Stop making plans, start making decisions

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In most companies, strategic planning isn’t about making decisions. It’s about documenting choices that have already been made, often haphazardly. Leading firms are rethinking their approach to strategy development so they can make more, better, and faster decisions.

Stop Making Plans; Start Making Decisions
by Michael C. Mankins and Richard Steele

Included with thisfull-text Harvard Business Review article: 1 Article Summary The Idea in Brief—the core idea The Idea in Practice—putting the idea to work 2 Stop Making Plans; Start Making Decisions 10 Further Reading A list of related materials, with annotations to guide further exploration of the article’s ideas and applications

Reprint R0601F

Stop Making Plans; Start Making Decisions

The Idea inBrief
Most executives view traditional strategic planning as worthless. Why? The process contains serious flaws. First, it’s conducted annually, so it doesn’t help executives respond swiftly to threats and opportunities (a new competitor, a possible acquisition) that crop up throughout the year. Second, it unfolds unit by unit—with executive committee members visiting one unit at a time to reviewtheir strategic plans. Executives lack sufficient information to provide worthwhile guidance during these “business tours.” And the visits take them away from urgent companywide issues, such as whether to enter a new market, outsource a function, or restructure the organization. Frustrated by these constraints, executives routinely sidestep their company’s formal strategic planning process—making adhoc decisions based on scanty analysis and meager debate. Result? Decisions made incorrectly, too slowly, or not at all. How to improve the quality and quantity of your strategic decisions? Use continuous issues-focused strategic planning. Throughout the year, identify the issues you must resolve to enhance your company’s performance—particularly those spanning multiple business units. Debate oneissue at a time until you’ve reached a decision. And add issues to your agenda as business realities change. Your reward? More rigorous debate and more significant strategic decisions each year—made precisely when they’re needed.

The Idea in Practice
To create an effective strategic-planning process: Link Decision Making and Planning Create a mechanism that helps you identify the decisionsyou must make to create more shareholder value. Once you’ve made those decisions, use your traditional planning process to develop an implementation road map. Example: At Boeing Commercial Airplanes, executives meet regularly to uncover the company’s most pressing, long-term strategic issues (such as evolving product strategy, or fueling growth in services). Upon selecting a course of action, theyupdate their longrange business plan with an implementation strategy for that decision. (By separating—but linking—planning and execution, Boeing makes faster and better decisions.) Focus on Companywide Issues During strategy discussions, focus on issues spanning multiple business units. Example: Facing a shortage of investment ideas, Microsoft’s leaders began defining issues— such as PC marketgrowth and security— that are critical throughout the company. Dialogues between unit leaders and the executive committee now focus on what Microsoft as a whole can do to address each issue—not which strategies individual units should formulate. Countless new growth opportunities have surfaced. Develop Strategy Continuously Spread strategy reviews throughout the year rather than squeezing them into atwo- or three-month window. You’ll be able to focus on—and resolve—one issue at a time. And you’ll have the flexibility to add issues as soon as business conditions change. Example: Executives at multi-industry giant Textron review two to three units’ strategy per quarter rather than compressing all unit reviews into one quarter annually. They also hold continuous reviews designed to address...
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