Monday, July 4, 2011

Strategic Planning Analogy #401: Adrift at Sea

Suppose, for a moment, that you took your company out for an ocean cruise. While on the cruise, there was a terrible storm and your ship sank. Now, you and your senior team are all on a tiny lifeboat out in the middle of the ocean, adrift at sea.

You realize that this is a serious problem, so you decide to hold a strategy meeting on that tiny lifeboat.

“Ladies and Gentlemen,” you begin. “We have a serious problem here. We need a strategy to get out of this mess. The first order of business will be to come up with a strategic goal. My suggestion is that our goal should be to reach land. Any objections?”

Everyone agrees that reaching land is a good goal.

“To get to land,” you continue, “we need to move the boat. Therefore, I want all of you to work on tasks to move the boat. That will be our strategic tactics”

So everyone started to do whatever they could to move the boat. People took whatever they could find to act like an oar. Then they leaned over the side of the lifeboat to use their makeshift oar.

However, since nobody knew where the closest land was, everyone just started rowing in random directions. Worse yet, everyone was rowing in a different direction. As a result, the boat just went around in circles.

Looking at the mess, you finally conclude, “You see? This is proof again of why I don’t think strategic planning works. We’re working hard but not getting anywhere.”

It seems that this experience on the lifeboat is not all that uncommon. According to a recent survey by Booz & Company, a lot of executives have come to a similar conclusion about the planning activities at their companies. The survey found that most of the executives (53%) don't feel their company's strategy will lead to success.

What does that say about the power of strategic planning if most executives do not have confidence in their company’s strategy? It’s a black eye to all strategists that the confidence in the industry has sunk so low. We’re sinking like that cruise ship.

Now it’s easy to see why the strategy on the lifeboat was so awful. The goal and the tactical directions did not provide any useful guidance. All it led to was random, useless activity. As we will soon see, a lot of business strategies are almost equally as useless.

The principle here is that when strategic planning doesn’t get you where you want to be, it is not because strategic planning doesn’t work. Instead, the problem is that you have a lousy strategic plan. A bad strategic plan is like an inaccurately drawn map. It may look like the real thing, but it is useless.

We need to raise the standard of strategic planning and no longer accept lousy plans. They’re hurting the image of the profession in the eyes of top executives. Listed below are some clues that your strategic plan is leading to a disaster like the one made in the lifeboat.

1) You May Be Adrift At Sea
One of the most important outcomes of a strategic planning process should be an understanding of a company’s reason for existence. If you do not have a reason for why customers should prefer you, then you should not be surprised when customers choose not to patronize you. This is why I said recently that this is the most important question you need to ask in a planning process.

You cannot fulfill a purpose if you have no purpose. And if you have no purpose, then expect your strategy to fail. Without a purpose, you are like that lifeboat—adrift at sea, bouncing around wherever the waves take you. You will never make it to shore.

So the first thing to do is check if your strategy is built on a foundation of purpose—a reason for existing in the marketplace. Companies adrift never win. In the Booz survey, only one in five (21%) executives think their company has a "right to win" in all the markets it competes in. You cannot solve this problem until you give your customers a reason to want you to win—a purpose linked to their desires.

2) Your Goal is Too Vague
Now you may be saying, “Wait! I have a purpose. My goal is to provide great returns to my shareholders…or my goal is to grow sales at 20% per year…or my goal is to be a leader.”

These goals are no better than the goal in the story of wanting to “reach land.” It is too vague. Where is the land? Which direction do we need to go? What does it take to get there? What do we need to get there?

Vague goals like sales targets or return on investment are focused on the outcomes which benefit one’s self. They do not address how or why those results should occur (ignore the cause for those outcomes). The only way to get sustainable sales or profits or leadership is by pleasing the customer. Unless your goal addresses how you are specifically benefiting the customer, then there is no guidance in how to get those sales or profits or leadership. You are still adrift at sea.

Check your goals to see if they are specific enough around how you are going to please the customer. If the goal is too vague, then you probably have a lousy plan.

3) Your Tactics Are Poorly Aligned
In the story, everyone was paddling in a different direction. As we all know, if you want a boat to move efficiently in a singular direction, you need to have everyone paddling in that one direction. The same is true for tactics. If they are not aligned towards the purpose, it will never be reached.

According to the Booz study:

- Two thirds of the executives (67%) say their company's capabilities do not fully support the company's strategy and the way it creates value in the market.

- Almost two-thirds say their biggest frustration is "having too many conflicting priorities."

- 82% say that their growth initiatives lead to waste at least some of the time.

These survey answers would seem to indicate that there isn’t a lot of tactical alignment going on out there. Too many companies have too many paddles moving in too many directions.

No wonder these people don’t trust their strategy. It is having no meaningful impact on what people do. There are too many so-called “strategic initiatives” out there which aren’t properly linked to the big-picture purpose.

For a strategy to be effective, it needs to provide a focus to what people do. It needs to show what to do as well as what not to do. It needs to be a beacon light showing the way, so that everyone knows the direction in which to push their efforts.

And even more important, it needs to help prioritize what is to get done. It is impossible to be effective at simultaneously working on 20 different key strategic initiatives. That is too many. It will cause too many conflicting priorities. Most companies can only handle four or fewer key strategic initiatives at any given time.

Is your strategic planning process:

a) Getting everyone to move in the same direction (towards your purpose)?
b) Getting everyone focused on the same few top priorities?

If not, you may have a lousy plan.

If you are upset with your strategic planning, don’t blame the concept of doing planning. Instead, blame the lousy quality of the plan. Instead of rejecting the idea of doing planning, change your approach, so that you are producing quality plans. Signs that you may be producing lousy plans are a) lack of a clearly defined, customer-oriented purpose, b) too much vagueness, c) little connection between the purpose and the activities, and d) trying to do too many strategic initiatives at the same time.

If the plans are lousy, eventually the blame will shift from “what a lousy plan” to “what a lousy planner,” and the planner will find him or herself unemployed. Fix this before it is too late.

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