The Strategic Planning Process: A Practical Guide

May 1, 2019 Tim Gallagher

strategic planning process

Hundreds of management books have been written about great strategy. Far less attention has been paid to the task of running a great strategic planning process, and hardly anything could be considered a “how-to” guide for practitioners.

In this article, I’ll leverage my work helping organizations build successful strategies—from Fortune 100 companies to governments to large not-for-profits—to outline important ingredients for success as well as pitfalls to avoid. If the task of creating a strategic plan is in your lap, read these strategic planning best practices to make sure that it delivers the perspective and the insights your business needs.

The Strategic Planning Process: Whose Strategy Is It, Anyway?

During strategic planning, there’s often more emphasis on process than on the quality of strategic thinking. The results are predictable: plans that are collections of relatively bland initiatives that include lots of details that soon become irrelevant. The problem is in the process itself: like the cheese that contains no cheese, many strategy planning processes don’t actually include any real strategic planning.

Winston Churchill was famously credited as saying “Plans are useless, but planning is invaluable.” The most important end-product of a good strategic planning process isn’t the plan on paper—it’s developing a powerful new perspective on the business. It’s the quality of that perspective that fosters bold, on-target initiatives and helps ensure that, if future conditions change, the strategy can be readily and smartly revised. But how can you make sure that your planning process is fostering something as intangible—and hard to quantify—as a powerful new perspective?

The most important end-product of a good strategic planning process isn’t the plan on paper—it’s developing a powerful new perspective on the business.

Much of the answer lies in the kinds of discussions you’re having as you build the plan. First, make sure you’re analyzing performance metrics openly and without bias. We all have a tendency to focus on things that confirm our existing beliefs and dismiss things that don’t fit the pattern. That tendency becomes amplified in an organizational context. Analyses are often cut in ways that bury the data that offers novel insight, by individuals who are more eager to show conventional patterns than surprises. Make sure you’re having conversations that encourage people to come forward with data that doesn’t fit the pattern and propose novel explanations. Second, make sure you’re pushing people to engage in the kind of hypothetical, “if-this-then-what” discussions that lead to real strategy. “If we do X, our competitor will likely respond with Y or Z, and then we’ll need to be ready to do A or B.” Strategic planning conversations often stop at the “If we do X” step. But the questions that follow are the ones that will lead to a conversation that’s actually about strategy.

The design of the overall strategic planning process is also important. Many organizations follow a regimented, one-way stepwise process when they do strategic planning. Often, the process starts with some kind of situation analysis, and then proceeds to setting goals, designing initiatives, and planning implementation. This is followed by a long phase of strategy execution. It’s a “point, close-your-eyes, and shoot” formula that seldom leads to breakthrough strategies. There are often no real validation steps in the planning phase, no plan B’s, or even future decision points. The focus is on reaching maximum closure and forcing alignment around a single path forward. I’ve seen strategic plans created via these kinds of processes rendered useless within weeks of completion by a single, unexpected change in the marketplace. Often, they required months of effort and hundreds of hours of senior management time to create.

Here are a few indications that your strategic planning process needs to be more strategic:
  1. We invest a lot of time in strategic planning, but we don’t feel we consistently get the kind of breakthrough thinking we’d like.
  2. When breakthrough opportunities do surface, they typically do so outside the formal planning process.
  3. Our plans seem to quickly become outmoded, and we invest a lot of time in planning details that are never executed.
  4. We often critique ourselves for not thinking or acting “strategically enough.”

Strategic Planning Best Practices

Here are five breakthrough strategic planning best practices to keep in mind the next time you’re launching into strat planning mode:

1. Rethink what it means to be “done” with the strategic plan.

In many organizations, strategic planning is approached as a task with a single deliverable at the end. There is a wealth of management literature about how startups find their way by continuously running experiments and refining their approach to the marketplace. Much of that insight is directly relevant to strategic planning in large, established organizations. Aim for a strategic plan that’s less about hard-wiring and up-front decisions—and more about defining a set of experiments that you’ll run, identifying multiple potential paths forward, and specifying the trigger-points that will tee up future decisions and actions at appropriate times.

2. Don’t ever let yourself say “we’re past that step.”

Nobody likes to reopen a can of worms, but it’s important to keep in mind that the ultimate goal of strategic planning is not following a neat, stage-gate process and finishing on time. If your process is too stepwise and one-way—if, for example, you aim to do all of your situation analysis or initiative scoping up front—you’re likely to neglect insights that emerge at later stages. Include several loop-back points in your planning process, and prepare your team—who may be expecting a very linear progression—to expect them. Encourage participants to bring new opportunities and salient information to the table at any time, not just at the “appropriate” step in the process.

3. Create more opportunities for true strategic thinking—particularly structured discussions around scenarios and second-order moves.

Good planning doesn’t stop at “We will do X.” It goes at least as far as “If we do X, the market may do Y or Z, and we should be ready to do A or B.” Assume every action you take triggers a change in your competitor’s strategy or market ecosystem, and your response to that reaction needs to be as well thought-out as your initial move. Make sure the richness of that thinking is captured in the plan documentation so that you can leverage it as conditions change.

4. Reward a different kind of accountability than just hitting milestones defined up-front.

Having actions, milestones, and targets set forth in strategic plan creates easy marching orders. But strategic plans that are excessively hard-wired often put initiative owners in the unwinnable and demoralizing position of being asked to march down a path that’s no longer in sync with the realities they’re facing. Or worse, they follow the plan blindly, regardless of the consequences. If feet are dragging or deadlines are being missed, have a way to assess whether the problem is in execution or the strategy itself—and, if it’s the latter, develop a process whereby the strategy can be readily and openly revised.

5. Be ready to halt a strategy that’s no longer working, and do it with as much fanfare as you gave the strategy when it launched.

Often, defunct strategies are just put out to pasture, where they continue to consume resources, or initiatives are refocused to try and preserve a sense of continuity. (“We don’t want to change the name of the initiative, because we spent so much time debating it.”) In my experience, the internal confusion created by these approaches is far greater than just hitting stop and getting to work on a new strategy. That means having a standing group that’s actively monitoring the strategy and is empowered to hit the stop button—hard, if necessary.

This post first appeared at Portola Advisors.

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About the Author

Tim Gallagher

Tim Gallagher helps companies create strategies and build operational capabilities. A former Partner with McKinsey & Company, he has worked in a wide range of industries, including airlines, business services, electronics, consumer products, and manufacturing.

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