- by Brian Cusick
Recently I read an article in The Wall Street Journal entitled “Strategic Plans Lose Favor,” which suggests that in our recessionary economy having a “strategy” is actually a hindrance towards making good decisions. Furthermore, strategy as we once knew it is a thing of the past. I think this idea warrants a blog post because my interpretation of the evidence presented by the WSJ leads to a rather different conclusion. I can see that strategy consulting, as we once knew it, may very well be losing favor. But if strategic thinking is on its way out then we are all in for a much slower recovery than anyone had imagined.
The gist of the article is as follows (at least per my interpretation): Business leaders found in 2009 that they can’t rely on long-term strategic plans because turbulent times create a need for more frequent course correction. Furthermore, they can’t stick to rigid forecasts when trends change drastically. This situation is characterized with the phrase, “…strategy is dead…” In its place will be fast decision-making and on-the-fly thinking. The days of “rigid forecasting” are over. What’s wrong with that? The problem that I have is as follows: the clash between quick thinking and strategy isn’t really a clash but an indication of bad strategic planning. Bad strategies are those grounded in aspiration, generalization and theory—they produce inadequate forecasts that are no more than disguised corporate growth targets. As a result, they do not adjust along with market changes (remember, a target is a goal, a forecast is what’s actually likely to happen).
When strategic planning is based on objective, quantifiable relationships between market forces and business results and when forecasts are used to produce what is likely to happen and not what is desired, strategy and planning enable quicker thinking—they don’t prevent it. Market based strategy that combines business knowledge, available data, analytical techniques, and user expertise provides the guardrails and framework to make the right decision quickly. These strategies free leadership to take smarter risks and allow teams to focus on new ideas.
I am not suggesting that the referenced companies did or did not have “good” strategies. In no way is there enough information contained in the article to make that judgment. I am, however, suggesting that the proposed link between flexible thinking and strategic planning is shortsighted at best and most likely destructive.
I would urge business leaders, regardless of industry, not to dismiss the evidence put forth by the WSJ but to think honestly about how important objective and realistic strategic planning really is. In the end, strategy based on quantitative holistic analysis will be strategic, practical, and self-correcting.