Svyatoslav Biryulin
Your strategy will fail
And this is not a disaster
According to Harvard Business Review, 60-90% of strategic plans never fully launch. Up to 90% of companies don't hit their long-term goals, and there is an opinion that businesses should resort to a short-term approach, be "agile," etc. But long-term thinking and planning are here to stay.
Why do we make plans and set goals? The most common answer is "to achieve results." Many education systems, from schools to MBA programs, teach us that means goal setting, planning and implementing. That's the process. And the number one indicator of the process's efficiency is the extent to which the objectives are achieved. For instance, C-suite incentive packages are often framed against accounting results. I call it the "business plan approach."
Why do we make plans and set goals? The most common answer is "to achieve results." Many education systems, from schools to MBA programs, teach us that means goal setting, planning and implementing. That's the process. And the number one indicator of the process's efficiency is the extent to which the objectives are achieved. For instance, C-suite incentive packages are often framed against accounting results. I call it the "business plan approach."
But this concept conflicts with two trendy ideas one can find in numerous articles and books on business:
1. The future is unpredictable. Every futurist and foresight practitioner will tell you so, and life itself proves it.
2. The world is in constant change. Visionaries and strategic thinkers do not tire of reminding us that we live in a VUCA, BANI, or even TUNA world (the term was introduced by the Oxford University professors).
To make it worse, a company's executives are not only passive observers of the change process - they are active actors. Every move a company makes influences the situation in the market, speeding up changes. So, it may seem that we live in a chaotic environment in which the "business plan approach," based on future forecasts, looks like a naïve attempt to order chaos, like an example of wishful thinking.
Moreover, business planning doesn't seem natural for us humans. Do you plan your life the way you plan your business activity? I have never met a person using massive Microsoft Excel sheets with figures and calculations to live their lives. But companies are run by humans, and business is an integral part of life, so why use methods we don't employ anywhere else?
But all of the above are not reasons not to plan at all
The difference between life and business is that a firm is managed by many different people, so to make it prosperous we need to coordinate their actions. Strategy is, first and foremost, an agreement between the governing process participants. Without it, there will be chaos inside an organization, and, being amplified by chaos outside of it, it will lead it to collapse. So, we need a strategy as a group discussion about the possible futures and how the company should move forward.
The discussion itself is more important than its possible outcomes. Strategic debates help unleash participants' creativity and find new fruitful ideas.
1. The future is unpredictable. Every futurist and foresight practitioner will tell you so, and life itself proves it.
2. The world is in constant change. Visionaries and strategic thinkers do not tire of reminding us that we live in a VUCA, BANI, or even TUNA world (the term was introduced by the Oxford University professors).
To make it worse, a company's executives are not only passive observers of the change process - they are active actors. Every move a company makes influences the situation in the market, speeding up changes. So, it may seem that we live in a chaotic environment in which the "business plan approach," based on future forecasts, looks like a naïve attempt to order chaos, like an example of wishful thinking.
Moreover, business planning doesn't seem natural for us humans. Do you plan your life the way you plan your business activity? I have never met a person using massive Microsoft Excel sheets with figures and calculations to live their lives. But companies are run by humans, and business is an integral part of life, so why use methods we don't employ anywhere else?
But all of the above are not reasons not to plan at all
The difference between life and business is that a firm is managed by many different people, so to make it prosperous we need to coordinate their actions. Strategy is, first and foremost, an agreement between the governing process participants. Without it, there will be chaos inside an organization, and, being amplified by chaos outside of it, it will lead it to collapse. So, we need a strategy as a group discussion about the possible futures and how the company should move forward.
The discussion itself is more important than its possible outcomes. Strategic debates help unleash participants' creativity and find new fruitful ideas.
Long-term goals are not the points in the future where we must be someday; they are directions in which we agree to move together. That's why setting rigid SMART-style strategic goals may be dangerous.
If a company doesn't reach its long-term objectives, it is not a reason to blame the team or to lay off a CEO. Deviations and mistakes are the sources of valuable information. If the future is uncertain (and it is), there is no way to guarantee that a firm can reach its long-term goals.
Take strategy as an experiment with unpredictable results. Of course, you need plans and objectives to allocate resources effectively and to motivate the crew members, but don't take them too seriously. Strategic planning is not a process to which you devote your time once a year, and that is separated from implementation. It is an ongoing procedure of collective thinking and decision-making.
Subscribe to this publication to read more stories on strategy and foresight. Follow me on Twitter or LinkedIn. Watch the video versions of these stories on YouTube.
If a company doesn't reach its long-term objectives, it is not a reason to blame the team or to lay off a CEO. Deviations and mistakes are the sources of valuable information. If the future is uncertain (and it is), there is no way to guarantee that a firm can reach its long-term goals.
Take strategy as an experiment with unpredictable results. Of course, you need plans and objectives to allocate resources effectively and to motivate the crew members, but don't take them too seriously. Strategic planning is not a process to which you devote your time once a year, and that is separated from implementation. It is an ongoing procedure of collective thinking and decision-making.
Subscribe to this publication to read more stories on strategy and foresight. Follow me on Twitter or LinkedIn. Watch the video versions of these stories on YouTube.