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Taking the Very Long View in Strategic Planning

How long a horizon does your company use when it develops its strategic plan?

In a recent article in the Jamaica Sunday Gleaner, I make the point the there’s tremendous value in looking at a planning horizon of 20-30 years.

Here’s the article:  Taking the Very Long View in Strategic Planning.

For more details about this approach that the firm uses with strategic planning clients, see the book written by a former employee of Framework Consulting, Amie Devero — Powered by Principle.

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As companies set up their annual strategic-planning retreats, there is a natural temptation to forget about the future, and focus on today. While the recession has driven us to examine daily cash flow, it is a mistake to think that the long-term future doesn’t matter.

 

It certainly does, and here are the reasons why I encourage my clients to consider a 25- to 30-year future.

Vision statements are fine tools for ensuring that an executive team – and an entire company – are focused on the same things; however, they are often used badly.

Before a team sits down to define the future, it is safe to assume that each person comes with two different understandings: the exact year ‘the future’ refers to; and what constitutes his/her vision for that year.

Too many companies jump right into statement building only to discover after consensus is achieved that half the team is in 2021 while the other half is in 2012. Some never discover this fact and suffer when discord breaks out as budgets, targets, and interim measures need to be defined.

Good future statements are based on specific years, like the one that our own Government has defined: Vision 2030 Jamaica.

Coming to agreement on the ‘planning year’, such as 2030, is a critical first task in any retreat.

LOOKING FAR AHEAD

When I work with top teams in their strategic planning retreats I urge them to pick planning years that are 25-30 years in the future. Their first reaction is one of shock, and there is usually resistance. Some argue that they can’t think that far ahead. Others say that business conditions change so much each year that such planning is unrealistic.

I draw an analogy to what Columbus had to endure when he committed his first voyagers to travel to lands that were ‘over the horizon’ – beyond their capacity to see.

This was no easy undertaking at a time when many believed that the Earth was flat and that one could fall off the edge by travelling too far out of sight. He was able to paint a vision of a land that he had never seen that existed ‘over the horizon’.

The fact is, it is impossible to accomplish big goals unless you are able to see that far in your mind’s eye.

Jeff Bezos of Amazon.com fame puts it well: “We are willing to plant seeds that take five to seven years to grow into reasonable things. You can’t do big, clean-sheet invention unless you are willing to invest for long periods of time.”

Another interesting thing happens when executives look far enough into the future. They stop focusing on themselves, and their personal goals. An over-the-horizon future is one that is not about them, but instead must focus on the next generation as most executives won’t be around. As they plan for a future that excludes them, they start to ask themselves what they really want for the company: its shareholders, employees, customers, and other stakeholders.

Bad news

At first they discover some bad news: they want very different things.

This is a sobering discovery as they realise that they have been working at cross-purposes for some time, pulling towards different destinations. However, once they come to a new consensus, they can work together for the first time.

What prevents these 20- and 30-year visions from turning into random fantasies is the next step: laying out the details of what happens in the planning year. Once the team completes the prior two steps, they can describe the destination in measurable details.

Revenues, profits, financial ratios, headcounts, physical locations, geographic locations, bi-lingual abilities, these are all examples of the metrics that are used to convert a far-away future into a coherent, measurable goal.

The last step is the so-called Merlin Process in which the future targets are connected to today’s actuals in a single matrix. Many adjustments take place at this step as the team ensures that there is a feasible pathway from the present to the planning year. Unfortunately, this is usually the point at which some nice-to-haves must be discarded as the true essence of the plan emerges.

For the past 10 years, I have witnessed teams take the long view and the results are usually inspiring.

A new world emerges as they lift themselves above daily pressures to craft a unified vision that is well over the horizon.

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Start a Fight in Your Next Strategic Planning Retreat

The latest research is clear.

When executives are allowed to openly disagree about important issues, they are likely to truly buy-in when consensus is finally reached.

I took that finding and applied it to the strategic planning process in an article in the Trinidad Newsday entitled Start a Fight at Your Next Strategic Planning Retreat.

You can find the entire text of the article here at the Guardian Life website.  Thanks to them for sponsoring the column.

Here is the article in full:

Start a Fight At Your Next Strategic Planning Retreat

Strategic plans are often accused of being little more than a mish-mosh of disparate ideas thrown together in a single document.  When they are disjointed  and incoherent, it makes them difficult to implement, let alone remember.  When critical opportunities pop-up in the year to implement them, they are lost.

 

The best strategic planning retreats, however, avoid this trap by encouraging confrontation and honest dialogue.  Unfortunately, most executive teams don’t have the discipline or ability to have these conversations, and for the sake of speed and “tranquility,” they avoid confrontations.  Instead, they rely on their colleagues who have that rare Anil Roberts combination of intelligence and “talky-ness” to drive the process home, leaving most others in the room as disengaged, bemused, observers.

 

The strategic planning process simply becomes an extension of day-to-day conversations… conducted instead “down the islands.”

 

A simple way to change the discourse from everyday concerns is to take the long view, and to use the planning process to define a future that is usually ignored:  one that is 30 years away.

 

Sometimes, I hear complaints.  Why should we care about a future that is that far away?

 

The fact is, an executive team is always shaping the future, whether it realizes it or not. The best teams do so consciously, while the worst only concern themselves with immediate issues.

 

Take the simple example of a company that wants to enter Latin American markets in a big way, with a goal of having 50% of its business coming from that segment.

 

The executive team realizes that it would require the creation of a bi-lingual workforce, while facing the fact that there are no Spanish-speakers on staff today,  When HR estimates that some 75% of the workforce would need to be bi-lingual to assure success, it becomes obvious that the goal won’t be achieved in a year, or even ten years.  A much longer-term plan must be crafted.

 

Something magical happens when executive teams of (usually middle-aged) professionals start to consider a long-term future.  The discussion stops being about them, and their department’s agendas, and the concern shifts to future generations, and what legacy is being left for them to manage.  They quickly realize that an executive team that crafts, for example, a bi-lingual future could be hailed for their brilliant vision in 2041.

 

By contrast, the company that suffers from a lack of new markets in 2041 will look back at prior executives with disdain, and blame them for mortgaging the future for short-term gain.

 

From our company’s work with executives around the region, we have observed that a certain kind of business altruism comes alive when they grapple with long-term futures as a team.  They come to realize that they often have very different visions of what the company will look like in 30 year’s time, and how their different points of view have led them to make different decisions.  When these decisions are in conflict, they sometimes end up working at cross-purposes, wasting time and money, but without knowing why.  In the retreat, it’s possible to get these views out on the table, and lead them to craft a single defined future.  It’s OK in this controlled setting to fight for one vision or another, with an understanding that consensus only comes when all the personal visions have been aired.

 

In one retreat I facilitated,  an executive was fully convinced that the company should become the largest in the Latin America /Caribbean region.  He fought for this vision with others in a useful way that illuminated a key reality:  they would have to move the corporation to Miami from Port of Spain to realize it.  That, they realized, was something no-one wanted.

 

Once a single picture of the future has been aligned upon, the battle isn’t finished.  After the future is translated into hard numbers like market share and profitability, these metrics must be connected back to today’s historical results in a way that makes sense.  This is normally done in a spreadsheet that shows the key turning points required to achieve the final results,

 

It’s not just a matter of filling in numbers, however.  Underlying each result and turning point are some powerful assumptions about how the company operates, and what can or can’t be done to move key indicators.  Listening to marketing, human resources, finance, IT and operations managers as they share their views, and struggle to come to consensus, is often inspiring, even when it gets heated.  They demonstrate the value of a good, fair fight for the future, and how it can lead managers to define a future that is much, much bigger than themselves.