Corporate Strategy: The “Yin and Yang” Duality In Strategic PlanningPosted by on February 6, 2013
Strategic Planning Is Also About the Present, Not Just the Future
In the past we’ve talked about addressing risks, assumptions and impediments during strategic planning, but what about current critical business issues? Should those be solved outside the process of strategic planning or be brought into the strategic loop of business forethought? This article addresses the tension between the present and the future (the tactical and the strategic) in corporate strategy development.
Addressing Critical Business Issues Through Strategic Planning
Strategic planning is not just about an organization’s future. Current critical business issues can also be strategic in terms of their immediate and long-term impacts and must be solved in harmony with the organization’s strategy. H.L. Mencken said that “for every complex problem there is a simple solution… and it is always wrong.” Critical business issues are usually tangled up with lots of business process, organizational structure and threads of the enterprise’s strategy. The simple solution of assigning a task force, key executive, or consultant (or taking other ostensibly obvious steps) in times of urgency may not be the best approach to serving an organization’s mission. Such isolated approaches to problem resolution can disconnect the solution from the integrated actions already underway or in development as part of the corporate strategic planning process.
The present and the future tension existing between the tactical and the strategic should not be cause for concern. We have referred before to this “yin and yang” duality that always exists when strategic planning is done well. Both must be represented within the strategic plan in order for the programs comprised in the strategy to be both forward-thinking and remain realistic in addressing the immediate needs of the business (see #8 in our list of Eight Critical Success Factors For Improving Strategy Execution for more on this topic).
This tension represents a dichotomy between solving immediate critical business problems, addressing basic organizational issues and other tactical short-term work to be accomplished in a balanced plan that also accommodates larger sweeping strategic initiatives. A good strategic planning process moves everyone out of their comfort zones, systematically challenges their own assumptions and leverages an un-biased prioritization approach to find the best strategy and sequencing of programs that support the organization’s mission (see Managing Assumptions, Risks and Impediments In Strategic Planning). It is a fact that certain elements of strategy are dependent on having organizational impediments, risks and critical business issues addressed in order to pave the road for faster progress later on in the process.
The reality is, strategic planning is also about the present, so identifying and addressing true critical business issues is the right course of action in most cases.
What Constitutes A Critical Business Issue?
A critical business issue can be thought of as “A problem or opportunity that is critical to the overall success of the organization”.
A simple rule of thumb for categorizing a problem as a critical business issue is to determine if two or more of the following are true:
- The problem is related to a core organizational function
- The problem affects a significant number of people directly or indirectly
- The problem is adversely affecting customers and/or key stakeholders, is promoting illegal activity or causing a break in regulatory compliance
When taking action on such a problem is tantamount to the overall success of the organization, it constitutes that the issue not only be considered for its criticality, but also its strategic implications. When critical business issues have strategic implications, they need to be addressed as part of organizational strategy and not in some disconnected loop that operates outside of the planning process and strategy governance structure (see more about The Office of Strategy Management).
Leverage Your SWOT Analysis To Identify Critical Issues
Organizations should proactively be seeking to identify critical business issues as a part of their planning process. Since most companies already utilize some form of SWOT (Strength, Weakness, Opportunity, Threat) analysis, that can be a starting point for targeting critical issues as a part of the planning cycle. SWOT, which has been in use since the 1960s, is a simple tool that can help companies address critical problems (perhaps addressing an area of weakness) by building on strengths and/or opportunities. Strengths are characteristics of the business that give it an advantage over others. In the SWOT context, weaknesses are characteristics that place the organization at a disadvantage relative to others. Opportunities are therefore elements or core competencies that the can be leveraged to the businesses advantage.
A critical business issue could also be identified as a current (actual) or potential (risk) gap between the company’s business performance and one of the following:
- A key competition’s performance
- Customer’s expectations
- Executive’s performance expectations
Likewise, an opportunity might exist to make significant improvements in a business area currently experiencing no performance problems - but at risk of decline based on market intelligence. In some cases, the critical business issue can be very large-scale, requiring the implementation of a major change in the organization.
Policy and Process Example
Las Vegas Sands Corp. has overhauled its compliance procedures to address potential money-laundering schemes tied to international bank transfers. The company added ex-FBI agents with the right expertise to help strengthen an area of weakness and has made significant process changes to address the critical business issue.
Market Trend Example
Dell, the personal-computer maker that lost almost a third of its value last year, is said to be in the process of a leveraged-buyout to take the company private. The critical business issue Dell faces is a rapidly declining PC market in recent years as consumers shun desktop and laptops in favor of tablets and smartphones. The strategy is to go private to allow the company time to overall its business and begin focusing primarily on B2B computer sales as well as IT services.
Strategic planning is not just about an organization’s future. It is also about what is causing the organization pain at this moment. By planning strategically and refreshing plans operationally in shorter cycles, strategic critical business issues can be addressed as a part of the overall strategy and not in disconnected “special-projects” loops.
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