Your Strategic Plans Probably Aren’t Strategic, or Even Plans

Here is an excerpt from an article written by Graham Kenny for Harvard Business Review and the HBR Blog Network. To read the complete article, check out the wealth of free resources, obtain subscription information, and receive HBR email alerts, please click here.

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It happens all the time: A group of managers get together at a resort for two days to hammer out a “strategic plan.” Done and dusted, they all head home. But have they produced a plan with a strategy?

At the start of my public seminars on strategic planning I ask attendees, who rank from board members and CEOs to middle management, to write down an example of a strategy on a sheet of paper. They look at me quizzically at first as they realize that this is a tough assignment. I reassure them that this is indeed a hard question and they plow ahead.

The results are always astonishing to me and them. Here are some of the responses from the list I received at my most recent session: actions (“launch a new service”; “review our suitability to the retirement business”); activities (“marketing our products through the right channels”); objectives (“achieve $100m net revenue”) and broad descriptions of what goes on (“planning process from beginning to end of product”; “working for your stakeholders”).

Sorry folks, but not even one of these responses is a strategy.

Unfortunately, while C-suite executives talk “strategy,” they’re often confused about what it means. Why this confusion? The problem starts with the word itself — a scarily misunderstood concept in management and board circles. The most basic mix-up is between “objective,” “strategy,” and “action.” (I see this frequently in published strategic plans as well.) Grasp this, I tell my audience, and your day will be well spent.

An “objective” is something you’re trying to achieve — a marker of the success of the organization. At the other end of the spectrum is “action.” This occurs at the individual level — a level that managers are presented with day after day. So naturally when they think “strategy” they focus on what they do. But this isn’t strategy either. “Strategy” takes place between these two at the organization level and managers can’t “feel” that in the same way. It’s abstract. CEOs have an advantage here because only they have a total view of the organization.

The key to strategy is that it’s the positioning of one business against others — GM against Ford and Toyota, for example. What exactly is positioning? It’s placement on the strategic factors relevant to each key stakeholder group.

An organization exists as part of a system composed of transactions between itself and its key stakeholders such as customers, employees, suppliers and shareholders. Organizations differ in the detail of these sets, of course, depending on the complexity of the industry in which they’re located.

The task of a strategic planning team is to produce positions on these factors that deliver value to the organization’s key stakeholders and meet the objectives of the organization. Let’s go back to our seminar list and take one of the responses: “achieve $100m net revenue.” This is an objective, rather than a strategy. A strategy serves an objective by providing a position on the relevant strategic factors — in this case for customers.

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Here is a direct link to the complete article.

Graham Kenny is managing director of Strategic Factors, a Sydney-based consultancy that specializes in strategic planning and performance measurement, and president of Reinvent Australia, an organization that focuses on the nation’s future developmen

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