The Biggest Mistake Made in Implementing Strategic Planning

If you own a private business, if your business has a strategic plan, and if that plan is in a three-ring notebook on a shelf, you have already made the biggest mistake that can be made in implementing strategic planning.

The biggest (and most common) mistake involving strategic planning is that the planning process is not viewed as a dynamic process integrated with the operating plan (front line or productive) process of the business. This mistake involves a number of conceptual errors involved in implementing the planning process. To understand the errors, we must start with what the strategic plan traditionally has been and then look at the basis of the planning process – the decision-making process.

Traditionally, strategic plans have been the product of retreats. Once a year – or maybe every few years - there is a retreat (or a meeting dealing with long-term issues). At the retreat there are many things said about long-term planning, some of them are written down, and someone is tasked to write some of the thoughts as a strategic plan. There might be goals in the plan along with general references to action planning that would take place. The plan is presented to the Board (or other policy-making entity), approved, and then at some point set aside to eventually reside on the shelf in a three-ring notebook. Of course, this is better than the many businesses that simply do not bother with a strategic plan. This article assumes the value of strategic planning, but suffice it to say that strategic planning can make a business successful when otherwise it may fail, especially with regard to owner relationships. Moreover, you may succeed without a strategic plan, but you will not realize as great a success as you would with strategic planning.

With respect to the basis of the planning process, a plan is nothing more than the written record of a group of relevant decisions. The factors of the decision-making process are: identify and observe time constraints, research and accumulate data, analyze information, articulate values, seek independent counsel from those affected and from experienced experts, and document (write in some format) the decision. The order listed is not a timeline and the factors do not present themselves sequentially. There will be a concept of the time available for the decision and the time by which the decision has to be made; however, the order of the rest of the process will be difficult to regulate. In fact, business experience shows that customer demands and market activity will cause decision factors to be and not to be available at various times and at varying rates of change. There is one constant, the documentation, which should occur as decisions are made.

In the everyday planning process, there is no neat segmenting of procedural planning from strategic to operational, there is only decision-making. In the timeline of the decision-making process, we receive information constantly, analyze constantly, obtain counsel constantly, and we decide constantly. We might approach the long-term and short-term dichotomy by saying the operational plan has milestones and the strategic plan has goals. We can say the role of the strategic plan is to identify goals and it is the task of the operational plan to implement actions to realize those goals. But if the timeline is not assured and the process ongoing, is it not a possibility that goals might become unreasonable before action plans are completed to reach those goals? As the strategic plan is being executed with action plans implemented and as operational decisions are documented, the plans are revised. The operational plan is constantly being revised which in turn affects the strategic plan. Put another way, if an operational plan is modified such that a goal stated in a strategic plan will not be reached, the modification of the operational plan accomplished by the documentation of that decision changes the reasonableness of the goal in the strategic plan whether or not that is acknowledged at the time.

So should both discrete forms of strategic and operational plans be revised constantly? No, the format of the plan, inclusive of operational and strategic items, needs to take a form such that plans are revised appropriately with appropriate notice as decisions are made. Documentation of strategic and operational decisions needs to be readable, malleable, quantifiable, have milestones and show goals. Goals should not be changed as often as milestones, but there are times when that change must be shown. Is it permissible for a change in operational planning to also revise policymakers' decisions about goals without prior notice? Ideally, it should not, but time constraints often cause such a result.

But wait – these decisions, long-term and short-term, involve different decision-makers with different authority. How is that complication handled? How can someone with operational authority only be allowed to revise a strategic goal which requires policy-making authority? This can be done by an inquiry from the operational to the strategic (bottom to the top, so to speak). This is a direction of communication not sufficiently encouraged, but one that is very beneficial to the effectiveness of the decision-making of a business. A reasonable goal can be met, while an unreasonable goal might be impossible to meet. Should an unreasonable goal remain as a reasonable goal in a strategic plan? Should those who set the goal not be informed that the goal is now unattainable? The discussion of the reasonableness of a goal in light of failing to meet milestones is a very beneficial discussion for decision-making. Should that decision occur sooner rather than later?

Here are the conceptual errors placing the strategic plan in the three-ring binder. The erroneous concept that a long-term or strategic plan need only be amended periodically, when in fact the short-term or operational plan changes the strategic plan in the course of business without notice, process, or authority. The erroneous concept that decision-making for operations is a different process than decision-making for strategy when in fact the decision-making processes are the same. The erroneous concept that a plan is a discrete writing describing strategic goals or actions to be taken to meet goals with milestones established to monitor progress and needs revision from time to time, when in fact documentation of a decision is a writing that effects a plan change. The erroneous concept that a writing revising a plan is necessary to provide notice of changes in the business, when in fact, with or without notice to those in authority, business changes already have caused new operational decisions thereby altering the plans of the business.

Each business is different and the most efficient format will be different. Yet, the concept of dynamic planning can be supported by one or more spreadsheet documents reflecting the spectrum of decision-making including short-term and long-term concerns. A strategic goal will have an operational or action plan to support attaining that goal with milestones established to monitor the progress toward that goal. As the monitoring is reported, entering that information on the spreadsheet provides a spectrum of the business effort toward meeting the goal. Both operational and policy decision-makers should have this information. Should operational requirements cause an adjustment to the progress, all in authority at various levels can judge the reasonableness of the goals. For all planning, there will be no need for formal amendment of a plan, since the plan is revised as decisions are made.

The strategic plan needs to be in the same communication format as the operational plan. Short-term decisions should not amend strategic decisions without notice while strategic decisions should not ignore short-term factors making goals unreasonable.