Strengthening Risk Evaluation and Mitigation Strategies through Evidence-Based Analyses
Increase your likelihood of developing effective strategies through an approach that’s thorough, action-oriented, and comfortable with debate and ambiguity.
October 2015 | by David Delaney
For a number of years, we, our colleagues, and many others who are engaged in the practice of strategy have been pointing out how ill-suited traditional strategic-planning processes are to the dynamism and pace of 21st-century business life. Less clear is what should happen to many organizations’ well-oiled approaches. Shut them down? Morph them into budgeting and operational-planning processes? Use them to synthesize the valuable insights emerging from more frequent strategic dialogues involving larger numbers of executives?
The building blocks of strategy shed fresh light on what strategic planning should and shouldn’t try to do. For starters, we’d emphasize that periodically—perhaps as often as every three to five years, if new competitors arrive or markets unexpectedly shift—companies must re-create their strategies. This cannot be accomplished through typical planning processes, as it requires broader skills, wider engagement, and more flexibility to make big strategic choices than they allow. So forget about strategic planning when you need to revamp your strategy; instead, take a more immersive strategy-development approach using all of the seven building blocks described in this article.
At the other end of the spectrum is what we would describe as the need to recommit organizations to established strategies. Traditional strategic planning is tailor-made for this purpose, and thinking about the task in these terms helps elevate it above the glorified budgeting exercise into which some processes lapse. Two of the building blocks we have described in this article—commit and evolve—are useful reminders of what any such strategic- planning process should accomplish: the constant monitoring of strategy, the reallocation of resources, the alignment of management on strategic priorities, and the creation of targets, budgets, and operational plans.
Between these two extremes lies the strategic refresh, which is particularly relevant for organizations where a lot of valuable, ongoing strategy dialogue takes place among members of the top team. Such engagement can highlight nagging issues that might one day necessitate a strategic redo but certainly merit attention now. For example, if signs suggesting that one or more key assumptions have become less valid emerge from strategic dialogues at the business-unit level, it might be time to update the company’s perspective on long-term trends. This exercise could be elevated in importance by making it a core theme of the upcoming strategic-planning process. In such situations, it’s a good idea to check all seven building blocks quickly, with an emphasis on understanding the strategic implications of underlying changes. If they are big enough, that could be a red flag signaling the need to re-create the strategy and thus to elevate the discussion beyond strategic-planning parameters.
Creating strategy in today’s environment of complexity, ever-changing priorities, and conflicting agendas is a daunting task. Yet when senior executives invest the time and effort to develop a more thorough, thoughtful approach to strategy, they not only increase the odds of building a winning business but also often enjoy a positive spin-off: the gifts of simplicity and focus, as well as the conviction to get things done.