Strategic Planning - Required as always, more agile than never
Author: Sergio Paiva - July 2020
“If the rate of change on the outside exceeds the rate of change on the inside, the end is near”, Jack Welch – ex-CEO at General Electric Company"
I – Objective:
There are many “agile planning” approaches. The objective of this article, more than describing methodologies, is to expose a conceptual connecting thread, so that the readers can be familiarized with the current concepts more and more present in the day by day of Strategic Planning.
II – Changes in the environment, changes in the plan.
Until recent years, the world seemed much more predictable and the future could then be planned in a long run. We used to “map” the future and what was planned happened with a reasonable percentage of correctness. It was the golden age of ‘5-years-strategic-planning’, called predictive, with annual review and adjustment of track, usually in a reactive way. In this model, pretty much used even nowadays, as a rule, a sequential process is applied which is long, of collecting and analysis of information, top-down elaboration of objectives and targets cascading in the organization, strategy definition, action plans, monitoring indicators and metrics and, finally, the implementation.
However, the technological and business environment we live in, characterized by uncertainty, speed of changes and complexity, the traditional strategic and the predictive planning have become hard as well as inefficient and uncertain at times. A survey conducted in 2016 by Harvard Business Review among American executives, shows that the majority of people question the applicability of the predictive model nowadays, for considering it strict, slow and partially applied, generate waste of resources, underperformance results and dissatisfaction in several layers of the organization.
For many industries, the business environment demands to be quickly adapted to the increasingly speed of changes. It also requires the constant review of objectives and plans to take the opportunities and face the threats better that the competitors do, continue to deliver value to the interested parties (stakeholders) and pave the way of sustainable growth in time.
A new way of planning is required.
The matrix below illustrates this concept according to the classification of the business environment – simple, complicated or complex. We are disregarding in this text, the “chaotic” environments as they are not the rule for the majority of the companies.
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Simple or averagely complicated environments have reasonable level of predictability and stability and present higher levels of certainty about the HOW to do and bigger chance of agreement among the different parties involved about WHAT to do. Here the classic or predictive planning is applied, that presupposes a reasonable stability, capacity of predicting the future and to plan the business 3 or 5 years ahead.
However, considering that what worked yesterday will remain working tomorrow is no longer an appropriate premise in complex, volatile and ambiguous environments. The increase in the level of uncertainty and the level of disagreement of the different agents due to the decisions that have to be taken, implies that a new approach of planning should be applied: the adaptive strategic or agile planning.
The strategic planning still is essential, but its shaping should be adapted to the new scenarios of changes.
The table illustrates differences of focus both in the management of organization and in the strategic planning according to the type of business environment in which the company evolves:
III – Agile Strategic Planning
“A strategic planning should respond to changes in the environment. It is like constructing a building on quicksand”, Graham Kenny – CEO Strategic Factors"
1. Origin
The agile blueprint of strategic planning comes from the agile methodology (framework agile), used years ago in the management of projects of software development. The framework integrates the premises that the changes of scope are usual and a natural part of the process. The introduction in other areas of the business, including the strategic planning, has become more and more common. Just like the scope of a project of software development changes, the environment where the company is inserted changes too. The speed of this changes and the necessity of the company to get adapted in an efficient and quick way has brought the “Agile” pattern to inside of the planning.
2. Characteristics
The agile planning is focused on flexibility and adaptability. Among its characteristics we find:
.Quick, short and interactive cycles of experimentation, evaluation and learning, guided by collaborative, self-organized and motivated teams
· Quick and frequent deliver of value to stakeholders: focus on prime objectives that promotes results quickly with review and dynamic allocation of resources among the projects
· Feedback harvest from clients and other involved parties throughout the process, allowing immediate corrections of scope or course
· Alignment of vision and objectives inside the organization
· Permanent learning (‘learn by doing’)
· Permanent structured look over the evolution of the business environment.
“Strategy should not be an academic exercise, but something that works despite of the mess and limitation of real world”, Brian Cassell – Chief Strategic Officer"
3. Planning steps
Just like any strategic planning, the agile planning takes into account the establishment of vision, objectives, targets and results, as well as the monitoring and its periodic review.
. Definition of the strategic planning vision
Describes and communicates to all the organization, in a tangible and clear way, and the vision of it is supposed to be in the future comprehended by the plan - 1 to 3 years, for example.
It is like a “post card from the future” where the coworkers of the company understand and visualize perfectly where the company aspire to be.
. Focus in a few strategic priorities
The strategic priorities trace the action lines that materialize the vision of the plan. Among them, we have chosen some to be developed in the next 12 months. They should not be many, for not to lose the focus and efficiency. The choice criteria is linked to value generation to the parties involved and the contribution towards the achievement of vision.
. Definition of clear and specific targets – key objectives and results (OKRs)
For each strategic priority we define key objectives and results. OKRs express fulfillment and concrete to be achieved in the period of one year. They are composed by qualitative objectives and targets (or searched results) specific quantitative covering the period of one year with quarterly review.
4. Quarterly cycles guided by agile teams.
This is a key element of the benchmark. The objectives and key results (OKRs) are designed to be reached in one year, however every 3 months, all the process is revised, adjusted and foresees the delivery of packs of value to the client. In case of strategic planning, “value” can be a concrete and tangible element that approximates the company to the pursued final result.
Multidisciplinary teams are responsible for developing in an iterative way the different OKRs, delivering the planned advances every three months.
The figure below illustrates this cycle
·
. the premises of the plan are quarterly revaluated to consider eventually new facts or trend changes in business environment·
. detected changes give rise to the review or confirmation of strategic priorities previously stablished·
. OKRs can also be modified according to the elements above. At every end of quarterly cycle, the progresses are evaluated and clearly defined by the responsible team the deliveries to the next cycle, in
accordance with the expected final result for the OKR·
. short term actions of every cycle are developed and executed throughout the quarter·
. at the end of the quarterly cycle, the team evaluates the progress of key results, understanding the failures in the process and acting in order to correct them.
Teams work is done with high level of autonomy and focus on the delivery of results at the end of each quarter.
Due to the results and changes occurred on business environment, the priorities might be reviewed and the resources might be relocated among different OKRs.
The steps described above will help the organizations to administrate their evolution and sustainability better in obscure and changeable world where they act on, having tangible results throughout the planning process, and not after it, just like the predictive plan uses to be.
5. Organization and leadership
In the next articles, I am going to approach how the company should get prepared for “being and acting agilely”, emphasizing the following aspects:·
. organization – how to organize an agile company. We are going to approach matters of structure, processes and tools·
. culture and leadership – what kind of leadership is needed to make a company become agile and perpetuate this way to perform.
References:
Alessandro Di Fiore, “Planning doesn’t have to be the enemy of agile”
Linda Parker Gates, “Agile Strategy: Short-Cycle Strategy Development and Execution”
David A. Lane & Martin Down, “The art of managing for the future: leadership of turbulence”
Dan Montgomery, "Start Less, Finish More: Building Strategic Agility with Objectives and Key Results", Agile Strategies Press
Matthew Hodgson, “Strategic Planning in Agile”