A former boss of mine, Lee Wilson, would often say “If the strategy’s not implementable, it’s nothing more than a pipedream.” I couldn’t agree with him more. I’ve seen too many organizations dedicate a lot of time and energy to developing their strategic plans only to have them wind up on a shelf collecting dust because they can’t be implemented.
To understand why, let’s look a little closer at what strategy is. In its simplest terms, strategy is a choice about how you are going to achieve your goals to ensure your company’s long-term viability. The key word here is choice. What that means is that you have made decisions about what you are and what you are not going to do. These decisions are usually based on what you know at that point in time and usually don’t consider the likelihood that your assumptions could be wrong or that something significant could occur that would change the choices you’ve made.
What makes matters worse is that once strategic plans are approved, they are integrated into the organization’s operation plans. Rarely does anyone come back to check to see if the underlying assumptions upon which the strategies were based are still relevant. By the time they do, it’s often too late.
So what’s the answer? Well, as with anything, there’s no silver bullet. But if you have an open mind and are willing to rethink your own strategic planning processes, I’ve found an approach that’s relatively easy to implement and worth considering in today’s environment.
To get started, first, you have to accept that your organization’s strategic planning processes are or may soon become rapidly outdated because they are too simplistic, inflexible and they fail to consider unforeseen changes in market conditions or technology.
Second, you have to consider what you don’t know about the future in your analysis. Too often, organizations limit their analysis to just a few options that they consider to be optimal based on what they know at that point in time. Or even worse, they let their own biases get in the way. I’ve noticed too many times that key decision makers often approve strategies that confirm what they wanted to do in the first place. Or they overestimate the importance of the information that is easily available to them and fail to consider information that’s not as easily available or accessible. Doing this can lead to poor decisions and missed opportunities.
Third, you have to be open to change. Instead of making decisions based on intuition, traditional cost benefit analysis, and what you “know,” you must be willing to rethink your own decision-making processes. Years ago, Edward de Bono, proposed in his book entitled, “Six Thinking Hats,” a compelling way to rethink decision making processes by forcing examination of multiple dimensions of decisions that might push decision makers out of their comfort zone. His approach acknowledges the “gut feeling” reactions as legitimate, but also recommends ways to think about other aspects of issues. I would submit that his approach is even more relevant today than it was when he first wrote the book because of the availability of information.
Even though there aren’t any silver bullets, I have found that decision tree analysis offers a more structured, but dynamic approach to strategic planning. Decision tree analysis is one of the oldest forms of decision making and continues to be taught in most business schools today. It provides a logical way to show a course of action based on statistical probabilities. And it provides a relatively easy way to show outcomes from strategic decisions when underlying assumptions change.
Integrating decision tree analysis into your strategic planning processes requires a different way of thinking. Setting up the initial models can be complex. It requires more rigorous analysis around the initial assumptions so that probabilities can be assigned. It requires people who have the skills to understand, build and maintain the models that can be used to visually represent outcomes. It also helps to have some people with actuarial or statistical experience to help explain probabilities
Incorporating decision tree analysis into strategic planning helps organizations shift away from making strategic decisions by “gut feelings” and shifts toward a more data-driven, evidence based decision approach. What I like about this approach is that it considers what we don’t know, uncertainty and risks by assigning probabilities to outcomes under a wide variety of “what if” scenarios, including those of uncertainties. Perhaps, most important, is that it offers multidimensional forms of analysis in ways that are relatively easy for most people to understand.
There are several vendors that provide decision tree software as part of their suite of business intelligence and predictive analytic tools. However, you don’t have to make major investments in software to use this approach. In fact, you can get started with Excel. YouTube has a lot of free tutorials on ways to setting these up.
The key to success when using decision trees for strategic planning is to assign someone to monitor the underlying assumptions driving the plan. Decision trees offer a way to show a different course of action when assumptions change and with time, they can give senior management more confidence in their own decision making, as well as that of their leadership teams.
Too often, people who work in operations have a negative view about their company’s strategic planning processes. Personally, I think it’s because they recognize the weaknesses inherent in the process which ultimately make the strategic plans “not implementable.” Pragmatically speaking, by integrating decision tree analysis into your strategic planning processes, you help facilitate the creation of a more dynamic decision making environment, one with a better chance for success.