An Excerpt from Willie's Book, Reinventing Strategy

The Dead End of Strategic Planning

At many companies, people groan when they hear that the "strategic planning" season is at hand. Frankly, I don't blame them. Far too often strategic planning is an empty ritual rather than a process of discovery. It involves gathering sales, financial, and other data, extrapolating them into the future, and then adding detailed projections about future hiring, investment, and other expenses. Plenty of minutiae are captured in the process, but there's very little evidence of creative, long-term thinking about changes in the competitive environment and how the company must deploy its scarce resources in response to those changes. The end product is a five-inch-thick binder full of data that collects dust on top of the CEO's bookshelf. This isn't strategy - it's planning, which is a very different thing.

When I begin work with a new organization, I'll generally ask to have a look at its current strategy. A binder is pulled from the shelf, and I study the document to try to find where in the 500 pages of tables and projections it explains how the company plans to win. Usually the explanation is nowhere to be found. The reason is simple. What I have been given is a planning document - often an excellent one - but not a strategy.

Henry Mintzberg, author of the classic management text The Rise and Fall of Strategic Planning, has studied what really happens under the guise of strategy development. His findings are eye-opening. As shown in Figure 3.1, fully 90 percent of the results projected in most companies' formal strategic planning processes never come to fruition. Instead, they fall by the wayside, vanishing into the limbo of "unrealized strategy" as seen on the lower left-hand side of Mintzberg's diagram.
Figure 3.1 Traditional Strategic Development
Source: Reprinted with the permission of the Free Press, a Division of Simon & Schuster, Inc., from The Rise and Fall of Strategic Planning by Henry Mintzberg. Copyright © 1994 by Henry Mintzberg.

Only 10 percent of most companies' actions arise out of their strategic planning ("realized strategy"). But what is the source of the other 90 percent of what companies do? Mintzberg calls it "emergent strategy." This describes the series of ad-hoc initiatives, reactions, decisions, and choices that managers make in response to daily pressures, without guidance from any overarching strategic concept. Taken together, they amount to the real strategy that most companies follow.

Of course, the executives running the big companies that Mintzberg studied aren't fools, or blind. They recognize the huge gap between the formally planned strategies they developed at such great expense and the realized strategies their companies actually followed. In frustration, some companies decide that they haven't tried hard enough or taken strategic planning seriously enough. They vow to buckle down and devote even more time, energy, and money to strategic planning.

Unfortunately, the usual result is to heighten the agony of strategic planning without bridging the disconnect between realized and unrealized strategy. The real problem is that, as Mintzberg has pointed out, strategic planning is an oxymoron. Strategy is one thing; planning quite another. Great strategy begins with divergent thinking. Planning excellence is above all an exercise in convergent thinking. For most companies, the attempt to combine them in the form of strategic planning produces a result that is 90 percent planning and only 10 percent strategy.

If companies are to mobilize the creativity to achieve strategic breakthroughs, it is vital that they separate strategy from planning - and put strategy first.