What's broken with traditional strategic planning and how to fix it

"I'm tired of investing all of this time and energy, only to have our plan sit on the shelf."

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The candid words came from the President of a middle-market manufacturing firm. He was confessing his frustration with his company's lack of strategic execution.

He's not alone. Traditional strategic planning is broken. An eye-opening study by the Economist found that nearly 70% of strategic initiatives fail in most organizations. What's going on? For too long, we have separated strategic planning from strategic execution. We need both. After all, we are rewarded based on the strategy we actually execute, not the one we planned to.

How can companies close this execution gap? By refocusing their strategic planning on innovation, it’s possible to make rapid progress. In our extensive work helping companies design and execute strategy, we often find that executives neglect to bake execution into the very beginning of the strategic planning process.

Here are three steps every leader can take now:

1. Expand the Vision: Most companies operate on a very narrow definition of innovation that limits innovation to improvements on new products or technology. But innovation is much more. I define it as “the consistent execution of new value for stakeholders.” Looking at it this way reveals the potential companies have to become powerful engines of innovation because they often interact with a variety of stakeholders: members, affiliates, suppliers, etc. What challenges are your stakeholders facing that you can help solve? That is great place to begin any innovation effort.
2. Broaden Leadership Engagement: Traditional strategic planning often limited decision making to a small core subset of leadership. But innovation is a team sport, and often the bigger and more diverse the team, the better. Agencies are in a position to leverage their broad ecosystems to enhance innovation outcomes.
3. Create Phased Milestones: Strategic planning is not a one-time event. It is an iterative process, and innovation strategy requires a precise balance between form and freedom. Experimentation is the fastest and cheapest way to reduce risk and ultimately deliver new value.

This is what makes strategic planning that is focused on new value creation fundamentally different from traditional strategic planning, which often moves from idea directly to execution. Now more than ever, companies are dealing with significant unknowns, and experimentation is the fastest and cheapest way to reduce risk and ultimately deliver new value.

The company President who said we can’t plan in the same way faced significant challenges in strategic planning for his organization. But by using these three steps to innovation, he was able to overcome them. Now the company has a clear path for growing its business and fortifying its business model with more than $2m in new value creation opportunities in the next 12 months.

Closing the execution gap is not easy. As we are fond of saying in the strategy world: “If innovation were easy, everyone would be doing it!” But we must because the rewards are substantial.