Why Traditional Planning Is Bankrupt and What to Do

Traditional strategic planning works for building a house or the sewage system of Mumbai, but it is obsolete for at least 5 reasons. How can you end the divorce of strategy and action, stop treating people like objects, and end business-as-usual?


As I write this, I'm sitting in the Business School library at Columbia, where I teach. I look up from my laptop at a Chinese student; pinned to her backpack is a sticker with Gandhi's face and his famous dictum, "We must be the change we wish to see in the world." The truth is out there...

But it's easier said than done. Yes, if you want to be president, you have to think and act presidential now, even while you are a candidate. But if you want a systemic change in your organization or society, how can you embody that change in the present, before it happens? How can you be the future now?

To answer, we have to go backward first. One afternoon, my colleague Richard Radu and I sat down with a senior technology executive at a financial services firm. He told us that the company faced a tough organizational challenge that involved moving thousands of people offshore. "People are overwhelmed," he said; "they don't know how to manage the change. They're afraid of losing their jobs." How could he and his senior management team minimize the human costs, allay people's anxieties, and still get the job done with maximum cost savings and speed?

Interviews with him and other key stakeholders revealed quickly that there was no shared vision or strategy for the proposed change. People said things like, "We are wedded to the past... There's lots of discussion, but no direction... There's apathy, complacency... And many people don't know how to manage across cultures – they have no competence in cultures."







It was the type of situation we often encounter in organizations. When a strategic challenge is intermingled with people, communication and culture issues, things become complex and unpredictable, and traditional planning falls short. Why? Because conventional planning is often riddled by multiple shortcomings, and this company was no exception:

• Conventional planning is divorced from action. "Top management is fully on board," said another manager, "but below they are not." Top-level planners had expected the lower echelons to implement their blueprint. This works well for capital development projects, such as a bridge, a pipeline, or a canalization system for Mumbai; but it breaks down in any living system that depends on the human element: initiative by all stakeholders. In the words of one focus group we asked: "There is no understanding of the strategy below the top. People don't even know that this is our intent."
• Conventional planning kills the human spirit. At Swiss Consulting Group we are always suspicious of buzzwords like "cascading down" or "buying into..." They mean that people are recipients or even objects, not stakeholders or owners, of the strategy. Because planning was top-down, there was "weak identification with the firm and its vision." Planners were about to steamroll their plans through the organization, without giving those affected the chance to participate, let alone lead the change. Top-down planning can kill off the most precious asset of the organization: people's ideas, creativity, and leadership. The result: demoralized employees and brain-drain.
• Conventional planning misses opportunities. Because planners did not communicate well – and especially since they did not listen or seek input from those affected, in all countries and cultures where the company operates – they ignored strategic opportunities to integrate already-existing initiatives. "There's silo thinking," said one manager. "We are fragmented. We have totally different processes." The result: lack of focus, in-fighting, culture clash. "We do everything, but nothing right," said another executive. "We have 25 initiatives!"
• Conventional planning is slow and costly. Planners had little regard for the changing entrepreneurial landscape created by their actions. This sacrificed the firm's ability to turn on a dime and take entrepreneurial leaps. The result: sometimes massive sunk costs (you build a heavy and costly infrastructure that nobody wants to use) and always inefficiencies. "Our IT is expensive," complained one manager. "The firm is not competitive."
• Conventional planning misses the root-causes. Since top managers did not stand in the shoes of the people and cultures affected, their plan got stuck on the surface. It attacked symptoms with a fix-it approach and missed systemic root-causes of problems and hence comprehensive solutions derived from the active involvement of all stakeholders. The result: bottlenecks and quality issues.

What to do? Our answer is Strategy-In-Action, a 7-step dynamic process linking people with strategy, and strategy with action. The approach was pioneered by The Hunger Project (www.thp.org) in 1990 in a joint venture with India's Planning Commission on a strategy for ending hunger in India, and is based in part on Hamel and Prahalad, "Strategic Intent" (Harvard Business Review, May-June 1989, pp. 63-76). Strategy-In-Action has been called the most systematic and scientific approach to strategy. The difference between conventional planning and Strategy-In-Action (see Table) is not theoretical – it can be the difference between failure and success, or between billions of dollars in sunk costs and large-scale profits. When Motorola launched its infamous Iridium infrastructure, it paid a heavy price for its traditional planning: a $1 billion loss. Iridium became one of the 20 largest bankruptcies in U.S. history.

Table: Conventional Planning vs. Strategy-In-Action

In interviews and workshops, we brought together people from across the company who needed to build a shared understanding, vision, and strategy – from the brilliant but opinionated strategy chief to the smooth human resources chief to line managers in several offices around the world. Some participated by videoconference or phone from their offices overseas. As facilitators, we made sure that no viewpoint was excluded from the process – especially stakeholders who would usually be ignored, or who might bring up difficult and unpopular issues. All too often forgotten, shared understanding is the crucial first step of Strategy-In-Action, the foundation without which strategy is built on sand.

So how will you ensure a shared understanding the next time you shape your strategy?

All the best,