The story of a once-innovative financial services firm illustrates the perils of substituting ‘messy’ innovation with a logical, orderly strategic planning process.

How far would Moses have gone if he had taken a poll in Egypt? — Harry Truman, 33rd American president

From a standing start, a financial services company had two decades of very strong growth. They were entrepreneurial and opportunistic. New products, services, and distribution channels evolved and developed as the leaders passionately pulled the organization toward their vision. But its growth wasn’t always a pretty sight.

Product and service ideas seemed to come from the wrong people, at the wrong time, in the wrong ways, and for all the wrong reasons. Often they had to be developed on a shoestring budget or using the philosophy of “make a little, sell a little, make a little more.” However imperfectly, customers were well served, product leadership was established, and in key markets, dominance was achieved.

Then senior management changed. The original, fairly well balanced, senior management team was eventually replaced with “technomanagers” (focused on management systems and technology). When they looked back at the twisting and turning paths left by product development and marketing, they were determined to “bring some order to this craziness.” These were “processes out of control,” management declared.

So a Strategic Planning Committee was formed. It consisted of fifteen senior managers and support staff from quality improvement, customer service, accounting, marketing, human resources and planning. They surveyed, researched, collected data, discussed, analyzed, diagrammed, and planned marketing strategies and new products. They wrote a powerful vision, values, purpose, and strategic planning document that could have been a business school case study.

Each thoughtful new product and marketing campaign took off with a bang… and then slowly fizzled. None were outright failures. But the company’s history of ever-rising sales success flattened out. Key people started leaving. Passion and energy levels slowly sank. Today, the company is struggling to catch up with its changing markets and ever-stronger competitors.

McGill University management professor, Henry Mintzberg has been extensively studying, teaching, writing, and consulting on management effectiveness, strategy formulation, and planning since 1968. His book, The Rise and Fall of Strategic Planning, reports on the exhaustive research and thinking he’s been doing on this popular management technique.

In a passage on neurotic and compulsive management he writes, “Above all, the machine organization (what I call technomanagement)… is obsessed with control, first of the workers, but everyone else after that… All this is done to ensure the stability of the operations and the smooth functioning of the bureaucratic machine.” He concludes that the biggest reason strategic planning doesn’t work stems from “the planning school’s grand fallacy: Because analysis is not synthesis, strategic planning is not strategy formulation (his emphasis)…ultimately the term strategic planning has proved to be an oxymoron.”

Common strategic planning traps

The new senior managers at the — now mediocre — financial services company, proved to be caretaker or maintenance managers. They fell into these all too common strategic planning traps:

Strategy formulation was treated as a separate task. It isn’t. No matter how much time and analysis we give it, no committee, staff support professional, consultants, or brilliant strategist can develop an effective strategic plan in isolation. Strategy is an interactive process. It might be separated from daily management, but it can’t be separated from leadership. It is leadership.

The blinders of logical hindsight: Management committed the classic blunder of applying logical hindsight when they looked back at a series of opportunistic and serendipitous product and market innovations. Adding up all the time the 15 Strategic Planning Committee members spent in the market either finding or serving customers, produced a total of less than 10 percent for the whole group. Theirs was an artificial world of budgets, plans, analysis, strategies, concepts, theories, and numbers. The valuable experience of the sales, service, and field support people who lived in the marketplace with customers, were reduced to aggregate data points, opinion survey categories, and disembodied quotations on questionnaires.

They lost strategic opportunism: Senior managers lost the rich learning, opportunistic, and urgent nature of evolving their strategies “on the fly” in the market. Effective strategic opportunism, like effective servant-leadership, both leads and follows.

Two types of planning are needed

Effective planning is a critical success factor. But the focus and type of planning is what’s critical. Two types are needed. First, personal, team, and organization planning should focus especially hard on improvement. This critical planning establishes systems and processes to continually build and improve understanding, skills, and competencies. So when those unexpected opportunities come along that fit your vision, values, and purpose, you’re able to capitalize on them.

The second type of planning is implementation or action planning. It’s disciplined, short term (today, any detailed action planning beyond two years is ludicrous) and centered on annual goals, monthly or weekly priorities.

By Jim Clemmer

About the author

Jim Clemmer’s practical leadership & personal growth books, workshops, and team retreats have helped hundreds of thousands of people worldwide improve personal, team, and organizational performance. His web site has over 300 articles and dozens of video clips covering a broad range of topics on change, organization improvement, self-leadership, and leading others.