Setting strategic direction is never easy, but when leaders don’t get the results they’re expecting they often overlook the role human nature played in the outcome. While most CEOs acknowledge the traps, many don’t see the extent to which they contribute to them. When planning becomes an exercise in doing it right rather than doing the right thing, results will suffer. By focusing on five common pitfalls, planners can increase the quality of the plan and the likelihood of better performance.
Failure to address fundamental problems of the business – Planning should be a purpose driven activity, and a good place to start is with an honest appraisal of the challenges facing the business. The important word here is “honest”. From a behavioral perspective, we experience anxiety when our expectations don’t match the results we’re getting and we subconsciously hunt for an explanation to resolve this conflict. Group discussion of the underlying causes behind poor performance can result in rationalizing the circumstances to explain them. It feels good to breathe deep once the “truth” behind the results is identified, but in doing so management relieves itself of accountability for the performance of the business. How often has the recession been used to rationalize poor results rather than a lack of internal vision, talent or plan execution? Sure the recession had an impact. Certainly some businesses experience a seasonal impact, but using those external situations to explain results can be a convenient way to avoid taking responsibility for them. In short, if you fail to critically assess the capability of the company to achieve its goals, you’ll have hopeful plans with little chance of success.
Over optimism -The planning process is, by its very nature, an exercise in projecting actions and results we’d like to see. I’ve never seen a company plan to take itself backwards. Planning is an opportunity to step out of the present challenges facing the business and move into a future where the imagined circumstances and results can be much different than today. In a way, it’s like a buffet dinner; when I’m planning everything looks good but when I sit down to eat I discover that I’ve bitten off more than I can chew.
There’s a narrow line that separates aggressive stretch goals from over optimism. That line is crossed when plans for short term results are projected to produce similar long-term outcomes without a sound basis for the expectation. The result is a “hockey stick” forecast. Focused cost cutting efforts can produce meaningful results and may be a good strategy to improve competiveness, but jumping to the conclusion that continuous improvement will generate similar results without a realistic assessment of what it’ll take to do it can lead to unrealistic projections and disappointment.
Failure to link plans and execution -Few things kill a good plan more than getting caught up in the day-to-day demands of business.I’ve seen many good plans get sidetracked because the business got either too busy or too slow. Well intended plans get pushed off and eventually are reassigned to next year’s plan. While there’s always a reason to explain why execution fell by the way, it often stems from a failure to monitor and adjust the plan throughout the planning horizon.
Planners need to create direct and specific linkages to actions with a feedback loop. Managers should understand their contribution to the overall goal and strategy, actions to achieve results should be in alignment with the overall strategy and managers should be held accountable for their results. Then, as business changes, the plan should be assessed and adjusted, not abandoned.
Poor communication -I’ve seen too many strategies that were incomprehensible to the employees. Others remain in the hands of the senior planners and managers with little communication and linkage to the workforce where responsibility for carrying out the plan resides. Strategies that are simple to understand, few in number and with goals that are measurable at all levels have the best chance of success. Employees must be able to see themselves achieving the goal and contributing to the higher strategy if they are to be engaged and the plan to succeed.
Putting form ahead of function -I’ve been asked many times what a good strategic plan should look like. What components should it have and in what order? The problem with this line of thinking is that the planner has put the form of the plan ahead of its function. Marketing plans, business plans, or budgets that begin with form seldom have the substance or linkage to execution necessary for success. Many don’t make it out of the executive suite and wind up living on the shelf until next year.
Making matters worse is that the same plans are often filled with slogans and lofty exhortations that, while sounding strategic, lack the specifics necessary to engage employees and produce meaningful results.
Planning is a necessary step to achieve best results in business. But to be effective it has to be practical and achievable and that means it’ll be different for every organization and situation. Avoiding the basic pitfalls mentioned above will go a long way to making your plan practical and productive.
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