Tool Box
Issue No. 48 - August/September 2009
Why let planning kill strategy?
by Daniel Lock
Companies that do not perform at their best are those which do not have the right combination of great operations and great strategies. They do not understand the difference between strategic thinking and long-range planning. Their organisation loses direction, resources and effort. Why do they have to stay in this situation? How does a company make use of strategic thinking and longrange planning? Why do some plans become useless even though resources are poured in? Why can’t plans effectively answer present needs? While strategy involves thinking, planning is a tool.
Long-range planning should be a result of strategic thinking. Strategies are useless when they are held captive by inflexible plans.
Long-range plans are too often projections of current conditions. Most assume current operations will stay the same as in the past and require only slight adjustment for political, environmental or technological pressures, as distinct from using these variables as a basis for determining strategic direction.
Clear Objectives: It is ironic that many companies cannot set clear objectives. There are lots of resources available. Often, top level management cannot come up with the right objectives because influential members of the board have different ideas. The unclear targets lead to poor performance.
There is also a danger in setting company objectives in financial terms. This becomes a problem when little qualitative thinking is done. Without clear analysis as to what products or markets the company will be involved in, assumptions are based only on present situations. The future is seen based on what the targets are “asking” for.
When too much emphasis is placed on reaching targets, a company is pressured to be safe, without taking risks to improve. Rather than explore areas offering opportunities for better performance, it follows the same road taken in previous years because it is safer to do so. Risks are ignored and the chances...
