Sometimes it seems there are just two views of strategic planning: it’s either a one or two-day retreat, or it’s an all-consuming, constant exercise. The “strategy light” version – a one or two-day retreat, seems super practical, while the “heavy strategy” version – a constant or months-long excursion – seems far less doable. While these impressions are somewhat accurate, it’s a mistake not to examine the middle ground.
Some very successful companies – including YouTube, Canva and the Walt Disney Corporation – adhere to the dictum that 10 percent of your executive team’s time should be devoted to strategic planning. This would amount to about 1 week per quarter or around 25 days per year. Strategy, these people argue, is so central to our success, that we should assure ample time for planning on an ongoing basis. In my own experience as an executive in the banking industry, I was involved in a planning process that took most of my time for six months. These processes are often so complex and burdensome that entire departments are devoted to strategy and the resulting plans can be huge.
In the “strategy light” camp, we see a plethora of smaller organizations working to fit their entire strategic plan onto one sheet of paper, and insisting that one or two days is sufficient to develop such a plan. Many players in the world of strategy consulting for small businesses seem to promote this idea, as a one-day planning session is an attractive and budget-friendly product for resource-strapped smaller companies.
For most companies, a more “goldilocks planning” approach is likely the most appropriate. There are several reasons for this. First, executives in smaller and mid-sized companies, in particular, have ongoing operational responsibilities that must be attended to. This limits the time those executives can practically allocate to planning. Second, as the burden of planning increases, it becomes costly in other ways. In particular, the planning staff, data collection and consultants can easily become a cost that reduces profitability. Finally, the productive value of deeper insights into your strategy can make an extended planning process less practical than an iterative process that allows for feedback and correction over time.
These are all reasons why a lower time investment in strategic planning makes sense – but why not go all the way and reduce planning to a bare-bones activity, as the “strategy light” proponents suggest? The main reason for this is that the richness of the information you need to consider requires a slightly deeper understanding of your strategic situation. Simply put, removing the rich information leaves you with an overly simplistic plan, leaving parts of your business vulnerable to competitors with a slightly deeper planning approach. For example, you can save time by cutting the number of market segments you address from, say, 8 down to 1. While this lowers the cost of your planning – in both time and money – it also leads to strategies that treat customers as a monolithic group with very basic behavior patterns.
The key to the “goldilocks” approach to your strategic planning is understanding how strategic planning can help you think about your business, your customers and your competitors. One very useful concept we use at Center for Simplified Strategic Planning is that people tend to use groupings they can remember easily. In practice, this leads us to prefer 3-9 market segments for most companies because we can gain the benefit of rich information and analysis while preserving our ability to use the information on a daily basis.
In practical terms, this had led us to work with a planning schedule of 4-7 days of meetings and 20-30 hours spent on data collection each year. While this is far less that 10% of your time, it gives you enough ability to examine key issues that you’re unlikely to be blind-sided by unexpected strategic issues. As consultants, we often design processes that require more or less time, since we strive to make our clients happy – but the average time required centers around the 4-7 days we teach in the Simplified Strategic Planning seminar.
How does this work in your company? Do you spend more or less time on your planning, and what are the pros and cons you see in this approach?
If you’re thinking of doing strategic planning and would like a simple, affordable approach that keeps you on track with your strategy execution, take a look at our new monthly process. You can get your planning and execution monitoring done in 2-4 hour virtual meetings each month! Details HERE