Strategic planning is a basic business school concept, yet there are many misconceptions about how to go about it, who should be involved, and how to execute the strategic plan once it is created. Unfortunately, the confusion often leads to incomplete or inadequate plans that do nothing more than check a “done” box. Among the most common misunderstandings are:
Misconception #1: Strategic planning only needs to happen annually and look near-term
For many companies, strategic planning is an annual exercise based on the budget cycle. This can turn into a short-term point of view which only continues what is already in progress and a limited set of new initiatives over the next year.
This approach often limits innovation and the change needed for the longer-term strategic direction and priorities of the business. A Constant Contact survey found that 63 percent of businesses plan one year (or less) in advance. Because looking ahead feels risky, leaders prefer a more myopic approach.
Unlike adaptive strategic planning that embraces revisions when change happens, the annual planning process does not allow for flexibility with change.
Further, many investments do not experience ROI within a year, giving a false impression that the investment is a failure and funds should be diverted elsewhere. Without proper time to develop measurable results, leaders cannot see cause and effect or dependencies. These measurements are precisely what allows for in-flight adjustments to achieve greater agility.
Misconception #2: Leadership should create a solid plan that always minimizes risks, then tell employees what to do
Unlike traditional strategic planning that takes place behind closed doors and results in a static strategic plan. Dynamic planning, the kind of planning that embraces change, requires a more responsive, inclusive plan. Gartner says, “Adaptive strategic planning transitions away from a rigid, top-down, calendar-based process to a more adaptive, event-driven strategy approach.”
There will always be risk, and not all risk is bad. What is important is to balance risk with expected value. Harvard Business Review says, “True strategy is about placing bets and making hard choices. The objective is not to eliminate risk but to increase the odds of success.” Strategic planning is not about perfection but adapting as you go.