What is strategic planning? I think you’ll agree that most people are confused about what strategic planning is, but what if I told you there’s no such thing as strategic planning?
In this video I’m going to share with you what Peter Drucker, the famous management consultant, and Sun Tzu, the author of Thirty-Six Stratagems, have to say about planning and strategy. Stay tuned.
Hi, my name is Jody Ann Johnson from ActionCOACH Team Sage, where we help small business owners grow their company, make more money, free up their time and to have choice of the opportunities they want to take advantage of.
Let me start off with uncollapsing strategic planning. From strategy, which is thinking, and planning, which is implementing and executing. I’m going to share with some of the research that I found as I was preparing for this video, from Peter Drucker on strategic planning. It says here: “it’s remarkable how the same lessons need to be rediscovered again and again.” Sun Tzu dealt with the confusion between a warrior’s adaptive strategy and dealing with competing people, and long term planning in dealing with objects; we’re still dealing with it today. In Peter Drucker’s Management Tasks and Responsibilities, he found the same problem and confusion around management, that they had for planning of objects and planning for people. He listed four misconceptions arising from this term strategic planning. Strategic planning is not a tool box of tactics or tricks. It’s not a bundle of techniques. Strategic planning is not forecasting. Strategic planning is not dealing with future decisions. And strategic planning is not an attempt to eliminate risk.
I think that last one is really important because as a society with things changing as fast as they are, people tend to get smaller, to constrain, to try to avoid risk, when what’s really being asked for today is an opening up, an expansion and a wider berth of awareness about our position and what’s going on around us. So we look to mitigate risk, and where we can, we probably want to do that, but not as an overall strategy for business growth.
Drucker describes strategy from a warrior’s perspective as the analytical thinking and commitment of resources to action. He describes attempts at predicting the future as foolish, because it’s of little use to people who seek to innovate and change the way people live and work. He sees strategy in terms of the decisions we make today about a future that is inherently uncertain. This is the realm of unpredictable people, not predictable objects. As I studied this, I was really fascinated because the way we were raised in school and in most of our environments was in a linear way, very much consistent with the Industrial Revolution, where there were assembly lines, and whatever happened over here was necessary for what happened here and what it was going to happen over there, but it was linear and predictable. So over here you knew what these people or this machine was doing on that side, and what to expect when it got to you. In today’s world we’re less dealing with objects, unless you’re involved in manufacturing where you’re going to take a material and turn it into something else, and more in the realm of people, and people are inherently unpredictable.
As a matter of fact we may think that we know our own selves and what motivates us, and how we’re going to react to the situation, and what that reaction is going to produce over there with others. And the truth of the matter is: not only do we not know how they’re going to respond, we don’t even know how we’re going to respond. So it’s going to take a different way of thinking about strategy and planning.
When you’re looking at strategy as it relates to people, we want to look for what are the natural inherent ways that people respond. You’ve heard of fight and flight; this is common. Yet, I can’t tell you how many times when somebody has come across aggressively with their employees or with a client or in the marketplace with a competitor and expecting them not to resist not to either shut down or run away. And of course that’s what people do. They shut down or they are gone even if they’re physically still there, they’re not mentally still there. And if it’s with a competitor, many times they’re going to come back and it’s going to launch a full on attack. So getting clear if we are dealing with people here, or are we dealing with an inanimate object, in which case planning for the production of something makes perfect sense.
The purpose of strategy is not to eliminate risk, but in Drucker’s words is to take the right risks. “Innovation at its core is an act of discovery, in which we embrace the uncertainty of the environment and explore it for opportunities.” I don’t think I can say this any better than he did, which is why I’m quoting it for you.
I’m listening to the audiobook of whiplash right now, and I’m on my second listen of it and bought the book, because it actually is challenging, the long held belief systems and what I think is possible and what is going on out in the world, on so many levels that it’s almost impossible to take in. So I’m on my second listen, because I have to turn it on, listen for a few moments, stop it and think – how does this apply to me? How does this apply to my business? How does this apply to my clients? And it’s staggering in its scope, so I highly recommend this book. And yet at the same time, Peter Drucker back in the 70s was quoting Sun Tzu in his Art of War in the Thirty-Six Stratagems, which are ancient; 2,000 and 3,000 year old stratagems about how to be competitive when it comes to the people side, and not necessarily the planning where we do productive planning, that linear logical process, which is important in its place, but less uncollapsed from planning necessarily when it comes to people, because people are inherently unpredictable, including us.
“The strategic planning is the continuous process of making present entrepreneurial (risk-taking) decisions systematically and with the greatest knowledge of their future, organizing systematically the efforts needed to carry out these decisions; and measuring the results of these decisions against the expectations through organized systematic feedback.” In other words, it’s the science of making good decisions about the future. Drucker was somebody who didn’t believe that we can plan for the future. He said: we have to plan our actions for the now, consistent with the direction that we’re heading. Which is why he always started off with: what is your businesses mission and vision? What’s the purpose of your business, where are you headed? Because that is the guiding navigating tool that you use. If it’s thinking and planning about a future decision, then it’s not really relevant, and it’s more like a dream. What we’re looking at is what are the actions that need to happen right here, right now, in order to take us in the direction in which we’re committed to going.
Sun Sir talked about knowing your position and awareness of your position in the marketplace. Competition is necessary in business because whenever you’re putting forth your products or your services, people have to compare you against somebody else, that is the nature of competition. Your ability to understand how to differentiate yourself in that way, from your competition, can be the strategy related to your marketing, or to your pricing, or to your product innovation and so on. That’s the world of strategy. The planning part is: this is what we want to get done. How are we going to do it? What are the feasible opportunities for making that happen? What are the resources that are going to be required? And then allocating those resources to the path that you’ve chosen. I think it’s very important that we’re aware that we’re going back and rediscovering again and again the foundational pieces of what works, rooted in ancient theory, about how we can be ever more effective with our strategic thinking and with our implementation and execution planning.
In your business and in your life you’re always adapting to dynamic situations. So I want to refrain from planning out, prescribe this and this, and actually looking at the direction that we’re headed, and making the planning process. It’s important to be organized and to coordinate efforts between people in shorter periods of time, like your quarterly planning, or even your monthly planning, so that it can be nimble and agile. And we should be able and free to adapt to opportunities that come our way, because many times we are in a conversation with somebody and all of a sudden a new opportunity arises that wasn’t in your plan at the beginning of the year, but that may be very consistent with his strategic direction you want to take your company, and that we’re able to respond to that rather than just prescribe: we’re going to do this and then we’re going to do this – sometimes that’s how people can get about their planning.
So the direction that you’re taking the business and where you’re headed, the fundamentals that must be in place, the clarity around who’s doing what by when, the clarity around what resources are available to us, and the nimbleness to be able to pivot when an opportunity comes our way, that we’re able and free to seize it.
To wrap up: the world is outside of our control. In our constantly changing environments, our most valuable resource is the ability to take quick and decisive action. The world is constantly creating unique situations, which require responses. Many of those situations are opportunities that look like problems because we didn’t plan for them. So in your planning, make sure that you have this world of the direction that you’re heading and the actions that are going to be consistent with that, and the flexibility of being able to take advantage of opportunities as they come your way.
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