Strategic planning should not be a waste of time, but it often is.
Confirmation of this common notion comes from a recent McKinsey Study, "How to put your money where your strategy is." They found that most corporations do not reallocate capital among their business units, or at least not in a significant amount. The study further found that those corporations that do reallocate capital significantly outperform the others. The value of those corporations is 40 percent higher after 15 years, on average.
There are a number of important reasons why this occurs, including maintaining a collegial working environment. It's hard for the boss to play golf on Saturday with the vice president whose division had to give up capital on Friday. However, the CEO is being paid to deliver results, not to make friends of the executive team members.
How to get started with a more valuable process? I recently was gathering my thoughts before meeting with a CEO to discuss his strategic planning process, and I pulled off my bookshelf the old Strategic Planning Management by my corporate planning professor, Tom Naylor of Duke University. The short book is full of wisdom, such as that stategic planning cannot be performed by staff; decisions must be made by the CEO and division heads who will be responsible for implementing the plans.
An audit of your company's strategic planning process is the place to start, according to Naylor. I've seen plenty of planning processes fail because their objectives were not clearly identified, or the corporate decision-making culture was ignored.
The annual planning season will start in just a few months. I recommend preceding that with an audit of your process. Call me; I'd be happy to help.
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