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A New Approach to Strategic Planning

Although CEOs involve themselves into strategic planning, most of them still believe they do it too seldomly, and when they do, they are not happy with the results nor the process. McKinsey proposes a redesign of the annual strategic planning process. Following a summary of their proposal.

Often, strategic planning is an unimaginative, risk-avoiding, bureaucratic process. The goals, however, should be to align around the corporate vision and find creative ways of how to get there. Here is how:

The most important thing -- McKinsey says -- is to believe that the strategy planning process should not be designed to make strategy. However, it should focus on building "prepared minds" and on increasing the innovativeness of a company's strategies.


Build "prepared minds"

• Top and line management need to understand the strategic context (business, strategic, key figures, assumptions, etc.) in which the operate, so they are prepared to make real-time decisions as they go.
  
  
• Make sure the meetings are productive.
  
  
  • Keep attendance small, the maximum is ten people. Usually the CEO, the sector head, the CFO, the CSO, the unit head and one or two crucial unit managers.
    
    
  • Take enough time for in-depth discussion
    
    
  • The venue should be at the business unit site.
    
    
  • Separate financial and budgetary discussions from the strategy discussions. Usually, there should be a full day for financials and a full day for strategy.
  
  
• Make sure the unit heads themselves do the strategic preparation. The headquarter should only give very limited guidance. No strategy template should be given.
  
  
• Prepare thoroughly. Send out material ahead of time. Read the material.
  
  
• Keep a collaborative tone at the meetings. "... all the people at the meeting should feel that that they are sitting on the same side of the table, confronting common challenges."
  
  
• Disciplined follow-up to the meeting.

Encouraging creative minds

• Measure success not with the number of breakthrough ideas they produce, but with how much it prepares management to act creatively. There won't be creative breakthroughs right in the meetings anyway.
  
  
• Bottom-up: strategy by experiment.
  Only scaling up a portfolio of initiatives will reap the desired breakthroughs in the end.
  
  
• Top-down: crosscutting themes.
  Define cross-company initiatives and themes which force division managers to think outside of the box, collaborate with other divisions, and unifies the innovative spirit of the company.
  Example: GE's multiyear themes like "Six Sigma" or "eBusiness".

The job of the managers charged with Corporate Strategy at the headquarters is to make sure this strategic planning process is done the right way, and they should help the top management and the business leaders to come together.