The two big pitfalls of strategic planning

If you’re a taxi company, how do you adapt to Uber-world? I don’t know the answer off the top of my head, and I’m glad I’m not facing that particular challenge. Most organizations aren’t quite in that tough a position, at least not yet. But all of us who are leaders of established organizations have to face a world that’s changing, and that’s producing new types of competition doing business in entirely new ways. To thrive, you’re going to have to realign your organization with the new realities of your industry.

Your first step: A new strategic plan that will spell out where and how you’re going to fit into this new world and meet your objectives. It’s one of the key roles of a top leader. But there are two big mistakes that leaders can make when driving the creation of these new strategic plans. And from what I’ve seen, most leaders of established organizations tend to make one or the other.

One of the two mistakes comes from looking at strategic planning as the process of figuring out how to improve what you’re doing now. You bring your team together and seek input throughout your organization in order to analyze everything you’re doing. Slowly but surely you determine how you can to do it better, faster, at lower cost, in ways that are more customer-centric, in new markets. Everyone in the organization is on board with the new plan, and you set to work hammer out the tactics that will bring these new strategies to life. Congratulations! You’ve just helped your organization become better than ever at doing what may soon be irrelevant.

This is the “buggy whip” approach to strategic planning. The fundamental, incorrect assumption is that you’ve defined your business properly, and that you have the right assets and resources to face the changing world, so that all you have to do is focus on tweaking, improving, and expanding. That assumption is probably fatally flawed. Today, the world is changing at lightning speed, relentlessly. The better buggy whip, the more efficient travel agent, the taxi service that is accessible through an app–these are Band-Aids on what threatens to become a mortal wound. This is how you get “Ubered.”

OK, so let’s assume you understand that, and instead of trying to update your old line of business, you ask: What sort of business do we need to be in to meet the demands and expectations of a changing world? You see where the new opportunities lie, what the new approaches to business built around entirely new tools are, how customers are interacting with organizations in fundamentally new ways. And around these exciting insights you draw up a strategic plan that describes the reinvention of your organization as a leading player with entirely new capabilities and approaches. Whoops–now you’ve fallen into the other trap, the “square peg” approach to strategic planning.

Completely reinventing the business is generally the luxury of nimble start-ups, or the last desperate move of imploding organizations. For a substantial organization that is still pulling its weight in a competitive landscape by virtue of significant assets and resources, an all-out effort to rebuild around fundamentally new ways of doing business is likely to be a messy waste. You’ll be needlessly throwing out competencies and relationships that may have taken decades to build. You’ll be pushing your people into jobs they never signed up for and may not be very good at.

Have any large taxi companies won by successfully turning themselves into an Uber-like service?

And that’s the dilemma of the leader: How do you align with the changes in your industry without turning your back on your organization’s identity, culture and assets?

They key is to balance internal with external guidance. That is, you want to bring people from across your organization in on this quest–but without succumbing to groupthink or a bunker mentality that leaves you clinging to old ways of doing business in denial of what’s happening out there. And you want to thoroughly explore the new business climate that’s emerging, with the help of potential partners and outside perspectives–but without completely losing touch with what has made you a successful organization so far.

That sort of thoughtful balancing act will lead to strategic plans that point the way to the critical and potentially extensive new changes in your organization needed to compete in the new environment. But they’ll be changes that build on and leverage your people, competencies and other assets, rather than changes that abandon them and leave you floundering for a way to replace them.

This article is published in collaboration with LinkedIn. Publication does not imply endorsement of views by the World Economic Forum.

To keep up with the Agenda subscribe to our weekly newsletter.

Author: Steven J. Thompson is a healthcare executive and currently serves as the Senior Vice President and Chief Business Development Officer at Brigham & Women’s Healthcare in Boston.

Image: A Businesswoman is silhouetted as she makes her way under the Arche de la Defense, in the financial district west of Paris, November 20, 2012. REUTERS/Christian Hartmann.