The focus is on developing clear, actionable business plans that describe the multiyear strategic initiatives required to transform vision into value. The purpose of medium-term strategic planning should be to enumerate the steps necessary to realize the vision-typically over a three- to five-year period. BIC a good example: it recognized that its capabilities positioned it to be not just a pen company but a broad-based disposable-device company, a realization that created the foundation for its move into lighters, shavers, and more. The long term is also a great perspective from which to consider how to project skills and brand into new domains. It was a vision for the future around which they could then align the organization for a multiyear journey. Looking forward, the company’s executives could see that an aging population and the fitness trend would provide strong tailwinds for a change in course toward the health care sector, while continuing commoditization would leave the traditional consumer electronics business at best becalmed. Philips’s decision to shift its focus from consumer electronics to the health care sector is an example of this kind of thinking. How might megatrends, including technology advances and demographic shifts, alter the business environment? What strategic risks and opportunities are revealed when considering future scenarios? Will the company’s traditional sources of advantage remain strong or be compromised? What new opportunities could arise and give the organization an opportunity to win? It’s the forum to challenge and redefine the boundaries of the market and the rules of the game. It’s about projecting more than five years into the future. The purpose of long-term strategic thinking should be to define, validate, or redefine the vision, mission, and direction of the company. Leading companies often think of strategy at three time horizons (see Exhibit 1): Much of the frustration expressed about strategic-planning processes arises when companies try to address the long, medium, and short terms through a single, inflexible process. Each has different goals and requires different approaches, a different frequency, and the involvement of different people. It is important to think about strategy at different time horizons. They invest in execution and monitoring.Įxplore Strategy at Distinct Time Horizons.They constantly reinvent and stimulate the strategic dialogue.They explore strategy at distinct time horizons.It’s that most companies lack an effective strategic-planning process.Īlthough there is no one-size-fits-all approach to strategic planning, we have found that the companies that get the most benefit from their strategic-planning activities have four things in common: In short, the problem isn’t strategic planning. And achieving strategic preparedness takes a structured, organized thought process to identify and consider potential threats, disruptions, and opportunities-which is, for want of a better term, strategic planning. Agility is great, but it’s more powerful when paired with preparedness. (See “ Die Another Day: What Leaders Can Do About the Shrinking Life Expectancy of Corporations,” BCG article, December 2015.) Faced with those odds, it doesn’t make sense to put all your chips on agility. And the life span of the average company has halved since 1970. Nearly one-tenth of public companies disappear each year-a fourfold increase in mortality since 1965. More than ever, companies need to devote time to strategy. Some even argue that strategic planning is a relic that should be relegated to the past and that organizations seeking to prosper in turbulent times should instead invest in market intelligence and agility.Īlthough the diagnosis is largely right, the prescription is wrong. Executives at most companies criticize it as overly bureaucratic, insufficiently insightful, and ill suited for today’s rapidly changing markets. Strategic planning is one of the least-loved organizational processes.
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