Common Paths to Strategy Creation

Common Paths to Strategy Creation

Strategy – even given its weighty impact, or lack of as the case may be, on organizations, governments, militaries, and other collective efforts – is not rocket science. In fact, there have not been many novel ways to generate strategy invented in the last 200 years. This article explains four universal steps to strategic planning that exist across the many approaches and variants of strategy creation. I then move on to depict, compare, and contrast five different variants of strategy generation popular over the last four decades. Finally, I explore the insights and limitations of the approaches and go on to establish the argument for innovation in strategy crafting, upon which the remainder of my writing will focus.

A Typical Path and Steps

Traditional strategic planning rose to prominence in modern organizations in the 1960s and continues as a core aspect of leading and guiding organizations today. Overall, the process results in direction setting, choices for action and decisions, and implications for resource allocation and management. Strategic planning is often a facilitated process, led by specialized strategic planners, organizational leaders, and a variety of analysts and participants.

There are four universal steps that many have used to generate strategy with traditional strategic planning techniques. Initially the need arises to engage in the generation effort and is followed by an assembly of facts about the environments internal and external to the organization. Then the actions are organized into some kind of short list of things to do and priorities are selected. These selected strategies and goals are often organized into a hierarchy which is then prioritized. Finally, an attempt is made to add enough detail that it makes sense to take action. Sounds simple, but there is more to it.

The graphic below depicts the four stages in the traditional strategic planning process.

Recognize the Need. There are many ways an organization comes to the strategic planning process. For those with a history of planning, a common signal is the approaching expiration of the current strategic plan. Often a year or so ahead this date, a planning period is launched. The process can also be triggered by other events such as a new executive taking the helm, significant changes in the organization’s environment, changes in organizational purpose or mission, or demands of an outside entity or agency such as a regulator, accreditor, or new owner or major partner. Whatever the initial driver, once the leadership team realizes the time is right, significant preparation needs to get underway to ready for strategy creation. Key activities of this stage include discovering and putting form to the existing strategic issues, updating and evaluating progress on prior plans and efforts, inventorying any significant changes within the organization or its environment, and generating an early draft of the key planning assumptions that will guide the effort.

Gather Facts. The second stage of the traditional strategic planning process is generalized by the gathering, organizing, and synthesizing of facts. There are a variety of tools and techniques that include traditional research, collecting secondary research from others, surveying the external landscape and environmental scanning, and forecasting. Many traditional planners recommend SWOT analyses (strengths, weaknesses, opportunities, threats), where internal and external forces and factors are identified and sorted based on the kinds of effects they are having or could have on the organization, its customers and partners, and its industry broadly. SWOT analyses may be inclusive of or augmented by internal organizational assessments to diagnose strengths and weaknesses. Other traditional strategic planners conduct deep environmental scans often using the PESTE framework (political, economic, social, technological, environmental). Many also include competitor analyses during fact gathering. Relatively newer tools give planners the ability to develop sophisticated forecasts and foresight which is useful in more dynamic markets where change is occurring rapidly. Key activities of this stage include selecting the tools and techniques to be used to gather and organize data, a data collection and analysis period, and a series of conversations aimed at making sense of all of the information.

Organize and Prioritize. The key outcome of this stage is the formulation of strategy and setting of goals that form a strategic plan. While the environment is changing dynamically, the organization needs to envision its future, identify the opportunities, formulate specific strategies and goals, and prioritize their importance. The idea of generating SMART goals during strategic planning has been traditionally recommended. SMART goals are Specific – target a specific area for improvement; Measurable – quantify or at least suggest an indicator of progress; Assignable – specify who will do it; Realistic – state what results can realistically be achieved, given available resources; and Time-related – specify when the results can be achieved. Generating a strategic plan is a topic that requires greater discussion. Key activities of this stage include harvesting insight, uncovering gaps, formulating strategy, building a plan, and setting reasonable goals.

Act and Monitor Progress. The final stage of traditional strategic planning goes beyond making plans to taking action. The strategies and goals formulated in the strategic plan need to be operationalized in such a way they can be understood and achieved. Often, strategic plans include specific recommendations for actions, or they may be augmented by detailed action plans created during the strategic planning process. The second part of operationalization is resourcing the plan. This requires that the organizational structure is readied for action, the necessary resources are gathered or anticipated, and communication is high. This ensures that the drivers exist for implementation and change accompanied by mechanisms for control and feedback. The third part of operationalization is building the measures, metrics, and scorecards or rubrics that allow for the strategies and goals to be monitored and evaluated. Monitoring and evaluation should result in any necessary course corrections so that strategy can remain adaptive to changing conditions. Key activities of this stage include generating action plans, taking action, monitoring impacts and outcomes, and adjusting course to manage toward the strategy’s hopeful end.