Strategy For The Ages: A Navigation Guide For Business Strategic Planning

October 20, 2012

This article pulls together information from several previous posts to provide business leaders a quick, but accurate, composite of the evolution of business strategic planning in the late 20th century. More importantly though, executives can learn from this article where strategic planning has been and know where this critical business discipline is heading so far in the 21st century. Key concepts are covered related to the modern usage of this essential business tool.

Strategic Planning Provides The “Thrusters” To Guide Our Businesses

A quick Google search for definitions of strategic planning will yield numerous variations. Often these definitions point to the blatant misunderstanding of what strategic planning truly is. At other times the term is flat out misused. In the end, we find that strategic planning lacks a widely accepted definition. It seems everyone in the field of planning has a different view on the exact definition. Yet, the definitions we most embrace, convey in one form or fashion, that the idea of strategic planning is to build and sustain competitive advantage by defining desired outcomes and creating some sort of go-forward plan to achieve those outcomes.

When today’s business leaders think of strategic planning they are likely think of the planned strategic and organizational actions and innovations that will be used to maintain and build competitive advantage. In fact, an entire industry is built around strategic planning services and consulting to support these efforts to build advantage over one’s business competitors.

Simply put, strategic planning is about maximizing our opportunities to be successful. Strategic goals setup guidance for organizational activity. Goals are the rocket thrusters that propel motion and guide direction. The strategy applies to all areas of the organization and the strategic goals define the major thrusts the business will pursue to achieve the vision of the strategy.

But strategic planning wasn’t always thought of this way. By understanding the origins and transformations of strategic planning as a discipline, you can gain valuable perspective and insight to improve the outcomes of your own approach.

Evolution of Strategic Planning

The origins of strategic planning definitely began in the military, and as mentioned, date back to the 6th century BC. According to Webster’s New World Dictionary, “strategy” is “the science of planning and directing large-scale military operations of maneuvering forces into the most advantageous position prior to actual engagement with the enemy”. Of course, the common business usage and understanding of the word strategy and its application in the planning and management has been transformed from a point of military maneuvering to other areas that aim at achieving and giving a structural framework to reach a competitive advantage.

The business usage of the actual term, “Strategic Planning” began in the 1960s, although “strategic management”, primarily rooted in budgetary planning and control, was popularized in the 1950s.

The 1960s ushered in a new era, and strategic positioning rose to prominence in corporate America. The Harvard Business School contended that strategy could be a potentially powerful tool for linking business functions and assessing a company’s weaknesses and strengths in relationship to its competitors’ strengths and weaknesses. Businesses as well as consulting companies pioneered tools and techniques related to strategic positioning, focused on productivity and profits. This trend continued on through the 1970s.

Corporate organizations continued to grow in their confidence in strategic planning throughout the 1970s. In 1980, Harvard Professor and strategic planning guru, Michael Porter, wrote the groundbreaking book, “Competitive Strategy” on the topic of strategic planning. 1980 represented a peak in corporate America’s interest as confidence in strategic planning for that decade, as strategic planning popularity began a decline after that year that persisted for the remainder of the 1980s. The decline occurred because many organizations began to feel that they were not seeing enough return on investment from their efforts. Despite the decline, military strategy books such as “The Art of War” by Sun Tzu, “On War” by von Clausewitz and “The Red Book” by Mao Zedong became enormously popular reading in business circles.

During the 1980s General Electric’s Chairman, Jack Welch, became highly influential and equally controversial in the world of strategic management. Although Welch focused on gaining competitive advantage for his organization, he also began downsizing and restructuring GE. GE’s strategic planning and operational efforts began a shift toward Total Quality Management and improving productivity.

The 1990s brought about a renewed interest and obsession with strategic planning, as mergers and acquisitions increased in frequency along with a rising rate of complex joint ventures. Such trends focused strategic planning on innovation through decentralized models, leveraging core competencies and emergent strategy.

So What’s Around the Corner?

Thus far in the 21st century (2000s), strategic planning continues an orientation towards gaining competitive advantage, but with the added dimension of developing and nurturing organizational innovation. As organizations look to strategy to help them grapple with issues that include reconciling size with flexibility and responsiveness, planning has grown more complex. This can be attributed in part an increasingly interwoven global marketplace and growing number of competitive forces that have accompanied that change. Likewise, planning complexity has been affected by the economic woes of the 2000s, which have driven businesses to form many new alliances, partnerships and mergers. The net effect of these changes has resulted in the need for cooperative strategies, resulting in more planning and execution complexity. Additionally, the 2000s have brought about changes in environmental commitments and corporate social responsibility.

As the vestiges of the Great Recession continue to dissipate, corporate strategy has been affected. Having passed through the worst economic conditions since the Great Depression, businesses across the board have adapted their behaviors and strategies. Today’s strategic planning has transitioned from a process of trying to predict the future to one of looking backward at what we “know”, examining current-state realities in order to build effective transformation strategies for the future and leveraging lessons learned from the past.

Resources for Taking Action