04 Nov The economy and strategic planning.
The CEO of one of the companies we work with asked me this question over email yesterday: “Should a short term economic condition (or is it) affect strategic direction?” I decided to share my answer since I know this question is on the minds of many CEOs, entrepreneurs, and executives right now.
Here are my thoughts:
• The Darwinian approach fits: it’s not survival of the fittest but more survival of the organism or in this case the organization that is more able to adapt to a changing environment. In a strategic sense this means reviewing the strategic plan to determine whether or not the change in the economy or economic outlook is greater or less of a force when compared to when the strategic plan was completed.
• Since the economy is a threat in more SWOT analysis’s right now the uncertainty and variability that comes along with this threat underscores the need to review the organizational strategy on a quarterly basis to ensure that any adverse effects of the economy against the strategy plan can be taken into account. It’s through this process of review, evaluating, and revising, that strategic plans become dynamic and remain relevant to things like changes in the economy. The opposite approach most often leads to the strategic plan being shelved while executives shift into reactionary mode. I think Jim Collins said it best in Good to Great when he described the Stockdale Paradox, “confront the brutal facts but maintain an unwavering faith in the endgame, and a commitment to prevail as a great company despite the brutal facts.”
• An unexplored threat that gains mindshare with executives can lead to distraction from the key initiatives that are moving the organization forward towards its long term goals. By examining the threat it can be treated with the appropriate amount of appreciative inquiry instead of potentially allowing it to become a self-fulfilling prophecy.
• The practical answer to this is to spend an hour in your next monthly executive meeting to discuss the facts and the concern the executives have about the economy to see if anything percolates through and requires adjusting the strategy. In this way the issue can be tabled, discussed, and then executives can focus on their key priorities.