The end of strategic planning?

by Didier Marlier on Saturday July 13th, 2013

The Belgian professor and consultant, Nick van Heck, likes to say, in a purposefully provocative manner that “Disruptions do not exist. They are only an excuse for the unprepared”. For him, leaders need to challenge their assumptions about what strategy and planning are about and how they are structured. He continues: “Strategy should not be about guessing the future but preparing for whatever may be!” I support this way of thinking.

At the beginning of the 1980’, the US futurologist, Alvin Toffler, divided the history of humanity in three large “waves”. The first wave (8000 B.C. – 1750 AD) was characterized by a first revolution: the move from nomadism to sedentarism, through agriculture. The second wave was to be the one of industrialization and lasted, approximately until the mid-1950’s. And that is when the third wave (the title of one of Tofflers’ most famous books) slowly appeared. It would be the one of knowledge.

In that era, some 20 years ago, we saw emerge a technological invention that would profoundly impact the fate of humanity: the internet. Considered today already as one of the invention which will most profoundly affect mankind, it is often compared to the revolutionary mobile printing press of Gutenberg, created more than 550 years ago.

The globalization trend accelerated numerous cultural and economic changes, until the 2008 financial crisis blew the whistle on the aging “financial capitalism” model. As we see today, this crisis has not been resolved and threatens to propagate in an uncontrolled manner again, at any time. It has profoundly shaken the foundations of traditional economies such as the one of the United States or Europe. But since, a wind of change has blown on some of the Muslim countries of North Africa, Iran, But also Russia, China and, very recently in Brazil with the spectacular street demonstrations in the whole country about bus fare increase (hiding in reality something far less mundane: the anger of people against their political class) or Turkey as another example… All of those countries are going through a real “Values crisis”, taking many people to rethink and re-invent another type of capitalism, such as Umair Haque and his “Authentic Capitalism”.

The book Wikinomics: How mass collaboration changes everything (by Tapscott and Williams) elaborates on the consequences of the open source phenomenon on the business world. Following the authors, we see today a new kind of economy flourishing, which blends capitalism, a return to strong values and a new component: the Open Source phenomenon. The Disruption Economy is a blend of these components and we have entered that era.

Disruptions happen very fast and increasingly often, without any warning. Take Kodak for example. It took it years to eliminate the old tripod model. It took far less time to Nokia and its fellows mobile phone makers to kill Kodak when they were not into the picturing business at all and Kodak was simply a collateral damage in the war that was raging between them which has as a consequence that cameras were added as gadgets on their smartphones. And it took Apple four years to completely destroy Nokia’s almighty Symbian Operating System, forcing the Finnish giant to an alliance with Microsoft.

Is strategic planning dead?

In times of acceleration, when radical technology transformation meets globalization, does the traditional strategic planning still mean a thing? How can long term planning (such as the defunct ten years long term plans from Stalin)still be of help in times when agility, velocity, permanently updated knowledge, experimentation, risk taking become the new virtues?

The preparation of our organizations to strive in an environment where disruptions can happen anytime, has to happen at three levels: Strategy, organization and leardership. The British professor, David Snowden, creator of the Cynefin model, explains that the context, with which leaders have to deal, has changed quite considerably:

Following Snowden, we will continue to evolve and lead in “simple contexts” where causes can relatively easily be identified and their effects predicted in a rather linear and certainty based manner. In “complicated contexts” where the cause and effect are also linear and predictable, the explanation of the phenomenon is however more difficult and sophisticated to understand and analyze. It therefore requires the intervention of a specialist or an expert. This has been the world in which we have grown, for which we have been trained, as much at university than in our own organizations. And this world, this leadership context will continue to exist and we need to continue to prepare ourselves and develop our people to decide and lead under such circumstances.

However, in the Disruption Economy, where almost anything may happen in an unexpected manner, we realize that the previous ways of predicting and preparing a strategy are challenged by leadership contexts which are increasingly complex and chaotic. Under such circumstances, the leader should not pretend to being more knowledgeable than the rest of their people. On the opposite, leaders need to let go of the illusion (sometimes fed by their own ego but more often maintained by the mass of their subordinates, too happy to hide behind that excuse) that their license to operate is their superior knowledge. And this is precisely why, in this new context, leaders should not risk themselves in “guessing the future”, based on their experience and know-how. Leaders, in the complex and chaotic contexts, need to observe, understand the emerging trends and accept the idea of failing or committing mistakes at least.

The traditional and orthodox strategic planning does not combine very well with the leadership style needed to strive in the “Disruption Economy. A leader who “guesses the future” relies on strategic planning. But leaders, who “prepare their organizations for whatever future might happen”, use a different process called “Strategize”.

Strategy is a document, a painting made at a specific moment by an elite, too often remote from a certain part of the reality, from the day to day of operations and of the market, called top management. Under simple & complicated contexts, creating that picture by guessing the future, continues to be that elite’s “raison d’être”. But when the world turns out to be complex or chaotic, an agile and proactive organization becomes a must. This is when “strategize” becomes important: Instead of depending on a leadership team doing its homework every two or three years by re-guessing the future and depicting it, the “strategize process” keeps the whole organization constantly awake and engaged into the business. The main features of that process are the creation of a collective enablement, intelligence and development.

Enablement Process: Strategizing suggests that all, in the organization, sufficiently understand the business, its purpose and reason for being, its customers, its processes, the societal wave which it is meeting, its strategy and its ecosystem. Understanding this context, employees will behave and decide with a sense of ownership and remain attentive and curious about what could impact or present an opportunity for the organization to which they belong.

“Intelligentization Process”: Instead of remaining stuck with the orthodoxy that only the top management needs to know and decide about things, strategizing means to create, to innovate, to promote the collective I.Q. of the enterprise. Employees start to question and challenge themselves and their ways of working. They think of the future, not only during working time but at other moments as well. This does not happen because they suddenly became workaholics under pressure but because they are now intellectually and emotionally engaged. In our work, we often see a strong correlation between energy and clarity. With co-created strategic clarity, the motivation and entrepreneurship/ownership feeling of the employees is decupled.

Development Process: We probably all remember the metaphor that was frequently used in the 1980’s by the TQM specialists: A noble man was walking around his village and saw a few man working. They seemed disengaged and bored. He asked them: “What are you doing?” and the reply came: “As your majesty can see, we are carving stones”… Further he discovered other men working on a similar job but the energy was high, they had already erected several walls. He repeated his question and the answer was: “Majesty, we are building a cathedral”… Employees who understand how their work fits with the bigger and higher purpose and who can realign their own “Deep Intent” with the one of the company they work for, are far more engaged. Leaders will have to continue doing what is expected from them: planning and deciding on the strategy. But this will not be sufficient anymore in the Disruption Economy. The companies that will strive in that new environment will master the unique skill of having the whole organization “scanning the periphery”, thinking of the future, challenging current orthodoxies, etc… The process of strategizing also develops people.

A living organism

Does our body need strategic planning to keep us alive? The best analogy we found to describe the future of organizations in the Disruption Economy, is the human body. Tomorrow’s enterprises will be far more organic than organized. Following neuroscientists Antonio Damasio and Joseph Ledoux, the human brain receives on average 11 million bit of information per second but it only manages to consciously process… 50!!! This may be called “information overload” but our body still manages to strive and keep us alive and this, for several reasons:

Firstly, for the human body, “seniority does not mean superiority”. The brain is not the unique leader of our body as it is totally dependent on our heart which, in turn would not survive without the stomach, which can’t do much without the lungs etc… In an organic body, all organs are clearly interdependent and aligned behind one overarching purpose: to keep us alive.

Strategic planning depends on an old paradigm: “Plan and engage” instead of “Engage, then plan”. Andy Grove, the ex-C.E.O. of Intel used to explain that a frequent mistake for leaders was to believe that planning had to come first and then engagement. Engage then plan is linked to the concept of strategizing. To have a clear and shared sense of Purpose is critical for organizations to be able to engage and to ensure that people will adapt their own strategies to the company’s Deep Intent.

Another reason why the human body keeps us alive is that each organ received feedback permanently on how it is performing vis a vis the supreme goal (keeping us alive). Outdated organizations crippled by a heavy hierarchy and cumbersome bureaucracy do not have that level of transparency and openness… Whereas a team that constantly receives feedback on how ell it is positioned and supporting the common objective will “try harder” and constantly adapt. It is the consciousness of interdependence that makes the organs of the body react and realign quickly. Our brain certainly coordinates, allocates resources and takes decisions but it is the connectedness of our organs that ensures a fast and adapted reaction. In tomorrow’s organizations, if the silos, the ghettos and the poor connectivity between people and departments delay or slow down a generous sharing of information, inhibiting a rapid reply, those enterprises will rapidly fall behind. Politics, games of power and lack of trust have one cause in common: the lack of direct relation between the people.

So, is strategic planning a dinosaurian leftover? Probably not. As explained, the human brain will continue to fill in its objectives of coordination and decision making. But with a capacity of dealing with 50 information/second when the environment throws 11 million/second, our conscious brain needs help from the other organs. And if the rest of the body does not support, our whole system may soon fall into paralysis by analysis.

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10 Responses to “The end of strategic planning?”

  1. For me strategic planning has always been an oxymoron and to think about strategy and execution at the same time is silly. Strategy is simply the how we are going to get where we’re going It guides the decisions to get there
    I have been helping my clients to describe strategy in a sentence for years No matter what disruption such strategy can be changed. The key will always be the execution plan created and owned by the executors

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