Posted by Lancing Farrell
This is the sixth post in a series. Michael Mankins and Richard Steele propose an alternative model of strategic planning. They believe that strategic planning can’t influence organisation performance if it doesn’t drive decision making. And it can’t drive organisational decision making while it is focussed on individual business units and limited to an annual planning process. They describe some of the changes that organisations can make to their strategic planning to produce more, better and faster decisions.
They separate – but integrate – decision making and planning. Decisions are taken out of the planning process into a parallel process for developing strategy. Executives can identify the decisions that they need to make to create more value over time. The output of this process is a set of decision that management can codify into future business plans through the planning process.
|Planning process||Strategy process|
|Creates business plans||Creates business strategy|
|Driven by managers and business units||Driven by executives corporately|
Mankins and Steele emphasise that making decisions is different to creating, monitoring and updating a strategic plan.
The focus is on a few key themes. High performing organisations focus their strategy discussions on a limited number of important issues or themes. The focus on themes instead of the business unit better aligns strategy development with decision making. It avoids discussions becoming stuck in the detail of each business unit’s strategy. The business unit managers remain involved in corporate strategic planning that affects their business unit. The focus becomes ‘what can the organisation dot o address each strategic theme’, rather than individual business unit strategies.
They make strategy development continuous. Strategy reviews are spread throughout the year instead of being squeezed into a 2 or 3 month window. Executives can focus on one issue at a time until they reach a decision or set of decisions. Managers can add issues. A single strategic decision making process is driving decision making across the organisation. Having one strategic planning processes will provide rigour and consistency, and reduce conflict and wasted effort.
They structure strategy reviews to produce real decisions. Mankins and Steele believe that the most common obstacle to decision making is disagreement amongst executives over past decisions, alternatives and the facts. Strategy review sessions need to be structured to overcome these problems.
For example, one organisation developed a process to address each strategy issue in two sessions of a half day each. The first half day is spent agreeing on facts. The second half day explores alternative courses of action and evaluating them to choose the best course of action. Strategy reviews have ceased to be a review and approval of a strategic plan; instead many important decisions are made.
The table below compares traditional planning with continuous, decisions-oriented planning proposed by Mankins and Steele.
|Traditional planning||Continuous, decision-oriented planning|
|1. Develop a strategy plan for each business unit at one time during the year.||1. The whole organisation identifies the most important strategic priorities (issues can be added to the list at any time).|
|2. Business unit plans are then used to budget and bid for capital.||2. Executive ‘dialogues’ are spread throughout the year to reach decisions on as many issues as possible.|
|3. Business unit plans are finalised after budget adoption and the executive then signs off on the plans, their KPI’s, budgets, and staffing.||3. Task forces are set up to prepare information on cross-functional issues to guide executive ‘dialogues’.|
|4. Once decisions are made the budget and capital program are updated.|
|The result is an approved but potentially unrealistic (and disconnected from actual organisational strategy) plan for each business unit.||The result is a concrete plan to address each issue. Each business unit has a continuously updated budget and capital program linked to implementing the decisions reached on critical strategic issues.|
Mankins, Michael and Steele, Richard 2006. ‘Stop making plans, start making strategy’, Harvard Business Review, January.