The time from strategic planning to execution has shortened. Most industries have already come to recognise and accept the ever more rapidly changing environment they need to operate in. Many products and services have shorter lifecycles nowadays; hence a strategic plan written years ago has little relevance.
Most companies will therefore benefit from shorter planning cycles in order to respond faster to the changing needs of their customers, suppliers and other stakeholders. In practice, this translates into a need to revisit the set plans more frequently. With excessively long strategy review cycles, the worst case scenario is that companies will plan for a market that does not exist in the same format anymore, or will otherwise plan outdated solutions.
So what to do instead?
Instead of revisiting the set plan once a year after a burdensome, months-long financial analysis period, a more agile approach that allows for easy revisits is required. It is of utmost importance, therefore, that all assumptions put into the forecasts and planning are clearly documented. If these baseline assumptions no longer make sense, all plans will need to be changed accordingly. Any significant shift in the relevant markets should trigger a review of the assumptions. By definition, no-one can predict the “black swans” in the market, but there are often subtle trends and indicators that might become surprisingly important in a relatively short period. These can easily be overlooked, and hence the market should be reviewed with great sensitivity. This more rigorous market analysis might reveal opportunities that competitors have not yet seen.
This sounds like hard work, but there should be clear, short-term action plans on how to execute new ideas. The start-up communities’ approach of “failing fast” applies to any organisation in this regard, and could prove to be an effective way of quickly acting on new initiatives, testing them, and either implementing them or moving on. The key is to have strong leadership and a governance model that supports this. An agile planning culture is not quickly built and requires consistent effort and commitment from the management.
Keeping one’s eye on the ball
Although the set long-term goals and vision are still paramount, the plan on how to get there, i.e. the strategy, should be revised more often, mirroring the changing priorities in the markets. Moreover, the strategic documentation must be clear, easy to communicate, concise and measurable, as you need to be able to determine whether the set plans were met.
Execution is crucial for success
No matter how well the planning has been done, we all know that the ability to execute is what separates the wheat from the chaff. The true test comes when plans are put into action. This phase reveals whether the planned strategy actually works and how customers react to it – and customer feedback must be noted and acted upon, rather than blindly following preconceived views and expectations concerning the market reaction.
Business model plans only take you so far; the operational changes needed in organisational models, processes, IT solutions and so on, will reveal whether the organisation has the capabilities to execute the plan and what type of revisions are needed.