Strategy as Decision and Choice

Lisa Junker on the Acronym blog points to a great article in the February HBR about strategy. The authors (Bower and Gilbert) point out that in large organizations, the decisions of large numbers of middle managers (particularly as they allocate resources) are collectively more powerful in driving strategy than the corporate leaders are when they write up their strategic plans.

Amen.

Junker quotes the authors who point out that “how business really gets done has little connection to the strategy developed at corporate headquarters.” This is an easy quote. It is guaranteed to make the strategic planners squirm.

But I like the quote just before it that she didn’t mention:

Senior executives, divisional mangers, and operational managers all play a role in deciding which opportunities a company will pursue and which it will pass by (a reasonable definition of “strategy” in the real world).

This is huge to me, and hugely missing in associations. Strategy is not about plans. Strategy is about decisions and choice, not all of which are made by the CEO or the Board. Plans, however, do not offer choice. In strategic planning, a small group of people makes all the choices, and then you’re done for the year.

Yes, senior leadership must make choices, but strategy evolves over time and (as the article states) it is shaped by choices made by many different people along the way (even people outside of your organizational structure). The goal should not be a plan. The goal should be increased capacity to make strategic choices well (including at the top), and to base those choices on high-quality strategic conversations at every level of the organization.

And I can’t stress this enough: strategic plans inhibit that goal. Whether they are intended to or not, strategic plans shut down conversation and remove choice. They effectively REDUCE strategic capacity in the organization.

I know the community is starting to evolve strategic planning to be more iterative and to make the plans “living documents” and the like, but personally I am not confident that those well-intended changes to strategic planning are going to get that process over this hump. I am afraid you’ll still end up short of the mark. Still missing important opportunities because the plan hadn’t considered them. You won't die if you do a strategic plan, but I'm skeptical that you'll reach your potential.

Jeff and I don’t say, “strategic planning is dead” just to be provocative. We’re serious. The association community can do better.

Comments

[Lisa Junker]

I'm glad you commented on this article as well, Jamie! I think there are a bunch of different strands in what the authors had to say--it's good to tease several of them out.

I'm particularly interested in one thing you say in your post: "Strategy is not about plans. Strategy is about decisions and choice, not all of which are made by the CEO or the Board. Plans, however, do not offer choice. In strategic planning, a small group of people makes all the choices, and then you’re done for the year."

I would argue that another problem that many associations have with strategic planning is that they don't make choices--or they think they do, but then when the plan meets the budget, they don't allocate resources based on those choices. Rather than kill the program or project that benefits 20 people and use those funds to promote the association's goals, they'll keep the program in place.

(That's not to say that any program that only benefits a few should be killed--if it gets the association closer to fulfilling its strategic goals, it should be kept.)

My former boss used to say that you could raise llamas in your office and tie it into a typical strategic plan. And that has been true of many strategic plans I've seen. When the goals are too general, you're not making choices. And if you don't make any changes because of your goals, you're not making choices, either.

[Jamie Notter]

Hey Lisa. Thanks for the GREAT comment! I particularly like what I will now refer to as "the llama test."

I agree that lack of choice is a big problem. Wanting to be everything to everyone, you end up with a strategic plan that is like a vision statement. It takes real discipline to be able to define what will truly drive your success. In the work Jeff and I have done, we have had to push the hardest on that point. Real growth and success is not driven by "do what we did last year, but up the budget by 3%."

And I will reiterate my original point, though, which is if you DO make a choice, and then you encapsulate it in a plan, you tend to remove the power of choice and reaction from the implementation phase, and that's a problem. The separation of strategy creation from implementation is actually artificial, but strategic planning keeps them rigidly separated.

[David Gammel]

I did speak with the CEO of an association for llama breeders once. He'll have to refer to the irrelevance of emus instead. :)

[Lisa Junker]

I'd rather raise llamas than emus any day. Have you ever been around an emu? They move really fast ... and they're a good foot (or more) taller than I am. If the strategic plan called for animal husbandry, I'd definitely prefer the llamas!