Strategic Planning as an Organizational Learning Model

Strategy, and more to the point, the execution of strategy, is often a tremendously complex undertaking.

The standard list of “problems” identified with strategic planning include:

• about 40% of strategic plans fail or are not implemented;
• a high percentage of workers and lower-level managers poorly understand the strategy;
• strategic planning is a slow, laborious process requiring an enormous amount of time and effort;
• most strategic plans are relatively devoid of real innovation; and,
• most strategic planning efforts fail to eliminate common points of failure.

So those who are deeply involved in strategic planning and development must clearly understand that their work is only beginning when the documents are sent to the printer.  The real work is in crafting a reality from the essence of the strategic plan.

Planning is Everything

One of my favourite planning anecdotes comes from General Dwight D. Eisenhower – architect of the D-Day invasion – “Plans are nothing; planning is everything.”

For me, this simple statement gets to the heart of strategy-making and planning because the planning process is essentially about learning. Let’s face it; we are not endowed with the ability to see the future in any definitive way.  About the best we can do is to develop hunches.

In the end, plans are nothing more than various scenarios or hunches of what we believe the future will hold – and what preparations we can make to deal with it.

See Strategic Planning as an Organizational Learning Model

One way to learn of the failures in strategic plan execution in your own organization is to “see” them as “disconnects” within the organization’s business model itself. The following simplified Nadler-Tushman congruence model (pdf) provides a convenient lens to visualize this idea.

In brief, your ability to achieve your strategy is driven by the degree of “congruence” the plan achieves with the inner workings of the organization. In the end, your Performance outcomes determine the robustness of the strategic plan.

Using this congruency lens is a useful test to identify potential causes of failure in implementation.

Strategy-Making Congruency

Let’s take a look at some of the typical problems of non-congruence between the strategy (INPUTS) and the Culture, Structure, People, Work (PROCESS) to illustrate the learning that might be possible.

1. It takes too long.
   This issue is the bane of strategic planning in most organizations. While it takes time to craft an effective strategy, it’s important that it not morph into a long bureaucratic process that doesn’t reflect the natural rhythms of the business model, demands inordinate effort, and the relevance of which is not fathomable to large swaths of people in the organizati
   
   In contrast, a rapid cycle collaborative planning process enables us to test, and to apply learning to improve our hunches, refine implementation approaches, and reduce risk.
    
2. Too many strategic goals and too few measures.
   Too many goals lead to a lack of focus, spread resources too thinly, and jeopardize outcomes.
   
   Establishing measurable outcomes for strategic goals is a healthy and necessary discipline. After all, if you can’t “see” the outcome in concrete terms, how will you know when you reach it? Implementation against measures motivates and improves engagement and learning.
   
   If there is a real need for a broad range of goals, be certain that you identify the critical outcome measures to provide guideposts to implementation.
    
3. Cyclical and seasonal peaks and valleys overlooked.
   Business cycles refer to peaks and valleys within the firm, within the industry, and within the broader economy. This is a major risk in our globalized world, and failing to understand how the cycles affect you organization’s strategic goals can lead to major disconnects and even failure.
   
   Again, a rapid strategic planning cycle and implementation approach dramatically improves organizational nimbleness and captures the best knowledge resident in the organization.
    
4. Communicating the plan is not effective.
   The aim is to disseminate the executive vision throughout the firm so that employees will be energized and empowered to make it so.
   
   An effective approach is to convert the strategic goals into operational statements of action that the organizational components, stakeholders and partners can embrace and enact.

These difficulties help explain why scenario planning – vignettes of potential future outcomes – is once again becoming popular. Scenario planning provides useful learning paths to guide planners and managers alike when the “what if” becomes “oh s#*t”.

Work, Culture, Structure, and People Congruency

The congruency of work, people, organization, and culture is about aligning with the planned strategic outcomes – and secondly with each other. At the risk of over-simplifying a complex topic, I find the following alignment & conflict management areas pivotal to finding success with a new strategy.

1. Align operational planning with strategic goals
   Experience shows us that operational planning and metrics are critical to informing the strategy formulation process. For example, you can test the feasibility of various strategy scenarios by clarifying precisely what is intended by a particular strategy, while also ensuring that employees understand the importance of their contribution to specific goals.
   
   If “operations” are not brought into the strategic planning process, there will be a lot of catching up to do. Frequently, the strategic plan leaves too much room for interpretation, and employees are not aware of strategic goals as they relate to day-to-day duties. Sometimes a challenging new strategy calls for a serious re-assessment of culture and people engagement – with the accompanying training. 
    
2. Typical Culture and People Problems through a Learning Lens
   For example, a business strategy that calls for competing on quality requires active cultivation of a “quality culture” within the organization. Nurturing a quality culture will require a complementary array of quality values, standards, methodologies, and recruiting and training of managers and employees. A strategy anchored in quality outcomes without an appropriate quality culture is unlikely to be very successful.
   

   The Real Reasons Behind the Kodak Downfall

   Answer: The organization overflowed with complacency. Kodak was failing to keep up even before the digital revolution when Fuji started doing a better job with the old technology, the roll-film business. With the complacency so rock-solid, and no one at the top even devoting their priorities toward turning that problem into a huge urgency around a huge opportunity, of course they went nowhere. Of course strategy sessions with the BIG CEO went nowhere. Of course all the people buried in the hierarchy who saw the oncoming problems and had ideas for solutions made no progress. Their bosses and peers ignored them.
        - John Kotter

   Despite the evidence that high employee engagement leads to high performance, organizations continue to under-invest in employee engagement.
   
   A related issue is the failure to recognize the increasingly important multi-stakeholder nature of supply chains in a globalized world. Stakeholder engagement becomes an essential component of strategy implementation.
    
3. Executive compensation alignment to performance outcomes
   Surprisingly, executive contracting and compensation continue to be tied to short-term financial goals rather than a balanced array of both short and long term goals and outcomes.

Of course there are other issues impacting performance outcomes, particularly the whole issue of brand promise and listening to customers – but I leave that to a future blog.

Why does alignment and congruency matter?

In boiling alignment down to the essentials, alignment matters because it decreases the amount of energy it takes to go from A to Z. That fact becomes a strategic performance issue in and of itself, and provides a critical learning moment.

If you take nothing else from this missive, I hope that you come to see your strategy processes as a tremendous learning opportunity for your entire organization.