The Big Lie of Strategic Planning – III

This would be the last in the series of posts on article The Big Lie of Strategic Planning by Roger L. Martin.

Circumventing the Traps

Companies that have fallen into the trap are the ones that are typically comfortable with their planning process.  Their focus is on getting more profit from the existing revenue than generating more revenue. Even their metrics are focused on finance and capabilities, rather than on customer satisfaction and market share. This anomaly is because they are accustomed to their comfort zone, whereas they should have be on their toes.  Therefore, it is recommended, to avoid such a situation, they should follow these three basic rules.

Rule 1: Keep the strategy statement simple

The first rule would be to focus their energies on revenue generating activities, such as on their customers.  After all, it is customers who decide to spend on a company which offers a better value proposition. Against this background, two broad choices determine a company’s success: target customers and creation of compelling value propositions. It is understood that this approach will also simplify the whole planning process.

In my opinion, all the discussion should be focused on how customer choices and value propositions will be impacted by the changes in the external environment.

Rule 2: Recognize that strategy is not about perfection

Here the premise is that managers believe strategy needs to be perfect.  But, as strategy is about revenue, and not cost, it is impossible to bring about perfection. So, this is something they need to keep in mind throughout the process.  But, for that to happen, the realization has to come from the top.  Until there is a realization within the organization, there will always be a greater emphasis on inflexible strategy.

Rule 3: Make the logic explicit.

So, the best way to increase the chances of strategy being correct, is to test one’s logic behind the thinking.  For that to happen, one needs to find answers regarding what one needs to believe about customers, about the evolution of the industry concerned, about competition, and about company’s capabilities.

Finally, the author argues that planning, cost management, and focusing on capabilities are dangerous trap for strategy makers. Yet, it cannot be denied that these activities are essential, and no company can afford to neglect it. Though, it is strategy that convinces the customers to spend on the company, it is these very traps that ensure that maximum profits are generated out of the revenue. So, even though planning and other activities will remain an important part of the whole process, a conscious effort will ensure that they don’t play a dominant role.

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