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Move from Strategic Planning to Strategic Decision-Making

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Most organisations spend too much time determining their activities rather than their focus and direction.

Plenty of organisations fall into the trap of confusing strategic planning with strategic decision-making. Planning your future activities can be a good practice, but it isn’t the same thing as determining the direction or focus of your company.

In fact, business experts have found that annual strategic planning processes can hinder decision-making because organisational leaders assume key decisions were already made. Or, managers end up making important decisions outside of a team process, alienating and disempowering their employees. In one survey of CEOs, only 11% of them believed that strategic planning processes were worth the effort.

It’s far wiser to focus your energy on strategic decision-making rather than planning, according to Michael Mankin, a partner in leading consulting firm Bain & Company. He recommends moving away from the typical annual planning process, and instead rely on continuous, issues-based decision making.

This frees you and your team from the rigidity of the calendar. You don’t have to complete your decision-making within a few weeks or months. In fact, many organisations spend years considering and debating critical strategic decisions. And you don’t have to look at important issues only during a particular time of year; you can spend time on a key decision whenever it is most relevant.

The most effective business leaders focus their decision making on key themes and issues that will have a broad impact on the organisation. Should we expand, and, if so, where? Should we outsource these services? Should be discontinue this product? Should we consider these kinds of partnerships? Should we look seriously at an acquisition or merger?

It’s not easy to make such important strategic decisions, given that it’s nearly impossible to be certain what the right decision is. That’s why it’s important to take the time to gather information and ask for input from others.

Entrepreneur and venture capitalist Ben Horowitz encourages CEOs to regularly gather information during their day-to-day activities by observing the functions of the business and asking for input from employees and partners. Then, when it comes time to make a difficult decision, you will already have a lot of information to work with. This is especially critical in Africa, where reliable macro-level data can be hard to come by.

Some questions that business leaders can ask themselves on an ongoing basis include:

  • What are competitors likely to do?
  • What are the true capabilities of the organisation and how can I maximize them?
  • How much financial risk does this imply?

Business experts also suggest holding strategy review sessions with key executives and managers multiple times a year. This creates a regular forum for hearing from your internal leaders and authorities on what makes the most sense for the organisation.

And if you’d like to continue doing annual strategic planning processes, make sure this is integrated with your high-level decisions. What you and your colleagues determine to be strategic focus and direction of the business, including the key things you will and will not do, should be the foundation for the organisation’s planning.

In the end, though, strategic decision making will always be an imperfect science—which is why organisational leaders need a healthy dose of courage. You will make mistakes. Your employees may question your decisions.

In his book The Hard Thing About Hard Things, Horowitz assures us that courage can grow over time. “Every time you make the hard, correct decision, you become a bit more courageous.”