Do You Have a Great Planning Process? Part 1

By George McQuain

General George S. Patton said two very important things relating to strategic planning (or any time of planning for that matter). They were “Until it's executed, a plan is only a plan” and “A good plan aggressively executed now is better than a perfect plan next week.”

When I was working on my MBA I was required to do original research and write a research paper. I chose for my topic “Strategic Planning and Its Effect on Company Performance”. I then developed a questionnaire that asked questions about the receiving company’s strategic planning and strategic execution processes. The goal of the questions was to quantify the sophistication of the company’s planning processes in terms of where decisions were made, how progress was measured, how plans were communicated throughout the organization, etc.

I then took my questionnaire and snail mailed it (this was back in the days before the earth’s crust had hardened and Email was invented) to the head of strategic planning at large number of U.S.-based large companies.

While I was waiting for the responses to my survey to be returned to me, I classified all the companies by industry group and began evaluating the responding company’s financial (Net Income, Cash Flow, ROI) and market (sales growth, estimated market share growth) results. I then correlated the sophistication of the planning process of the responding companies against their performance.

My research seemed to bear witness to something General Norman Schwarzkopf said: “The truth of the matter is that you always know the right thing to do. The hard part is doing it.”

What I found was that there was a negative correlation between the sophistication of a company’s planning process and their performance and a positive correlation between their execution process and the company’s performance. In other words, having a great “plan” didn’t translate into great performance, executing your plan did.

As Peter Drucker said "It is meaningless to speak of short-range and long-range plans. There are plans that lead to action today - and they are true plans, true strategic decisions. And there are plans that talk about action tomorrow - they are dreams, if not pretexts for non-thinking, non-planning, non-doing."

While all of this may seem obvious, according to Kaplan and Norton, the originators of the Balance Scorecard,  90% of companies fail to successfully implement their strategies. So, while it may be obvious, a lot of people/organizations are having "issues" here. More on this phenomena in my next blog.