We often come across companies that have set an ambitious long-term goal but have devoted almost no intellectual effort to thinking through the medium-term programs that are needed to support that goal.
In too many companies there is a grand, and overly vague, long-term goal on one hand – and detailed short-term budgets and annual plans on the other – with nothing in between to link the two together. There seems to be an assumption that the short term and long term abut each other, rather than being dovetailed together. Sound familiar?
But the long term doesn’t start at year five of the current strategic plan. It starts right now.
Whatever the answer, most business professionals understand that achieving a long-term goal requires a series of logical, achievable, sequential steps.
Organisations cannot rely on chance or luck. Yet the steps that lead from where a business is today to where it wants to be – its objectives – are often missing.
The ‘strategy gap’ is real and exists within most organisations. Often unseen, the gap is a threat to the future performance – and even survival – of an organisation and is guaranteed to impact the efficiency and effectiveness of senior executives and the management team.
Imagine for a moment that you are early in your chosen career and the thought of retiring is many, many years away. However, your objective is to retire early, perhaps at 55. To achieve this objective you have to start planning today. It’s no use waiting until you are in your 40s; it will be too late and you will need to push that retirement date out much further than desired.
Or consider an oil tanker navigating its way into a port. Newton’s Law says that a body in motion tends to stay in motion unless something changes it. An oil tanker weighing 500,000 tons requires over an hour and six miles just to slow down from 15 knots.
This means that the plan to stop has to be executed well in advance of the intended result.
It is the same in business. Organisations must plan and start executing that plan today if they expect to achieve their objectives some time in the future. Yet surveys indicate that this is not happening.
Despite the increased spending on systems and the technological advances in recent years, only 33% of executives take advantage of electronic decision support tools that could help them in managing performance.
The failure of organisations to manage the transition from where they are to where they want to be is one of the most critical management challenges facing senior executives.
In 2001, more than 250 US organisations – with a combined asset value exceeding $255bn (#158bn) – failed, and companies are on track to have matched that figure in 2002. Without the ability to achieve objectives, executives and managers become mere bystanders in an organisation where performance – or non-performance – ‘just happens’.
So what is going wrong? What is it about the strategic planning process and its execution that fails? Why do systems so frequently fail to live up to management’s expectations? These are crucial questions that need to be answered if the strategy gap is to be avoided.
According to the dictionary, strategy is ‘a plan’, ‘an approach’, and ‘a line of attack’. Strategy can be considered to be ‘the art of guiding, forming, or carrying out an action plan’. When applied to business, strategic planning is about deciding where an organisation wants to go and how it is going to get there.
Strategic planning is still the most widely used tool for managing the performance of an organisation.
In Bain & Company’s annual survey of senior executives from around the world, 76% said they look to strategic planning as the top management tool to improve long-term performance and to strengthen integration across an organisation.
Despite the appearance of many other tools, the report states that senior management trusts familiar tools during difficult times.
Strategic plans typically have a structure that makes them easy to follow.
Most start by stating the purpose of the organisation, which is usually followed by documenting the long and short-term goals, and the plans for achieving these goals.
However, the terminology contained within these plans often varies between organisations, and the words have different meanings.
The senior management team must develop a strategic plan with objectives, goals, strategies, and tactics that everyone supports. Without this acceptance and commitment, those who do not believe in the plan are unlikely to put in the right amount of effort to make it succeed.
Their allocation of resources may be counterproductive to implementing strategic initiatives, while their management time is diverted into seeking out factors that will justify their position. This misplaced time and effort will lead to a gap, which could prevent the execution of the plan.
To achieve buy in, management must create a corporate culture and a set of values that support the vision and guide employees’ decisions and behaviour. Employees must have the opportunity to provide feedback regarding their ability to implement strategy.
Not listening to their views, not addressing – and resolving – conflicts and major differences of opinion, and not building a learning culture – one that tracks and learns from its own successes, failures, and mistakes – will result in strategies that are unrealistic and cannot be implemented.
This situation leads to the strategy gap.
- This is an edited extract from The Strategy Gap: Leveraging Technology to Execute Winning Strategies by Michael Coveney Dennis Ganster, Brian Hartlen and Dave King
The Strategy Gap will be available on 11 April 2003. To order or get more information go to www.comshare.com/strategygap.
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