Problems and barriers to strategic planning and proposals for solutions

Progress monitoring. PÜMPIN and GEILINGER (1988), ROTHSCHILD et al (2004), DELOITTE (2005), STRONG (2005) and DYE and SIBONY (2007) stress the importance of systems to measure and monitor the progress of strategic initiatives. Two methods to support these activities are “strategic campaigns” and a “metrics monitoring system”.

HAMBRICK and FREDRICKSON (2001) argue that the strategy should be a central and integrated concept; ROTHSCHILD et al (2004) specify this idea and recommend establishing strategic campaigns. To ensure strategy execution the strategy development should be combined with capital allocation. Strategic objective, funding and other measures will be bundled to a “strategic campaign”. These campaigns keep each and everyone focused on the important strategic objectives. Using this approach the organization funds only those campaigns, which have a high net present value and that support the chosen strategy. Major benefit is that executives can supervise a limited number of work streams without getting overwhelmed in detailed reports. By setting metrics and milestones for each single campaign as well as managing capital allocation and tracking outcomes, managers keep track of execution.

DYE and SIBONY (2007) highlight the importance of monitoring systems and present recommendations for metrics. According to them it is essential to track strategic measures not solely trough financial targets in most cases. Instead a variety of input metrics[1] should measure implementation success. Combining regular reviews with financial and non-financial metrics an organization can establish a “strategic-performance-management-system”[2] that assigns accountability for strategic initiatives and makes initiatives’ progress more transparent. Further benefits are to give an early warning of problems and to enable management to step in and correct or even stop a strategic initiative, which is failing to perform as expected.

In summary organisations can establish strategic campaigns and monitor their success with a strategic-performance-management-system.

Communication issues. As explained in the chapter before, communication of a strategy or the strategic plan might represent a problem, too. KOTTER (2000) suggests the following 7 key elements, which have to be addressed to ensure an effective communication of strategy[3]:

· Metaphor, analogy, and example: Visualisation makes the communication more effective.

· Multiple forums: The same message should be transferred by various vehicles to ensure that the message is being heard.

· Repetition: To ensure an understanding the message should be repeated several times.

· Leading by example: Behaviour is a powerful way to demonstrate a new direction.

· Explanation of apparent inconsistencies: If major elements of the strategy seem to be inconsistent they have to be explained explicitly.

· Give and take: Instead of one-way communication a two way communication should be preferred.

In summary it can be argued that establishing an appropriate communication approach can ensure that all employees understand the overall picture and their contribution to bring the new strategic plan to life. In order to achieve trust among employees it is also recommended to target on opinion leaders first, who can act as advocates for the new plan, based on informal communication structures.

4 The new strategic planning process

Most approaches to strategic planning put an emphasis in answering the question “What should the organization do?” The answer to this question is very important for an organization. However it does not ensure that the organization is enabled to create value and to make the right strategic decisions. Strategy execution and monitoring of success have been indentified as characteristic problem areas in organizational practice.

Putting the proposals into practice, which have been discussed in the previous chapter, the organization can address a more comprehensive set of issues related to fundament, execution and funding:

· Fundament. Why should the organization choose this way? What are the underlying assumptions, the tradeoffs, and the risks? How should the organization respond if one of these assumptions turns out to be flawed or changes?

· Execution. How does the organization do it? What are steps for implementation? Who is accountable for this process? How does the organization keep track of execution and success?

· Commitment. How can the organization achieve commitment among the management team and all employees? How can the organization inform employees?

· Funding. What will the outcome of the strategic planning cost in total? How will the organization fund the planning results? What is the expected return and will it meet the internal hurdle rates for return?

Taking into account the broad perspective for strategic planning and considering execution, monitoring and funding issues, the organization and its managers can gain a clear view of where they are going and why. They will also know how to monitor the progress and can assess the payoff. Monitoring of both market data and operational data against planning assumptions as well as sustaining organizational flexibility represents another field of strategic planning improvements. Due to consideration of capital allocation and funding issues it is also clear, which other critical corporate processes will be influenced from the strategic planning outcome. Summarizing and bundling this outcome in so called “strategic campaigns” or “strategic initiatives” helps the organization to focus and improves intra-organizational communication.

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[1] Note: Examples for those metrics are quality of available talent, number of ideas, and number and skills level of people within important strategic projects.

[2] Dye, Sibony (2007), page 46

[3] Compare Kotter (2000), page 90

4 The new strategic planning process