by Oliver Recklies
3.2 Tailoring the planning cycle
Often organizations are concerned about the effort to implement and to run a strategic planning process. To set up an appropriate planning process ROTHSCHILD et al (2004) as well as DYE and SIBONY (2007) highlight the benefits of a tailored planning cycle. The instrument is to free business units from the need to conduct the planning process every single year; hence these units undertake strategic planning only every two or three years. In this planning approach organizations can employ trigger mechanisms to identify which business units need to undergo the full planning process. Major benefits are: The corporate strategy function can focus its resources on critical strategic issues. Furthermore business units that have started a new strategy a short time ago are not forced to run this process again and can focus on strategy execution.
Using this tailored planning cycle approach some business units have to review the strategy they developed a year ago and make minor adaptations. Other business units should completely reinvent themselves due to their several years old strategy that has reached maturity. However, when important changes in the external environment occur, senior management must be able to address strategic issues with the relevant business units on an ad hoc basis.
3.3 Improving the cultural context
The organization’s culture represents the context in which strategic planning processes and tools work. Hence cultural issues, e.g. conversation style have an impact on the planning process. ROTHSCHILD et al (2004) see a spirit of debate and productive challenge among senior and middle managers as an option to influence the organisation’s culture. Organizations should establish a culture “that gives people permission to raise uncomfortable truth and question the assumptions on which strategies are built”.
Organizations have to consider that the establishment of such an organizational culture that allows fruitful debates and tolerates mistakes does not happen overnight. Furthermore organizations have to start this change from the top. Under some circumstances it may require changes in personnel, too.
Planning cycle and corporate culture can be seen as contextual factors, which determine the planning process. The next subchapters will highlight some recommendations that are directly related to specific phases within the strategic planning process.
When analysing external and internal factors most organizations employ a static view of these factors. Other problem areas can be found in the large number of external data and unexpressed customer needs.
Dynamic view of the market place. In order to develop a successful and sustainable strategy, organisations should also apply an approach that considers the impact of so called secondary effects. Furthermore planned systems and structures should also be in place for tomorrow’s environment. AVILA et al (1995) recommend taking a dynamic view of the marketplace. Therefore organisations should anticipate competitive reactions and explicitly incorporate them into their strategic analysis. This dynamic view is in line with the recommendations by FARRELL and ASSOCIATES (1995) who stress that organizations’ strategy analysis should include products, markets and channels of both today and tomorrow.
Structuring external data. To reduce the problems related to the analysis of a large number of external data, it is recommended to structure the environment into different segments and sub-segments. Segments could be general environment, business market and industry; where technology and economy could be sub-segments of the general environment. The creation of different scenarios can be seen as a way to manage the uncertainty of forecasts.
Unexpressed customer needs. To identify unexpressed customer needs ROTHSCHILD et al (2004) recommend starting with the customer using a so called strategic customer research. The objective of this analysis is “to explore the unstated priorities that customers sense but can’t fully articulate” and to identify so called “future defining” customers, too. One option to do so in practice is to employ scenario techniques and to combine them with the research results from trend scouts.
After strategic analysis organizations have to set up the agenda for the planning meeting. Organizations should focus on key issues and involve middle managers.
Key issues. DYE and SIBONY (2007) stress that identification and discussion of key issues should be the first step to ensure that the organization does not waste effort on less important topics. Key issues are “the strategic issues that will have the greatest impact on future business performance”. In practice managers should try to anticipate big challenges and spot important trends that might affect organization’s business. Identification of trends, lists of strategic questions and in-depth interviews are seen as examples to explore and discuss those key issues.
Middle managers. Considering the findings from FLOYD and WOOLDRIDGE (1997) the quality of strategic decisions can be improved if middle management has the chance to contribute their knowledge to the stage of agenda setting. Hence it is recommended to establish a procedure that ensures the involvement of middle managers during the process of agenda setting. Degree and content of such a procedure should consider both size and structures of the organization and requires also specific skills among middle managers.
To generate a variety of ideas the organisation has to ensure that various perspectives and different levels of knowledge are reflected. One option to reach this objective is to include management representatives from all functional units of the organisation; another option is to divide the planning process into two parts.
Including representatives from units. DYE and SIBONY (2007) argue that assigning and involving the right people represents an important factor for the planning process. Based on their research results they give a general description of right people: “…the most knowledgeable and influential participants, stimulating and challenging the participants’ thinking…”. Hence strategic planners from the business unit level and the corporate level as well as people who carry out the strategic moves, e.g. corporate decision makers, business unit leaders and people with expertise, should participate in strategic conversations.
Dividing the process. FARRELL and ASSOCIATES (2005) recommend dividing strategy finding into two complementary activities.
One activity is the formal organization of the strategic planning process; corporate planning departments can make their contribution around the process. Their primary tasks include supplying formal analyses and other hard data to broaden the consideration of issues. This activity is not intended to discover the right answer.
The second complementary activity can be found within managers’ responsibility to formulate a strategy. This is an iterative process that starts with an invention, an idea or an innovation. In this activity soft skills like lateral thinking, creativity and intuition are requested. The results of this activity can be summarized into a strategic plan. It can be recommended to merge this plan with other departmental strategic plans by corporate planners to set up a comprehensive strategic plan for the entire organization. This is confirmed by AVILA et al (1995), who recommend that the organisation should couple the functional strategies “with actions in other parts of the business systems to reinforce the impact of the functional improvements and limits the extent of any counteracting effects”.
At this stage within the planning process the organization did identify strategic issues and was able to develop a new strategic plan. The next step requires the implementation of this plan. Recommendations for strategy implementation and execution put an emphasis on general conditions, progress monitoring, and communication issues.
General conditions. According to PÜMPIN and GEILINGER (1988) as well as DELOITTE (2005) the following conditions represent those premises, which are essential to achieve a successful implementation of a corporate strategy:
· Right from the beginning of strategy development all managers should be involved to establish identification with the new strategy.
· Top managers have a function as role model. Therefore they have to support the new strategy and have to express this clearly.
· Since the implementation of a strategy can not only be achieved by top- and middle managers, all employees should be linked with the implementation. Employees should believe in and understand the rationale behind a strategy to ensure its success. This has to be ensured by an appropriate communication. DELOITTE confirms this and also highlights the importance of commitment: “Effectively communicating the chosen strategy to every level of the company is of paramount importance” and “The chosen strategic direction must be communicated through a process that builds commitment”. Motivation and engagement play a major role.
· All corporate units have to make a contribution to strategy implementation.
· Specific measures are requested to measure the desired change.
 Note: Many of those trigger mechanism will employ financial ratios. Others can be operational to offer a more complex evaluation of the unit’s performance.
 Compare Rothschild et al (2004), page 42
 Rothschild et al (2004), page 42
 Compare Avila et al (1995), page 40
 Compare Pümpin (1992), page 194 f
 Rothschild et al (2004), page 39
 Dye, Sibony (2007), page 42
 Dye, Sibony (2007), page 43
 Note: This approach is in line with MINTZBERG (1994) who argues „Controller should supply the formal analyses or hard data that strategic thinking requires, as long as they do it to broaden the consideration of issues rather than to discover the right answer. They should act as catalysts who support strategy making by aiding and encouraging managers to think strategically.
 Note: MINTZBERG calls this responsibility „strategic thinking“.
 Avila et al (1995), page 44
 Compare Pümpin, Geliniger (1988), page 40 ff, compare Deloitte (2005, page 22)
 Deloitte (2005), page 22
 Note: DELOITTE (2005, page 22) argues that it is crucial that the chosen strategy be specific, as it will lead employee decisions regarding the measurement plans. THOMMEN and ACHLEITNER (2006, page 961) distinguish between direct and indirect measures. Direct measures have a direct effect on the organisation. These are plans and budgets, project plans, management systems, organisation, information systems and the assignment of managers. Indirect measures such as employee information, corporate identity training, and corporate culture, support direct measures.
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Status: 01. Januar 2015