially long-term strategic
planning, is no less necessary in a fast-changing world. Clayton Christensen
reminded us that the root cause of every business disaster is mistakenly
pursuing short-term goals ahead of long-term ones." Daniel T. C. Lee
commented, "Traditional or not, strategic planning has never restricted
new innovation…. The issue is the extent and depth of the analysis."
Several
argued along with Munyaradzi Mushato, who said, ''the need for a sustainable
strategy is actually higher in a volatile market space … why deliberately go
out to plan to build a short-lived competitive strategy?" Paul Tiffany
commented that the question we should be debating revolves around the tools
that are most appropriate to the task today, such as David Teece's ''Dynamic
Capabilities'' model.
Huw
Morris was among those suggesting adaptation. He regards current strategic
planning concepts as relevant, but warned that they need to be used to promote
agility. For example, he said, ''by strategy task forces that 'hack' rather
than as part of a long annual strategic planning process." Gary Johnson
put it this way: "Competitive advantage and a business without
strategy-one that is in constant reactiveness, seem to be an oxymoron; a
'living' strategic plan will always help a business be more competitive."
Shadreck Saili said that while long-range strategic planning may still be
relevant to some degree, ''the frequency of monitoring and evaluating of
strategic plans becomes therefore a relevant factor to consider." Edward
Hare suggested that, "What organizations need to do is break old habits of
practicing planning as ceremonial processes that are conducted periodically.
That'll probably happen … Those that don't just won't survive."
This
led to the question of why managers have been reluctant to adopt new methods of
planning. Janice Maffei framed the case by saying that "We need to
influence leaders to envision longer term possibilities while creating short
term experiments." Shann Turnbull warned this may not be easy, commenting:
"The establishment of 'smaller, faster, more agile organizations' is
inherently a governance problem…. The problem is that network governance is not
taught in business schools or any other faculties." How can strategic
planning be adapted to changing needs? What will it take? What do you think?
Original Article
From
time to time thinking converges around a set of ideas. For us this month, the
topic is strategy planning and organization. Conventional thinking and
organization that has encouraged us to seek sustainable competitive advantage
in the past is being questioned in today's business environment. Some are even
suggesting that the mind set that has given us strategic planning concepts such
as SWOT (strengths, weaknesses, opportunities, threats) analysis, the
"five forces," growth share matrices, five-year plans, and an
emphasis on core competencies of the firm may lead to competitive disadvantage
in a technology-transformed world in which markets, employee and customer mind
sets, and innovations, evolve at a rapid rate.
The
conversation was stimulated (can it be 16 years ago?) by Clayton Christensen's
work leading to his book, The Innovator's Dilemma. In one sense, the
book was mistitled. Some of its most salient material concerned issues
confronting large corporations facing innovative upstarts with disruptive
ventures, the non-innovator's dilemma. But it also dealt with the challenges of
achieving innovation in a world of entrenched ideas about how products are
developed and used. Implicitly, the book questioned traditional concepts of
strategic planning in an environment populated by increasingly innovative and
agile competitors.
Now
comes a new book, The End of Competitive Advantage, by Rita Gunther McGrath.
Hers is a frontal attack on accepted strategic planning methods designed, in
her opinion, for another time. These are methods based on the presumption that
competitive advantage is sustainable. It's a presumption that she claims
"creates all the wrong reflexes" in a world in which the best one can
hope for is "transient competitive advantage."
McGrath's
prescription for achieving transient competitive advantage includes such things
as smaller, faster, more agile organizations--and where management-by-consensus
is a thing of the past. The emphasis is on marshalling rather than owning
assets, including talent. In order to ensure the appropriate deployment of
these assets from one opportunity to another, it will be necessary to
recentralize control over the resource allocation process, moving it out of
strategic business units (SBUs). It raises questions about the relevancy of
SBUs as opposed to transient teams as a form of organization.
These
organizations engage in "shape shifting" based on systematic
innovation and the constant testing of assumptions, all required to maintain
transient advantage. They are organizations designed to create and test
options, practicing "continuous deployment," doing things "fast
and roughly right" rather than relying on strategic planning as we have
known it.
McGrath
makes her points forcefully, but laments the slow rate at which these changes
are being adopted in large organizations. If these ideas are so powerful, she
asks, "why hasn't basic strategy practice changed?" Is her thinking
on target but just a bit ahead of the curve? How relevant is long-range
strategic planning and its assumptions of sustainable competitive advantage?
What do you think?
To read more:
Clayton
M. Christensen, The Innovator's Dilemma (Boston: Harvard Business School Press,
1997)
Rita
Gunther McGrath, The End of Competitive Advantage: How To Keep Your
Strategy Moving As Fast As Your Business (Boston: Harvard Business Review Press,
2013)
by James Heskett
http://hbswk.hbs.edu/item/7341.html
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