The Futures Group conducts regular surveys of the ways that companies do strategic planning. The following are from a study of theirs released in September 1998.
The survey was based on telephone interviews with senior planning, marketing, or operations executives at 102 United States companies. These are fairly large companies. Forty-five percent had annual revenues in excess of a billion dollars.
The Futures Group found that the executives spent less than half of their planning time evaluating external factors such as potential new markets, competitive situations, regulatory constraints, legislative action, sociological change, etc.
As a group, the executives were uneasy about forecasting performance beyond a two year time horizon. Here are the techniques they used to develop their plans.
- 80% percent used financial forecasting
- 75% used trend analysis
- 72% used competitive intelligence
- 71% use brainstorming
- 64% used scenarios
Big company or small, there's an incredible amount of pressure, amplified by simple human tendencies, to look inside rather than outside.
The power of good strategic planning, though, comes from a solid basis in agreement on vision and values, and then rigorous and continuing analysis of what's going on both inside and outside the company. Because it's natural for you to look inside more than outside, you'll find that you have to take special efforts to look at what's going on at the boundary of its company and its markets.
This awareness building has to happen in three consistent ways.
First, there need to be regular visits to the front lines. The people most aware of what's going on in the market tend to be your people who are out there touching it everyday. That can include field sales force, but it also includes your people who answer the phone, handle customer service issues, and follow up on support. Anybody in your company who deals directly with customers or prospects should have their say about what's going on out there.
Second, there needs to be some kind of formal intelligence gathering function. The object of business intelligence is to gather information that can be used to have an impact on strategic decisions. That means getting enough information, sorting out the important stuff, and providing some analysis for action.
Third, every key manager needs to have a good information discipline for scanning the environment. Here are some suggestions for things you should be checking.
The Wall Street Journal and a good national newspaper such as the New York Times need to be scanned and checked daily.
Key business magazines need to be checked according to the frequency of their publication. Fortune and Business Week are a necessity for US Managers because they help define the current thinking. The Economist is a great choice because of its depth, erudition, and its international perspective.
Regular internal performance measures need to be scanned daily, weekly, and monthly. In all the businesses I've worked with, there are generally two or three no more than four key indicators of how things are going. My rule for executives that I work with on an individual basis is that you should be able to gather your critical information and do some quick analysis in less than 15 minutes a day.
Scan the critical trade press for your business or industry. These days you can do a lot of that, as well as the scanning we've talked about above using online sources.
Use one of the many tracking or alert services to keep you up on key issues. If you're using the Interactive Wall Street Journal, make use of the personal journal feature. There are also several free and fee-based services that do this.
TIP: Here's one more tip one folks I've worked with really like. When you get a print version of a trade magazine, trot off to the copy machine and burn a copy of the table of contents. Then, put that copy in a binder or folder that you keep near you. Take the actual magazine and put it in a file where you and other people can find it. The rule is, if people want to look at an article from a magazine, they copy it and put the magazine back, they don't take the magazine.
Here's how to use that binder or folder. When you're on hold, when you're waiting in line someplace, when you're riding in the van from the airport to your hotel, look through what's in the binder. That will give you a good general scan of industry issues.
You can also use the binder as a great resource when you have a particular problem to solve. Before you go anywhere else, browse through the tables of contents to see if anyone has dealt with the issue that you're facing. Most likely someone has and there's an article in the trade magazine about it.
Now, some of you will be tempted to try to turn this into a massive electronic database, knowledge management, searchable index, system. Don't.
The reason the binder/folder system works is because it's simple and it depends on the information processing power of your brain, not some computer that might not be around when you want it. The basic problem with elaborate indexing schemes in most situations is that the information you want doesn't get into the system in the first place, or the indexing system doesn't index the way everybody thinks. Keep it simple and you'll keep it effective.
This article originally appeared in Wally Bock's Briefing Memo newsletter in 1998.
Reviewed: 2/15/03
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