Strategic Planning Pays Off

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Author John Towler, Ph.D.

Why strategic planning is so important to success in business.

There’s an old adage that says “If you don’t know where you are going, you’ll never know when you get there.” The same can and should be said about planning in an organization. Too many firms are drifting along from day to day, year to year, without any clearly defined goals or destinations in mind. Some of these firms survive while others go under; but the one thing they have in common is that they are always reacting to events, putting out fires, and moving from one crisis to another. That is, they are all controlled by what is happening around them instead of controlling events and their own destinies.

Today’s businesses can’t afford to be managed by people who don’t know where they are now, where they want to be tomorrow, and how they are going to get there. It doesn’t matter whether you are the CEO, the department manager, or the shop supervisor, you must plan for your organization and plan with your co-workers. The days are long gone when the most senior person could create some sort of plan, and then impose it on those below. This approach won’t work today because our workforce is better educated, has higher expectations, and requires a more participatory management style.

The old method fails now because when others aren’t involved in the creation of the plan, they aren’t committed to it. And one person sitting alone simply cannot be as innovative and creative as a group of people working on the same issue. The danger here is twofold: a brilliant component of the plan may be lost because someone wasn’t asked to contribute his or her ideas and the plan may falter because others were not involved in developing it. Remember, people support what they help create.

“All right,” you say, “so we need plans. But how will that motivate people?” The answer is simple. People like to know where they are headed, to feel they have some say about the direction, some control about how to get there and, finally, that there is a strong leader who will help them arrive. Social psychologists who have studied the effects plans have on people point out that plans are important as symbols, telling an organization’s members either that the firm knows where it is going and everything is under control, or that things aren’t under control but the firm is taking corrective action.

Plans are also advertisements for the firm, letting customers and investors know that this is a company that is organized, successful, and going places. Plans can also be treated as games by people within the firm, who can use them to test just how serious the company is about its programs. Lastly, plans serve as excuses for interaction in that they consolidate the workforce, bringing together people and divisions that might not have had much contact, but who now work on common projects, common goals, and shared priorities.

But if there are so many benefits to planning, why aren’t more companies doing it? It’s partly because of inertia, partly because they don’t know how, and partly because they think up a lot of silly excuses for not doing it. One of the excuses you hear is “We don’t have time to plan.” But do they have time to correct the continual mistakes that result from not planning?

Another excuse is “We don’t have the right people to do it now.” This implies that the firm will continue to flounder along, waiting until everything is in place and all the right people are there, before they take action. Unfortunately, it could be out of business before it ever gets ready to plan.

Some managers claim they can’t plan because “it costs too much money.” This is probably the dumbest excuse of all. Consider the cost that could result from just one employee who is improperly hired, poorly trained, and finally let go after several months. What are the costs of even one production process that is implemented, then found to be inappropriate? What are the costs of a single new product that doesn’t sell after being brought to market? Even a planning program costing several thousand dollars is nothing compared to the cost of not planning.

The last common excuse is another red herring: “Planning is a waste of time because it doesn’t last.” Certainly poor planning is a waste of time. This is the case when you don’t involve the right people or fail to sell others on your plan. Most people simply don’t know how to plan. They tend to be unrealistic about where the firm is now, about future conditions, or about what they can achieve. There are several sound steps to follow if you want to plan and do a good job of it.

First, you have to get your people involved and ready for the process. Ask (allow?) people to identify the strengths and weaknesses of your organization, its people, processes, procedures, products, services, and anything else you can think of. Now get the key decision-makers and their people together in a think-tank atmosphere. A cross section of the workforce can be useful here, though you may wish to concentrate on specific areas one at a time.

Next, hold the planning sessions away from the office. Management planning sessions are frequently held as two- or three-day retreats, since this allows people to get away from the daily grind and the temptation to run back to the desk during breaks. The same principle should be applied to the people from the shop floor, clerical areas, outside sales, and anywhere planning is to take place.

If it is a senior level group, be sure you use an outside consultant to plan and guide the session. Too many senior executives think all they need to do is have all the great minds in one room and great ideas will flow naturally from the synergy. This isn’t true.

Consultants are skilled in managing group dynamics and in giving the sessions structure, discipline, and objectivity. They are also experienced in preventing any one person from dominating and forcing his or her views on the others. This can effectively ruin a planning session, but it is hard for the group to handle when the views come from the CEO. This is where an outsider is invaluable. A consultant can gently control a domineering manager when no one from inside the firm dares to try.

Part of the planning process should involve team building. Your plan will only be as good as the people involved, their acceptance of it, and their willingness to work toward specified goals. Creating trust, building rapport, and allowing for frank and open exchanges of ideas are essential to the success of your plan. Even if you have all worked together for years, you should spend some time learning how to operate smoothly as a team.

The last step is the planning process itself. This is where you must ask yourself a great many probing questions, planned in advance. Some provocative questions you might ask are:

• What is the management philosophy?
• Where is the company now?
• Where does the company want to go?
• How is the company going to get there?
• What is the state of the firm now?
• What is our mission?
• What kind of organization do we want?
• What markets are we after?
• How will we obtain them?
• Are we satisfied with our production process?
• What changes can we expect in the future?
• How should we prepare to respond to future needs?
• What change can we anticipate in manpower, administration, and services?
• What prevents us from reaching our goals?
• What is a realistic timetable?
• What benchmarks can we use to chart our progress?

Strategic management planning is gaining in popularity because it is beneficial to the organization and to the people within it. It gives employees a vested interest in the company, its goals, and its future. This is the key to motivating staff. People will work hard for something they believe in and not at all for what they don’t feel part of. More and more firms are realizing that planning for the future is essential, but how the planning is done can be just as important as the plan itself.

John Towler is a Psychologist and the founder of Creative Organizational Design. Please send comments about this article to jtowler@creativeorgdesign.com. For more information, please contact us.

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