Perspectives

Published Article

Freshening Up Strategic Planning:
More Than Fill-in-the-Blanks

December 2003

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By Dennis Rheault, Published in Journal of Business Strategy

We have recently come through times where it was quite common to hear that things are changing too quickly to make strategic planning worthwhile, or that ‘‘real-time’’ processes are required to deal with rapid market shifts and competitor moves — with more value being placed on quick reactions rather than on well-reasoned responses.

Things are settling down again, and many companies find themselves having to reintroduce strategy development into their core processes.

Under the general heading of planning, a variety of processes come to mind. The lowest common denominator tends to be the annual budgeting process that establishes financial targets with a fair amount of detail 12 to 18 months out. For many companies, this is where planning begins and ends. Moving beyond the numbers, some companies explicitly allocate resources and plan activities that are required to achieve the numbers — some refer to this process as activity based budgeting (ABB). ABB makes the numbers more robust and also allows for quick adjustments when the numbers invariably do not quite turn out as planned.

Moving one step higher in the food chain, we find strategy development, a process that is often haphazard and decoupled from the resource allocation and planning that goes on annually, and in recent times, frequently nonexistent. It is all too common to see the budgeting process driving the strategy, one year at a time: ‘‘Now that we’ve settled on the numbers, how are we going to hit them’’? Strategy development should have a longer-term perspective and be tightly linked to drive the annual business planning/budgeting processes. Many companies need to reestablish some basic approaches to strategy development and create explicit mechanisms to link the resulting strategy to execution.

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