The Big Lie of Strategic Planning, from Roger Martin

This post is a part of our Think Piece series, in which we synthesize and share the most insightful concepts from our favorite books, articles & thought leaders. The following has been modified from the writings of Roger Martin, The Big Lie of Strategic Planning, Harvard Business Review, January 2014. 

“Customers and context are both unknowable and uncontrollable.”

In 1978 Henry Mintzberg published an influential article in Management Science that introduced emergent strategy, a concept he later popularized for the wider nonacademic business audience in his successful 1994 book, The Rise and Fall of Strategic Planning. Mintzberg’s insight was simple but indeed powerful. He distinguished between deliberate strategy, which is intentional, and emergent strategy, which is not based on an original intention but instead consists of the company’s responses to a variety of unanticipated events.

Mintzberg’s thinking was informed by his observation that managers overestimate their ability to predict the future and to plan for it in a precise and technocratic way. By drawing a distinction between deliberate and emergent strategy, he wanted to encourage managers to watch carefully for changes in their environment and make course corrections in their deliberate strategy accordingly. In addition, he warned against the dangers of sticking to a fixed strategy in the face of substantial changes in the competitive environment.

THE PROBLEM

In an effort to get a handle on strategy, managers spend thousands of hours drawing up detailed plans that project revenue far into the future. These plans may make managers feel good, but all too often they matter very little to performance.

WHY IT HAPPENS

Strategy making is uncomfortable; it’s about taking risks and facing the unknown. Unsurprisingly, managers try to turn it into a comfortable set of activities. But reassurance won’t deliver performance.

THE SOLUTION

Reconcile yourself to feeling uncomfortable, and follow three rules:

  1. Keep it simple. Capture your strategy in a one-pager that addresses where you will play and how you will win.
  2. Don’t look for perfection. Strategy isn’t about finding answers. It’s about placing bets and shortening odds.
  3. Make the logic explicit. Be clear about what must change for you to achieve your strategic goal.

All executives know that strategy is important. But almost all also find it scary, because it forces them to confront a future they can only guess at. Worse, actually choosing a strategy entails making decisions that explicitly cut off possibilities and options. The natural reaction is to make the challenge less daunting by turning it into a problem that can be solved with tried and tested tools. That nearly always means spending weeks or even months preparing a comprehensive plan for how the company will invest in existing and new assets and capabilities in order to achieve a target. The plan is typically supported with detailed spreadsheets that project costs and revenue quite far into the future. By the end of the process, everyone feels a lot less scared.

This is a truly terrible way to make strategy. It may be an excellent way to cope with fear of the unknown, but fear and discomfort are an essential part of strategy making. In fact, if you are entirely comfortable with your strategy, there’s a strong chance it isn’t very good. You need to be uncomfortable and apprehensive: True strategy is about placing bets and making hard choices. The objective is not to eliminate risk but to increase the odds of success.