Stop Making Plans, Start Making Decisions

13 03 2010

“In most companies, strategic planning isn’t about making decisions. It’s about documenting choices that have already been made, often haphazardly. Leading firms are rethinking their approach to strategy development so they can make more, better, and faster decisions.”

Recent studies have shown that more and more executives are not effectively using strategic planning. However, strategic planning is needed so that decisions are not made on a whim.

There are two keys that cause for the failing of traditional planning: the timing effect and the business-unit effect.

  • Timing Effect: Strategic planning happens yearly or semi-yearly, but key decisions are made continuously. Strategic plans also take time to develop, but decisions often have to be made quickly.
  • Business-unit Effect: Strategic planning focuses on units as individuals, but actual decisions are based on issues, regardless of how many units are affected.

A new process needs to be created for developing strategy that is different than the traditional process yet still parallel to it. A company’s quantity and quality of decisions can be and most often will be improved when they embrace decision-focused planning. Companies need to take the general ideas of strategic planning and modify it to meet the needs of actual decision-making.

How to create decision-based strategic planning:

  • Separate- but integrate- decision-making and plan making by taking decisions out of the traditional planning process and create a different, parallel process for developing strategy
  • Focus their strategy discussions on a limited number of important issues or themes and move away from a business-by-business planning model
  • Make strategy development continuous. Focus on one issue at a time until a decision is reached and add issues to the agenda as market and competitive conditions change
  • Structure strategy reviews to produce real decisions

“By creating a planning process that enables managers to discover great numbers of hidden strategic issues and make more decisions, companies will open the door to many more opportunities for long-term growth and profitability.”




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