In my previous post on the topic of strategic planning, we took a closer look at the personal and professional risks that executives face through the strategic planning process. In this post, we will focus on another thorny question: Is my strategic planning process putting the business at risk of being blindsided by unforeseen external events and volatility?
The 2008 economic crisis demonstrated that today’s seemingly safe bets can take a sudden turn for the worse tomorrow. Today, the headlines are again dominated by dark clouds. Monetary crises, commodity bubbles, political instability, labor unrest, and even armed conflict dominate today’s headlines. Furthermore, many executives have learned the hard way that crises hundreds or thousands of miles away can have a very real impact in their markets.
Until crystal ball technology improves, you have no choice but to plan for the worst and hope for the best in the markets that you oversee. Executives at many companies are blindsided by macro shocks when they become overly focused on internal data and industry/competitor analysis. Your strategic plan needs to lay out the foreseeable scenarios, key signposts, and leading indicators to monitor, and develop contingency plans accordingly.
One of FSG’s clients in the beverage industry has tried to shake its management of myopia by requesting rigorous analysis of the external variables that could impact the company’s market. The findings of the resulting analytical exercise are used to develop a white paper that is presented to the business unit presidents every March, before the strategic plans for the following year are developed.
Such an exercise requires an investment of time and resources, but the benefits are twofold. First, the strategic plan will more accurately reflect the reality of the markets. Second, even if the scenarios developed in the white paper never unfold or if unforeseen events override contingency planning, the exercise forces managers to think more strategically, to get involved in the planning process, and thereby become personally and financially invested in the final plan.
In my next post, we’ll look at one more critical question every senior executive needs to be asking as they undertake strategic planning for 2012: Are mid- and lower-level managers placing enough priority on strategic planning, and am I doing enough to improve their planning capabilities?
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Chris, indeed! Today’s executives have to look beyond macro shocks related to internal data and industry analysis for reasons you highlighted above and others that include the following:
1. Technology advancements have leveled the playing field so managers need to look beyond their industry (usually local) to the global village for industry competitors.
2. Increased migration has significantly influenced/heightened customer expectations everywhere
3. Easy(ier) access to information through technology improvements has made customers more savvy and less patient with companies and business that can’t deliver quality goods and services
4. High unemployment and underemployment rates together with job security uncertainties, have all contributed to a lot of us being “forced” out of our comfort zones as it were, to better ourselves. This energy has contributed to an increase for competition for available resources and innovations and led to a “survival for the fittest” mentality, which means that only managers and individuals engaged to their internal and external environments will be able to not only survive but thrive in our world today.