Why Strategic Planning Fails

Why strategic planning fails is an assertion that strategic planning fails in the first place, and that the causes might not be well understood. The reasons why strategic planning fails and the rate of failures should not be a surprise to anyone since it would perpetuate another fallacy of planning.

Analysis of Why Strategic Planning Fails

The Harvard Business Review puts the ROI of traditional planning at 34% or less. In fact according to several surveys of top executives only 19% of strategic plans achieve their objectives. Perhaps another not so surprising data point is that among those same executives, only 25% of them are even motivated by the plans they create.

Why then do so many organizations devote so much time and energy to the annual ritual of developing or updating their strategic plans if they are doomed to failure from the start? Just think of all of the smart, well-educated, experienced managers and executives devoting so much of their organization’s limited resources on an activity with such a poor track record of producing results.

Before I get too much farther allow me to offer a you a great summary on The Predictable Failure of Strategic Planning as just one of many great sources of valuable insights. Another interesting and quick read is Strategic Planning Failure. Papers like this will certainly add more value to your planning readiness as an effective counterbalance to all of the gibberish from the planning industry.

But that is not the end of the shocking facts surrounding why strategic planning fails and strategy execution failures:

  • 85% percent of management teams spend less than one-hour a month on strategy issues
  • Many organizations don’t have a consistent way to even describe their strategy, other than in a large strategic planning binder.
  • Only 27% of a typical company’s employees have access to its strategic plan.
  • 92% of organizations do not report on lead performance indicators.
  • 90% of well-formulated strategies fail due to poor execution.
  • 60% of typical organizations do not link their strategic priorities to their budget.
  • Two-thirds of HR and IT organizations develop strategic plans that are not linked to the organization’s strategy.
  • 70% of middle managers and more than 90% of front-line employees have compensation that is not linked to the strategy.
  • Most devastating, 95% of employees do not understand their organization’s strategy.

From the list above there are two reasons why strategic planning fails that stand out the most.

  • First, that organizations cannot consistently describe their own strategy.
  • Second, that 66% of IT departments continue to develop plans that are not linked to the organization’s strategy.

It is a shame that our collective investment over the years in IT governance and IT control frameworks hasn’t advanced us further than this.

The causes behind strategic planning failures are well understood and described in detail in the references offered here. I suspect anyone that has been forced to endure a strategic planning cycle instinctively knows many of the causes beginning with the process being often very painful to sit through. Planning can be an exhausting exercise made more unbearable by the knowing it is merely an annual ritual not an actionable plan.

Higher Education Strategic Planing

For those experiencing the strategic planning process or any combination of strategic, tactical or operational planning inside higher education you have the added challenge of the process being turned into an academic exercise that in the end:

  • Is based on history
  • Is lacking meaningful data or forward-looking insights
  • Is diluted by consensus or perhaps it is consensus by dilution
  • Is intentionally ambiguous and fuzzy
  • Is lacking an accountability mechanism
  • Is just bad

Why not simply create a strategic plan that says “Do Better”? Seriously – everyone just do better.

After all Google was founded on a simple strategy of Do No Harm in support of their mission to “organize the world’s information and make it universally accessible and useful.”

My instinct tells me we find the elegance of simplicity to be too much of a shock to the senses. I also believe this type of approach places far too much responsibility on the individual to do the right thing and so we resist.

Strategic Planning ModelsPrince George Community College planning model diagram

And therein lies the core issue. If we follow a blue ribbon model like the ones depicted here, and things fail, “well we used the model” helps us avoid being accountable. Just look at some of the examples and you’d swear they must be for launching the space shuttle.

The fact is business and organizations don’t move in a linear fashion. Nor do it’s employees or customers behave in a linear fashion. Yet, our strategic planing processes and templates presuppose a linear world:

Mission > Vision > Values > Goals > Objectives > Tactics > KPIs

Planning process using a tree approach with parallel branches from Hartford Community CollegeIt’s enough to give me a nose bleed just typing it out. But somehow we must find some form of comfort in the illusion of a scientific method. Otherwise why would we endure the ritual knowing the outcomes?

The reality of our world and therefore the reality for business, organizations, employees and customers is a curvaceous world. There is a high degree of unpredictability, randomness and chaos. Just when you take aim at objective A, objective B comes into sight.

For higher education and especially for the public sector, who’s strategic plan from three years ago or even two years accounted for the economic downturn? How do plans today account for it? What about changing political landscapes?

I am not aware of a single strategic plan in Wisconsin that anticipated the political changes we have seen play out let alone the legislative agenda that has thrust numerous changes on institutions.

Curvaceous Planning

Strategic plans and operational plans must allow for the curvaceousness of how events unfold and the fluidity with which situations change. Yes you can still do integrated planning, and pour tons of time into making SMART goals, but it is more important that you build into your plans an approach to allow for creating and maintaining options for uncertainty and for possible changes.

Options planning certainly isn’t new and it does offer a great deal of structure for those who find comfort in it, all while acknowledging the realities of the world and our inability to predict events farther out.

Why strategic planning fails – because we impose a rigid linear methodology to produce a linear plan that does not reflect the world we operate within or the dynamics of higher education. We waste copious amounts of time and energy on components and elements of strategic and tactical plans that never get activated and for which there is no accountability.

This entry was posted in IT Performance Management, IT Strategy and tagged , , . Bookmark the permalink.

20 Responses to Why Strategic Planning Fails

  1. Dan says:

    You have a few typo’s you may want to correct. For example you say “The fact is business and organizations do move in a linear fashion.” When I believe you wish to day “do not move…”

  2. These are very well articulated and common issues with formulating a long-term deliberate strategy. The kind of “emergent strategy” described in this Forbes article offers an approach that (in some ways at least) may be better suited for some organizations in today’s complex and dynamic planning context: http://www.forbes.com/sites/karlmoore/2011/03/28/porter-or-mintzberg-whose-view-of-strategy-is-the-most-relevant-today/

  3. Patrick that was a great article thank you for sharing the link. I conclude I am more of the emergent strategy camp and find it sits well with me and similar approaches in concurrent engineering or development.

  4. Karalea says:

    In reviewing the data you gave, I wouldn’t say that the plan, no matter what model is used, is the failure. If 85% percent of management teams only spend an hour a month attempting to utilize the plan and 90% fail due to poor or no execution, then the failure is in the execution, not the model.

  5. I agree with your conclusion but add the data shows the plan is of little or no value and supports the findings that on the whole planning fails to deliver the intended benefits. I also agree it is not the model per se but the method you choose can influence the likelihood of it producing actionable plans that people will want to use.

  6. Meg Tufano says:

    I think that another reason that strategic planning fails is that it does not mirror the way we actually think. People in AI and neurobiologists, etc., are coming close to seeing the brain as working similarly to the way a hologram works, not a Newtonian machine (e.g., Karl Pribram (Georgetown University) believes that both perception and memory are based upon a holographic brain mechanism). People working in robotics have had to dig deeply into holographic logic to come up with anything remotely like human vision (Abu-Mustafa et al, (1987) “Optical Neural Computers” Scientific American 256 (March) 88-95). And people who study creativity (how DO we figure out the problems that we face?) are entering a brave new world of, “Just get out of your own way and you’ll make better decisions.” (Eagleman (http://www.eagleman.com/)) Probably the best organizational model we have for organizing business and academia right now is Google (see Jarvis, “What Would Google Do?”).

  7. Love your note Meg as I am fascinated by how hard it is to replicate human ability to analyze things. I am constantly amazed by what emerges from human computing projects. How can kids solve protein folds or Boolean satisfiability that our best supercomputers cannot. If I would have only studied harder…..

  8. Meg Tufano says:

    ;’) One of the many reasons I love teaching is seeing the genius in someone who has no clue that he/she IS a genius (when asked the right questions). …The most interesting scientific data I’ve seen recently (and this is totally down-in-the-cellular-level data) is this paper (cited below) published last month (July 2011). Realize that this is a study of ONE PERSON so more research needs to be done, but, paradoxically, the more the person was “thinking” the worse his choices became. His BRAIN on the other hand (his dopamine reactions) made signicantly (supremely) better “choices” than he did. This kind of thing is what is reflected in Mihaly Csikszentmihalyi’s book, “Flow.” Literally, we have to get out of our own way to make better decisions. I’d love to be a fly on the wall to watch someone try to get a Board of Directors to buy that as a strategic plan! “Flow!” ;’)
    Ken Kishida et al’s study on “Sub-Second Dopamine Detection in Human Striatum”

  9. As well as the linearity of current planning models, the lack of authentic staff involvement in the development is another contributing factor to the failure of strategic planning. The inability of most senior staff to believe that staff and stakeholders could ‘add value’ to a planning process is notable – you either believe staff should be provided with opportunities to think strategically or you don’t. But, not providing opportunities and tapping into their ideas about the future of the organisation (because that is, after all,what you are planning for), is a recipe for failure of strategy execution. If you want ‘buy in’ to a plan, then ‘bring in’ the staff from the beginning of the process, not at the end.

  10. Meg Tufano says:

    @Maree: Good point! And wouldn’t that be a terrific idea in academia and business generally! I have been evaluated in every possible way (employers, administrators, deans, and, of course, students evaluate me every semester). I don’t think it would hurt to have (anonymous) evaluations going in the other direction (teachers to admin; employee to employer), and also a serious attempt at regular collegial discussions with ALL stakeholders (a college is SUPPOSED to be a group of respected equals; and the best business ideas today are coming from companies that are working collaboratively).

  11. Jeff says:

    There is some good data here. Thanks for posting. Is there ever any plan that is going to cover 100% of the scenarios? Can we anticipate an event that may or may not happen every hundred years – terrorist attack, earthquake, hurricane, significant political change? And, if we plan for “what if’s”, isn’t there really an infinite number of different combinations and ways things play out? Is that really the purpose of a “strategic” plan anyhow? Are we planning for the 99% or the 1%? We always want to control everything, but there are always items outside our control and never will be in our control. The bottom-line is that markets do not change that quickly normally. If an organization has its pulse on the market, is pursing the right positioning, and has alignment, it will be successful. Yet, according to MIT, less than 5% do so, but that 5% have a 36% higher market value, a 45% higher market share, 60% higher ROI, and a 400% better cash flow. The data clearly show that firefighting is not better than having clear strategic priorities.

    The real problem is in the expectation, process, and execution of planning.

    1) There is no mention of “market drivers” as the fuel for the plan. If a strategic plan is not customer-focused, forget it. Leading indicators are the name of the game; otherwise an organization is being driven by looking through the rearview mirror rather than windshield.
    2) Executives are not involving staff in the process, not even communicating the plan, so why would we expect positive results? Planning can be very motivational if done correctly.
    3) Executives are not using the plan on a day-to-day basis for priority setting throughout the organization. A strategic plan with market-focused tactics is a roadmap, which needs to be cascaded to the front-line. If it is not followed, of course an organization gets lost. If everyone is not marching to the same drummer, there is chaos.
    4) And, of course, there has to be follow-up and accountability with a measurable performance management system.

    If a market-focused plan is developed and used in the way it is supposed to, the results will speak for themselves.

  12. bowtieadmission says:

    This is a very interesting article and timely for us at Augustana College. We just completed a strategic planning process that took a very different approach that we believe is more realistic and has great potential to advance Augustana. We organized our plan and strategy around risk management and outcome-oriented measures…measuring what we do, rather than what we have.

    I have started blogging about our plan and planning process and will use your article to guide against the many pitfalls associated with planning in higher education.

    The Planning Blog can be viewed here: http://www.augustana.edu/blogs/strategicplanblog/

    And, a copy of our plan is here: http://www.augustana.edu/x555.xml

    Thanks again for a great article.

  13. Strategic planning and strategy implementation are difficult in for-profit organizations, as the reference articles point out. They are an impossibility in higher ed. There are many reasons for this, and the author lists some important ones. In my mind, the most important reason why strategic planning in higher ed is futile is this:
    Strategic planning in for-profit enterprises is about allocating finite resources and aligning processes and organization, all to maximize achievement of one goal: profitability. In contrast, higher ed institutions do not have one goal for which to optimize – there are many competing missions.

    Effective strategic planning in higher ed would require the following:
    1) ability to prioritize the various missions (e.g., education vs. research)
    2) ability to discontinue activities that are not mission critical or divert resources from more important goals
    3) change the organization so that it supports the priority of missions
    4) implement institution-wide processes that are unimpeded by departmental desires for autonomy
    5) define and track quantifiable measures for the degree of accomplishment of each mission
    6) link compensation of upper and middle management to their respective contribution to the degree of accomplishment of each mission

    Not only have I never come across an institution where 1) through 6) exist, I have never seen an institution even attempted any of those. Consequently, strategic planning becomes a “feel good” exercise that facilitates and structures the dialogue between cabinet and “middle management” (i.e., faculty) and that provides the framework and talking points for presidents to convince their boards that they deserve their bonus. It is of no consequence for the actual performance of the institutions.

  14. Charles says:

    In our efforts to be profound I think we’ve missed one practical issue with strategic planning. The plan itself takes on a life of its own in that it takes more time and energy to update/manage the plan than it does to actually do the work. If strategic plans are not part of the fabric of an organization or institution – meaning that anyone can look at the work and relate it to the plan – then it is a waste of time.

  15. Alice S. says:

    I agree that items 1-6 are essential for a good strategic planning process. I also agree that universities are rigid institutions….but so are large corporations. The “profit” /”not for profit” distinction does create greater difficulties for organizations that are more closely tied to market success. However, as universities face tighter budgets, they must become more sophisticated in the management of their resources. Strategic planning CAN be done successfully in higher education. I say this from personal experience. However, it is VERY hard to do and tying the plan to budget allocation and performance metrics (that make sense relative to organization values) is absolutely critical. Without systematic analysis and continuous feedback from internal metrics (not just graduation rates) there is no hope of improved organizational effectiveness.

  16. Adam Brown says:

    Hi – This is interesting stuff. Do you have the name of the HBR article where they mention 34% ROI on strategic planning and the other two data points from the executive surveys? Thanks!

  17. The Higher Ed CIO says:

    I am embarrassed that I did not provide a link to it in the post. I am even more embarrassed I didn’t preserve a link to it in my offline draft. I believe the source was an annual survey of executives which may have been done by HBR and one of the big 6 firms.

    If I get some more time I will see if I can locate it.

  18. Pingback: Creating Competitive Success Out of Uncertainty | The Crispian Advantage

Comments are closed.