Of these four attributes, information flow and decision rights matter most to strategy execution. Therefore, you must set up your strategic planning process to promote them. This means that you should not develop your strategic plan in a vacuum, with only a small group of strategists who are disconnected from the rest of the organization. Instead, improve information flow by involving a virtual network of strategic planners across the organization, right from the start. This will promote sharing of insights, strategic thinking, alignment, collaboration, and ultimately a deep-rooted understanding of the strategic plan and a greater sense of ownership among more people.
Define decision rights and accountability rigorously; articulate them clearly, and assign them to the right people. Accountability should be clear to avoid passing the buck, but the work and accountability should be appropriately cascaded to motivate the lower levels of the organization. Also, link decision rights and accountability transparently to your performance incentive schemes.
5. Promote Efficiency
Strategic planning is a multilayered, multi-frequency process that must be engineered for efficiency. Combining a top-down and bottom-up approach is key to minimizing cycle time. In your planning processes, emphasize strategic discussions, align everyone on key business initiatives, and set targets before you undertake detailed planning. This top-down alignment and direction sets clear boundary conditions for developing detailed business plans. It also minimizes the number of iterations that are required to align plans between local businesses and the corporate center.
Optimize the planning process further by simplifying it, and by standardizing your data structures. Focus on key drivers of value; eliminate discretionary detail that is not required for business steering purposes. Your information technology infrastructure can yield further efficiency benefits to the process by consolidating planning data, integrating it with actual reporting, supporting the process workflow, and facilitating data integrity.
The Context of Coherence
As we said at the beginning of this article, every company’s strategy should be distinctive. In your planning process, you will want to create the context for your decisions by identifying those factors that distinguish your company from all others. These will include a considered choice about the markets you most want to reach, and a careful and accurate assessment of the small number of capabilities that allow you to do some things better than anyone else. (See The Essential Advantage: How to Win with a Capabilities-Driven Strategy, by Paul Leinwand and Cesare Mainardi [Harvard Business Press, 2010]).
A good planning process will move your firm toward coherence — and greater coherence leads to added value. Moreover, although all businesses will take different routes to their destination, the five best practices of strategic planning outlined above will apply regardless. With careful attention and dedication, you can evolve your current planning process into one that is more tailored, more accommodating of external perspectives, more aligned with a performance culture, more execution oriented, and more efficient. The results will be worth the effort.
- Richard Verity is a partner in Booz & Company’s London office. He heads the firm’s chemicals practice and specializes in supply chain management, purchasing, and corporate transformation services for the downstream energy and chemical industries.
- Simon Mills is a senior consultant in Booz & Company’s London office. He specializes in operating model and organizational transformations for the energy sector and topics on the CFO agenda.