The purpose of strategic planning can no longer be merely to generate plans.
Identifying the hallmarks of a strategic thinker is a rather difficult and some may argue an impossible exercise. The practice of strategy and strategic thinking is intrinsically linked. In the past 25 years we have come to think of strategy as an analytical problem to be solved. Most notably, strategy has been narrowed to a competitive game plan, divorcing it from a firm’s larger sense of purpose; the CEO’s unique role as arbiter and steward of strategy has been eclipsed; and the exaggerated emphasis on sustainable competitive advantage has drawn attention away from the fact that strategy must be a dynamic tool for guiding the development of a company over time.
Real strategy doesn’t just position a firm in its external landscape; it defines what a firm will be. Watching over strategy day in and day out is not only a CEO’s greatest responsibility. In an article in the Harvard business school back in the early 90’s an interesting study emerged. When they asked young men what they want to accomplish by the time they are 40, the answers you get fell into two distinct categories. There are those – the great majority – who will respond in terms of what they want to have. This is especially true of graduate students of business administration. There are some men, however, who will answer in terms of the kind of men they hope to be. According to the Harvard business review These are the only ones who have a clear idea of where they are going. The same is true of companies. For far too many companies, what little thinking goes on about the future is done primarily in money terms. There is nothing wrong with financial planning. There is a basic fallacy in confusing a financial plan with thinking about the kind of company you want
yours to become. It is like saying, “When I’m 40, I’m going to be rich.” It leaves too many basic questions unanswered. Rich in what way? Rich doing what? As thinking changes throughout a person’s life then so too does a business strategy, it changes and develops in an organization over time.
In most popular portrayals the strategist’s job would seem to be finished once a carefully articulated strategy has been made and implemented. Strategy is far more than that. Strategy can never be an unchanging plan that derives from an analytical, left-brain exercise. Where strategy becomes thinking is when an Organic process that is adaptive, holistic, and open-ended is undertaken. What has been missing for the last 25 years is viewing strategy as a dynamic process. No matter how compelling a strategy is, or how clearly defined, it is unlikely to be a sufficient guide for a firm that aspires to a long and sustainable life.
Ryanair provides a case in point. During its early years the Irish airline entered the market with full service priced at less than half the fares of British Airways and Aer Lingus. Ryanair’s leaders didn’t anticipate the ferocity with which its competitors would respond. When the resulting fare war brought Ryanair to its knees, its leaders didn’t simply urge the airline to try harder. They revamped the strategy and transformed the company into a no-frills player with a true low-cost business model. This involved changing the airline’s fleet as well as its cost, fare, and route structures.
The authors of this paper argue that strategic planning that guides discussion among managers at different levels can play an important role in stimulating the collective process for shaping the development of common goals and priorities, acting as a strong glue to align the organisation around a chief purpose.
Strategic planning is only useful if it supports strategic thinking and leads to strategic management – the basis for an effective organization. Strategic thinking means asking, “Are we doing the right thing?” Perhaps, more precisely, it means making that assessment using three key requirements about strategic thinking: a definite purpose be in mind; an understanding of the environment, particularly of the forces that affect or impede the fulfilment of that purpose; and creativity in developing effective responses to those forces. It follows, then, that strategic management is the application of strategic thinking to the job of leading an organization. but it does not attempt to make future decisions (Steiner, 1979). Strategic planning involves anticipating the future environment, but the decisions are made in the present. This means that over time, the organization must stay abreast of changes in order to make the best decisions it can at any given point – it must manage, as well as plan, strategically. Strategic planning has also been described as a tool – but it is not a substitute for the exercise of judgment by leadership. Ultimately, the leaders of any enterprise need to sit back and ask, and answer, “What are the most important issues to respond to?” and “How shall we respond?” Just as the hammer does not create the bookshelf, so the data analysis and decision-making tools of strategic planning do not make the organization work – they can only support the intuition, reasoning skills, and judgment that people bring to their organization.