The Idea in Brief

Most executives view traditional strategic planning as worthless. Why? The process contains serious flaws. First, it’s conducted annually, so it doesn’t help executives respond swiftly to threats and opportunities (a new competitor, a possible acquisition) that crop up throughout the year.

Second, it unfolds unit by unit—with executive committee members visiting one unit at a time to review their strategic plans. Executives lack sufficient information to provide worthwhile guidance during these “business tours.” And the visits take them away from urgent companywide issues, such as whether to enter a new market, outsource a function, or restructure the organization.

Frustrated by these constraints, executives routinely sidestep their company’s formal strategic planning process—making ad hoc decisions based on scanty analysis and meager debate. Result? Decisions made incorrectly, too slowly, or not at all.

How to improve the quality and quantity of your strategic decisions? Use continuous issues-focused strategic planning. Throughout the year, identify the issues you must resolve to enhance your company’s performance—particularly those spanning multiple business units. Debate one issue at a time until you’ve reached a decision. And add issues to your agenda as business realities change.

Your reward? More rigorous debate and more significant strategic decisions each year—made precisely when they’re needed.

The Idea in Practice

To create an effective strategic-planning process: 

Link Decision Making and Planning 

Create a mechanism that helps you identify the decisions you must make to create more shareholder value. Once you’ve made those decisions, use your traditional planning process to develop an implementation road map. 

 

Example: At Boeing Commercial Airplanes, executives meet regularly to uncover the company’s most pressing, long-term strategic issues (such as evolving product strategy, or fueling growth in services). Upon selecting a course of action, they update their long-range business plan with an implementation strategy for that decision. (By separating—but linking—planning and execution, Boeing makes faster and better decisions.) 

 

Focus on Companywide Issues 

During strategy discussions, focus on issues spanning multiple business units. 

 

Example: Facing a shortage of investment ideas, Microsoft’s leaders began defining issues—such as PC market growth and security—that are critical throughout the company. Dialogues between unit leaders and the executive committee now focus on what Microsoft as a whole can do to address each issue—not which strategies individual units should formulate. Countless new growth opportunities have surfaced. 

 

Develop Strategy Continuously 

Spread strategy reviews throughout the year rather than squeezing them into a 2-3-month window. You’ll be able to focus on—and resolve—one issue at a time. And you’ll have the flexibility to add issues as soon as business conditions change. 

 

Example: Executives at multi-industry giant Textron review two to three units’ strategy per quarter rather than compressing all unit reviews into one quarter annually. They also hold continuous reviews designed to address each strategic issue on the company’s agenda. Once an also-ran among its peers, Textron was a top-quartile performer during 2004–2005. 

 

Structure Strategy Reviews to Produce Results 

Design and conduct strategy sessions so that participants agree on facts related to each issue before proposing solutions. 

 

Example: At Textron, each strategic issue is resolved through a disciplined process: In one session, the management committee debates the issue at hand and reaches agreement on the relevant facts (e.g., customers’ purchase behaviors, a key market’s profitability figures). The group then generates several viable strategy alternatives. In a second session, the committee evaluates the alternatives from a strategic and financial perspective and selects a course of action. By moving from facts to alternatives to choices, the group reaches many more decisions than before. 

 

 

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