Strategic planning is one of the least-loved organizational processes. Executives at most companies criticize it as overly bureaucratic, insufficiently insightful, and ill suited for today’s rapidly changing markets. Some even argue that strategic planning is a relic that should be relegated to the past and that organizations seeking to prosper in turbulent times should instead invest in market intelligence and agility.
Although the diagnosis is largely right, the prescription is wrong.
More than ever, companies need to devote time to strategy. Nearly one-tenth of public companies disappear each year—a fourfold increase in mortality since 1965. And the life span of the average company has halved since 1970. (See “Die Another Day: What Leaders Can Do About the Shrinking Life Expectancy of Corporations,” BCG article, December 2015.) Faced with those odds, it doesn’t make sense to put all your chips on agility. Agility is great, but it’s more powerful when paired with preparedness. And achieving strategic preparedness takes a structured, organized thought process to identify and consider potential threats, disruptions, and opportunities—which is, for want of a better term, strategic planning.
In short, the problem isn’t strategic planning. It’s that most companies lack an effective strategic-planning process.
Although there is no one-size-fits-all approach to strategic planning, we have found that the companies that get the most benefit from their strategic-planning activities have four things in common:
- They explore strategy at distinct time horizons.
- They constantly reinvent and stimulate the strategic dialogue.
- They engage the broad organization.
- They invest in execution and monitoring.