Realizing ROI in Strategy Planning
The Harvard Business Review puts the ROI of traditional strategic planning at 34% or less.
Several surveys of top executives indicate that only 19% of strategic plans achieve their objectives and only 25% of them are motivated by the plans they create.
In many companies strategic planning has become a modern day version of the proverbial emperor and his clothes. The value and impact on performance is often just not there, yet every enterprise needs some kind of plan for the future. Otherwise the company, its shareholders, employees, and customers will find themselves floating aimlessly in the competitive seas being thrown this way and that by various forces and events with no destination and no control.
From our work over the last 25 years with thousands of companies around the world, as well as our study in academic institutions such as The Wharton School, Columbia Business School, and the U.S. Air Force Academy, we have concluded that common approaches to strategic planning will never be satisfactory because they are based on a faulty premise: the future can be determined by present (and past) conditions and that our path to the future can be controlled.
Any executive will recognize that in practice this presumption is false. In fact, there is often a gap between the conclusions drawn from the analysis of the past and present, and the way reality behaves. All sorts of unexpected events, occurrences, and dynamics will unfold as an enterprise moves forward rendering these conclusions as moot or even misleading.
As indicated in a Wall Street Journal article in January 2010:
“During the recession, as business forecasts based on seemingly plausible swings in sales smacked up against reality, executives discovered that strategic planning doesn’t always work…”
How does an enterprise chart its own course and win on an uncertain-ever-changing competitive landscape?
Insigniam offers a Strategic Frame as a highly effective method for establishing and executing strategic direction for an enterprise.
With a Strategic Frame the executives, and employees, are aligned on the direction and ambitions for the enterprise as well as key competitive weapons and trends to monitor, without being tied to a fixed, linear path. As reality unfolds the frame gives the enterprise a lens from which to view the real-world competitive dynamics and quickly make choices and decisions for the near and long-term.
In building this frame the enterprise answers key questions:
- What is our purpose?
- What is the business in which we are engaged?
- What is our ambition? What are our interim goals?
- What promises must we keep to specific stakeholders as we pursue our purpose and ambition?
- What trends, beliefs, and perspectives are we betting our future on? How will we monitor these?
- What are our assets and investment level for these assets?
- What are our competitive weapons?
The result is a frame that allows for powerful and appropriate choices and decisions at every level of the enterprise (usually on a yearly basis in an operating plan, but sometimes as quickly as an immediate response) as the future emerges, thereby allowing the enterprise to accomplish its objectives while navigating changing seas.
Global 500 Food Company—Dramatic Growth
A Latin American division of a European food company brought six distinct and independent country business units, each in a different stage of growth, together to create a growth engine for the global business. The division delivered double-digit growth by using the strategic frame to simultaneously empower each country while also identifying where optimization could be found in sharing resources.
High Tech Company—Capturing New Markets, Building New Business Models
A fast-growing division of a Global 200 technology company had an imperative to diversify and open up new, unconventional markets to establish a new growth platform for the company. Using the development of a strategic frame they we able to breakdown silos, rethink the business model, and create an aggressively aligned thrust for growth in an extremely competitive market. The immediate execution of several projects as a result of managing through the frame delivered sales results significantly ahead of the original business plan.