Why does Strategic Planning Fail?
Organizations create a strategic plan yet they fail to execute the plan while other organizations fail to create a plan. Most people agree that Strategic Planning has value. Why is it so difficult to create and implement a plan?
1. Many companies today are reactive and focus on the next quarter. This causes them to lose sight of the long-term strategy. As a result, if they have a strategic plan it may not be practical.
2. The day-to-day management systems are not linked to the strategy so managers are not considering strategy when they make decisions. The approval and prioritization of work should be aligned with the long-term strategy but this rarely happens.
3. Long-term strategy begins at the corporate level. Each department contributes their own long-term strategy which should support the overall business strategy. This is not happening. e.g. The IT strategy is frequently independent of the overall business strategy. As a result, business and IT departments have confilcting priorities.
The solution is simple: Alignment and Visibility. The strategic plan for each department must align with the overall strategic plan and the management tools must provide visibility of how day-to-day activities support the strategic plan. Finally, the enterprise must constantly monitor to ensure that decisions are aligned with the strategy.
This is an interesting post and brings up a subject that has interested me for a long time: the reactiveness of business.
It seems funny to me that many companies try to make long term goals only to surrender them when something unexpected happens, or when the next quarter is coming up.
I agree with your often overlooked point about where strategy comes from. It’s nonproductive to think that a day to day manager is going to consider overarching strategy – it’s certainly a corporate level initative and maintenance item.
Great post, Nick!
-Matthew
Your post opens up the notion of integrated strategic planning in general.
Most corporate segments have some sort of annual goal-setting under normal operations. Planning where a change has occurred is where the rub is. Because a lack of communication/exchange of communication ensues, the messenger (IT section) is the first deflection.
My wife went to work for a major corporation in communications. After she got into it, she discovered that she was in a unit formed by a recent acquisition. They have different operating systems, e-mail systems and even telephone systems! She couldn’t post to the intranet much less the internet. Her counterparts (higher level corporate communications people) told her that she would have to go through them to do her own work.
She was treated like a secretary for everything in her unit because it couldn’t communicate with the rest of the corporation. At an annual goal-setting meeting like we’re talking about, their unit was going to service clients in other corporate divisions but postponed it for a year because they couldn’t figure out how to do it.
Shortly thereafter, she contacted corporate IT and now has access to both systems!! The fall out is just beginning. The last day of that annual goal-setting meeting is today!!
Effective strategic planning should begin at the corporate or enterprise level. Each lower-level organization should then create their strategy sot that it directly supports the higher level strategic objectives. The linkage should be clear. As your example noted, this does not always happen and the resulting priority conflicts can be quite disruptive.
A common example in IT: Server Rationalization is a growing trend in IT. Before this is approved as a strategic objective for IT, they should identify how that objective links to other corporate objectives. Does it save money? Does it reduce risks such as obsolete technology? If there isn’t a clear link, then why should it be approved.
Hi Nick,
I agree with you on your premises, but not on your conclusion or suggestions. Strategy Plan fails not because the manager or employees do not focus on. Strategy Plan fail because the lack of Inspiration, Vision, Compromise, Integration, Communication and Commitment of all of the parties (from the highest corporate to the lowest corporate levels). With out these ingredients, your strategy plan will be flouting in the middle of no were.
What strategy plans needs is leadership from the key people, which may be the corporate leaders, meddle managements or even employees at all levels. Is imperative for Strategy Planers, to pay particular attention to those variables, because with out it, you are planning to wish not to make it happen. Finally, strategy may come from any corporate level, but with out leadership, strategies will always come from the top corporate leader and that is one of the reasons why none of these ingredients is present; causing strategy to fails.
Arnold Cochran
Arnold, thank-you for your comments. While agree with your point, it is only one of several reasons why strategic planning fails. Successful strategic planning begins with a realistic strategy, executive sponsorship, acceptance and support from the people who have to implement the plan, and ongoing monitoring to ensure that day-to-day decisions and departmental objectives align with the strategic plan. This combination is necessary for success and a lack of any of these components can lead to failure.