How to improve
It can be a frustrating exercise, but there are ways to increase its value.
This sense o disappointment was capturedin a recent
surveyo nearly 800 executives: just 45 percent o the respondents said they were satisedwith the strategic-planning process.
Moreover, only 23 percent indicated thatmajor strategic decisions were madewithin its connes. Given these results,managers might well be tempted tojettison the planning process altogether.But or those working in the overwhelmingmajority o corporations, the annualplanning process plays an essential role.In addition to ormulating at least someelements o a company’s strategy,the process results in a budget, whichestablishes the resource allocation mapor the coming 12 to 18 months; setsnancial and operating targets, oten usedto determine compensation metrics andto provide guidance or nancial markets;and aligns the management team on itsstrategic priorities. The operative questionor chie executives is how to make theplanning process more eective—notwhether it is the sole mechanism used todesign strategy.
s know that strategy isoten ormulated through ad hoc meetingsor brand reviews, or as a result o decisionsabout mergers and acquisitions.Our research shows that ormal strategic-planning processes play an important rolein improving overall satisaction withstrategy development. That role can beIn conerence rooms everywhere, corporate planners are in the midst o the annualstrategic-planning process. For the better part o a year, they collect nancial andoperational data, make orecasts, and prepare lengthy presentations with the
andother senior managers about the uture direction o the business. But at the end o thisexpensive and time-consuming process, many participants say they are rustrated by itslack o impact on either their own actions or the strategic direction o the company.
Renée Dye andOlivier Sibony
“Improving strategic planning: A McKinseySurvey,”
The McKinsey Quarterly
,Web exclusive, September 2006. The survey,conducted in late July and early August2006, received 796 responses rom a panel o executives rom around the world. Allpanelists have mostly inancial or strategicresponsibilities and work in a wide rangeo industries or organizations with revenueso at least $500 million.