In their article "Strategic
Plans Lose Favor" published January 25, 2010 in the
Wall Street Journal Joann Lubin and
Dana Mattioli described company experiences where the state of the
economy had made them abandon their strategic plans, and even their
plan-producing thought-process. These companies probably had rather poor plans
to begin with.
A well-thought-out strategic plan is not derailed by
an economic surprise, because a well-thought-out plan has provisions for surprises
already built in.
The oldest commonly-used provision for surprises
is the so-called “flexible operating budget”, which predetermines, among
other things, what the adjustment to surprisingly low market demand would
be (in a way that preserves to the maximum attainable degree the attainment of
the long-range strategic objectives). In fact, a well-thought-out
strategy would not have been chosen in the first place if it didn’t contain
from the start the required degree of flexible budgeting.
It
is commonly thought that one benefit of an economic recession or depression is
that it cleans out the Augean stables: poor products, poor production
systems, poor managers, etc., which survived in good times only because a
rising tide raises all ships, even leaky or slow ones. Now apparently
poor strategic planning gets cleaned out as well. Hooray! That’s
good news for the future usefulness of strategic thinking in industry.
Many of the companies that
use unwise short-cuts in their strategic planning really know better. But
they don’t do the complete job because they believe that to actually do so
would be very time-consuming and very expensive. Well, it used to be, but
certainly not any more. The availability of the required software tools
for ex ante strategy stress-testing makes well-thought-out planning not only
possible but also fast and inexpensive. There just is no excuse any more
for not doing the strategic planning job properly.
