The Hackett Group has completed a comprehensive study of business planning. Here are some of the things that they found.
The average company invests more than 25,000 person days annually in strategic, tactical, and financial planning, reporting, and forecasting for every billion dollars of revenue.
The typical company gives only 42% of its managers and 27% of its employees access to a strategic plan.
The typical company budgets 230 line items.
Fifty-six percent of the companies say they develop strategic plans annually.
Fifty-eight percent of companies tie incentive compensation to strategic plan achievement.
Ninety-seven percent of companies tie compensation to financial planned results.
WALLY'S COMMENT ... I've been wondering for some time if planning as we've been doing it for the past 30 years or so is inappropriate to the current digital age. Let me suggest some shifts in thinking that may bring strategic planning more into our digital age.
Shift from long-term, pre-planning to an emphasis on flexibility. That means building information systems that scan inside and outside the organization and help managers and leaders recognize changing situations in a way that helps them deal with those situations effectively.
Shift from finance as the primary measure of plan effectiveness to finance as one of the measures of plan effectiveness. Financial measures were and are important, but they're not the only, or even the most important measure. Despite what I learned back in college from broad economic theory, we now have several good studies that indicate that the most profitable and long-lived organizations are financially conservative and treat financial measures as one among many of the measures of organizational effectiveness.
Shift from strategy as the key emphasis to doctrine as the key interest. This is a shift that's happened only in recent years among military strategic planners. Doctrine fits somewhere between mission statements and strategy development. It's a short, analytical, and prescriptive statement of who we are and what we do. Putting emphasis on doctrine means that strategy can be developed quickly and changed when situations demand it.
In line with the recommendation above, shift from single-point strategic planning to multi-point strategic planning. This goes hand and hand with greater flexibility and decentralized decision making. It also mandates that people be allowed to make decisions and given the information and other resources necessary to act on those decisions.
Finally, shift from a plan focus to a results focus. In most of the strategic planning I've experienced in my 30 plus years in business, the emphasis has been on the plan usually put up in one or several three-ringed binders rather than on the results. Results focused planning is likely to be more effective. It will use shorter cycles, and modify the plans based on the results.
I went looking for good websites on strategic planning, but I just didn't find any. The sites out there were either commercials for one planning system or seminar or other, or were sites made up of pointers to other sites. The evaluations on the pointer sites were horribly inaccurate. They would refer to "excellent resources," for example when all that was on the destination site was a single article, or label as "insightful" a pure piece of brochureware.
This article originally appeared in Wally Bock's Briefing Memo newsletter in March 1999.
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