Strategic Planning Tools

There are many, many strategic planning and process tools which may be applied to the strategic planning process. I am a fan of the LinkedIn group "Corporate Planning & Global Industry Segmentation." Earlier this year there was a discussion about strategic planning tools and once everyone had weighed in, the following list was the result.

I have three observations about the list.

The first is "wow", this is a great resource. Strategic Scenarios has a toolbox of approximately 24 tools we apply to specific problem areas, but this is far more comprehensive.

The second is, "where is scenario planning?" If I were to prioritize strategic planning tools, there are a few that need to fall into the top five tools and these would be SWOT, Metrics, Scenario Planning, Alignment (Individual Action Planning) and resource planning. These are the tools that support the creation and execution of the organization's Mission, vision, values, objectives and strategies (the traditional elements of a strategic plan). Scenario planning adds to strategic planning in several ways:

1) It serves as a way to flesh out the objectives in such a way that the planning team can think more holistically about what strategies to apply.

2) It serves as an advanced risk management tool; by putting risks and opportunities into a story format and developing alternative scenarios in various risk situations.

3) The development of alternative scenarios keeps the organization from thinking that there is a single future reality. In fact, the future is unpredictable and scenario planning provides a way to plan for many alternative futures and be prepared for them.

4) Scenario planning serves as a "test" for the objectives and strategies set by the planning team. By playing out how the objectives and strategies will look in a story format, planners can perform "what-if" scenarios with business outcomes in narrative format, just like they can model financial results on an Excel spreadsheet.

5) Finally, scenarios help teams to break out of "the way we've been doing it in the past" and to challenge themselves with alternative futures that take advantage of opportunities. A good scenario development process will foster creative thinking and innovation within an organization and help them break out of the box of organizational inertia.

The third observation is that strategic planning tools are only as good as the people using them. Just like a carpenter knows which tools to use in which situations, and how to skillfully apply the tool to the construction process, strategic planners need to know which tools to apply and how to effectively apply them to achieve organizational performance. Applying too many or too few tools could result in less effective planning process.

◦ 23 Ps for strategy - see Rex Buckingham
◦ 5 Ps for strategy
◦ Ansoff matrix
◦ Art of Quantum Planning - see Gerald Harris
◦ Art of the Long View see Peter Schwartz (scenario planning)
◦ Art of War - see Sun Tzu
◦ B.C.G. matrix Analysis - see Boston Consulting Group
◦ Balanced Scorecard - see Robert S. Kaplan and David P. Norton
◦ Barriers and profitability
◦ Blue Ocean Strategy - see Prof W Chan Kim & Renée Mauborgne
◦ Chaos theory
◦ Competitive Advantage / Holistic Corporate Planning - see Porter
◦ Charting Your Company's Future by Kim & Mauborgne
◦ Company position / industry attractiveness screen
◦ Contrasting characteristics of upstream / downstream companies
◦ Crafting Strategy - see Henry Mintzberg
◦ Crossing the Chasm - see Geoffrey Moore
◦ Cultural web
◦ Discipline of Market Leaders - see Treacy/Wiersema
◦ Dynamics of paradigm change
◦ Enterprise Process Management
◦ EPISTEL - Environment, Political, Informatic, Social, Technological,
. . Economic and Legal
◦ Five Forces - see Michael Porter
◦ Force Field Analysis
◦ Four organizational cultures
◦ Four routes to strategic advantage
◦ GE-McKinsey matrix
◦ Geo-business model
◦ Integrated Business Planning using mathematical representations
◦ Integrated model of strategic management
◦ Leadership decision making model
◦ Management By Walking Around
◦ Mapping the Market, Segment by Segment
◦ McKinsey 7S Framework - see McKinsey & Company
◦ M-O-S-T
◦ Network analysis, PERT, CPA
◦ Nine Forces (Porter's Five Forces plus STEEP/PEST)
◦ Organic versus mechanistic management styles
◦ Patterns of strategic change
◦ PEST Analysis - Political, Economic, Social & Technolog'l analysis
◦ Porters Diamond
◦ Reengineering - see Michael Hammer and James Champy
◦ Related diversification grid
◦ Resource allocation at corporate level
◦ Spider Web Graphs
◦ STEER - Socio-cultural, Technological, Economic, Ecological &
. .Regulatory factors
◦ Strategic Game Board by McKinsey & Co
◦ Strategic triangle
◦ SWOT - Strengths, Weaknesses, Opportunities & Threats
◦ Third generation balanced scorecard
◦ Three Growth Horizons by Mehrdad Baghai
◦ Total Customer Service profit chain
◦ Total Quality Management (TQM)
◦ Toyota Management System / Production System (Hoshin Kanri)
◦ Value Chain models - see Michael Porter
◦ Winning in Fast Time - see Jack Warden

My strategy = your tactics

For all the use of the terms "strategy" and "tactics", there is a predictable debate about which are the strategies and which are the tactics. Using the dictionary to understand the meanings of these words will not likely help in this debate, because the dictionary will simply reinforce what we already believed these terms to mean, while leaving the specifics of our situation unaddressed.

How could two people, working in the same company, be unclear about which are the strategies and which are the tactics?

The answer is that the difference between strategy and tactics is a matter of perspective.

For example: Let's imagine a strategic planning session in which the CEO establishes an Objective for the organization that Knowledge Sharing should be formalized within the organization. The strategy, he says, will be to build a Knowledge Portal. From the CEO's point of view, AND from the point of view of the organization's strategic plan, the strategy is to build a Knowledge Portal. The Objective to formalize knowledge sharing is the "what" and the Strategy to build a Knowledge Portal is the "how". The CEO does not concern him/herself with the tactics of how the Knowledge Portal gets built and, appropriately, the tactics are assigned to the CIO.

The next day, the CIO meets with his/her team and says, "We have a new objective. We need to build a Knowledge Portal." What will our strategy be?" The team researches the options and decides that their strategy will be to build a Microsoft SharePoint Portal server. They develop a project plan with their tactics including acquisition of server hardware, training, software, installation, configuration, establishment of standards, etc. The CIO does not concern him/herself with the tactics of installing the software and, appropriately, the tactics are assigned to the Project Manager.

The Project Manager meets with his/her team and says our objective is to build a Microsoft SharePoint Portal site. He/she assigns a team member with the objective of acquiring a server. This team member's strategy will be to research the requirements for Microsoft SharePoint, anticipated storage needs, company standards, project budget guidelines, etc. , and submit a purchase order for the best machine that fits those criteria.

This food chain of objective, strategy and tactic is passed down the organization. The strategy at each level is the tactic of the level above. The same words are used and yet, they are applied to different actions. In a well run organization, each of these objective, strategy, tactic sets will be aligned with one another, so that the person with the screwdriver installing a box into a server rack understands how this task aligns with the CEO's objective to formalize knowledge sharing within the organization.

A comprehensive, performance based, strategic planning process understands this relativity of strategy and tactics. When we talk about an organization's strategies, we are always talking about the strategies at the organizational level. When we follow-up with the alignment and individual action planning phase of executing the strategic plan, each person's actions will fill out the chain from strategy to execution. The combination of strategy and tactics, with clearly measurable outcomes and well defined responsibilities is how an organization ensures that organizational objectives are successfully executed.

Gut vs. Analysis

I keep hearing that strategic planning is not necessary because you can just run things "from the gut". There may be something to that, in some circumstances, depending on what you mean by "from the gut."

If "from the gut" means that someone is planning in a non-formal process using many, many years of experience, using the same methods that they have used in the past, then this may be a satisfactory planning method, providing that nothing changes and the organization can continue with business as usual.

Malcolm Gladwell's "Outliers" describes how, after 10,000 hours of experience, someone gains sufficient expertise at something that they can begin to manage intuitively, without need for recourse to stodgy planning tools. Once someone has logged their 10,000 hours, then you might argue that they're not really planning "from the gut" at all, but rather through a synthesis of thousands or even millions of data points that they have experienced over that time. 10,000 hours of experience provides sufficient variation in situations that someone can recognize a wide variety of patterns and know what has resulted from a wide variety of actions.

There are (at least) three major problems with leading "from the gut".

The first is that those who lead from the gut rarely communicate their plans effectively throughout an organization. One of the benefits of a formal strategic planning process is that the strategies, tactics, measures and responsibilities are written down for all to see. When the plan is documented and clearly communicated throughout the organization, we're much more likely to see alignment in which everyone is working together towards common goals. The alternative is a relatively anarchistic environment with everyone pursuing their own version of "how we've done it in the past." This kind of haphazard leadership style may work in a smaller organization where "leadership by osmosis" can occur, but it will likely fail in a larger, more complex organization where everyone does not get direct access to the top leadership.

The second big problem with leading from the gut is that "stuff happens." There are impacts on the organization both from inside and outside that can wreak havoc with the casual plan. When planning from the gut, there is rarely a scenario planning exercise, risk analysis, alternative scenarios or research to understand leading indicators that would provide the organization with a warning when trends impact their industry either positively or negatively. This means that the casually run organization is both at a greater risk from outside forces, and also is less able to take advantage of new opportunities.

The third challenge with leading from the gut is that managing from the gut works well in situations where there is little complexity, but when organizations get bigger and where social, technological, environmental, economic or political changes are dynamic, the gut is no longer effective. There is simply too much complexity for even a genius with 10,000+ hours of experience to synthesize informally. Unfortunately some managers get away with managing from the gut for a long time and therefore believe that it will continue to serve them well in the future. As situations become increasingly complex, the gut approach ultimately fails, collapsing under the weight of unanticipated outcomes.

Those who manage from the gut may have been successful using this methodology in the past, but ultimately it is a lazy and ineffective way of managing and leading an organization. Utilizing a formalized system that both takes advantage of the leaders' experience and also follows a process that includes communication, alignment, consideration of risks and alternative scenarios, and clearly documents responsibilities and measures of success will win out over the gut system. Surveys show that companies that use a formalized strategic planning process are 70% more successful than those who do not.