We can excuse David for not having a plan when he was forced into exile after King Saul tried to kill him. David wandered through Israel and joined forces with the Philistines—the mortal enemies of the Israelites. David knew he wanted to be king—and was even promised the kingship by God—but he didn’t have a strategy for how to achieve it. Things worked out for David in the end and he became one of the most powerful kings in the history of Israel.
Organizations can’t rely on that kind of luck or hope when it comes to their strategies. I am surprised at how many companies tell me that they are involved in a “months-long strategic process” or that they have spent the last year formulating their strategy. Executives tell me these things with a sense of pride in their diligence and prudence. They should be embarrassed.
Strategy formulation doesn’t require months or years . In fact, it is counter-productive to spend too long coming up with a strategy. Organizations should spend a week (at most!). I have helped companies do it in one day. After all, the amount of time you spend on something doesn’t always correlate with its quality.
Length Does Not Equal Quality
Executives feel that spending an exorbitant amount of time on their strategy will translate into a better plan. They aren’t just dotting their i’s and crossing their t’s. They are ensuring all letters have been perfectly formed into beautiful sentences.
Corporate strategies aren’t like school. The market doesn’t care if you have perfect handwriting. It only cares about what you can offer to consumers. The best strategies will run into issues when the underlying market conditions change. For example, many companies were caught flat footed by the chip shortage—who no one predicted—except Tesla who adjusted rapidly to reality. They swapped out chips for alternatives and avoided major disruptions to their factories.
The days of formulating 5-year strategies and spending months doing that is a relic of the past. It may have been how General Motors did it post WWII but that’s not how the best organizations do it today.
Strategies should be shorter, 12 – 18 months and refreshed often. Whenever I see an organization with a 5-year strategic plan, I know that they will waste years three to five. Conditions will change too much and they will miss out on great opportunities because they refuse to update their assumptions (see Bed, Bath and Beyond)
The common argument against my approach boils down to stakeholders. Organizations feel like they need to hear from every possible stakeholder before they formulate a strategy. This process naturally can take months especially for larger organizations.
Instead, organizations should focus on sampling their stakeholders. They can research and collate the most important findings in a few days. The frequent refreshes also means that you need less input. If you only update your strategy every five years, then you will be forced to talk to as many people as possible. If you do it every 12 months, you can talk to fewer people.
Strategy Isn’t About Prudence
Prudence is a word every executive is familiar with. Many approach company strategies like doctors approach patients. They are thinking of not harming their organization as their first rule. However, innovation and change is by definition harmful. Some customers and employees will be left behind.
Take a look at Disney and their new parks strategy. Disney parks suffered greatly from the COVID-19 restrictions and it was unclear when visitor volumes would return to 2019 levels. Instead of waiting and hoping, Disney decided to embrace a different strategy.
They added a new app called Genie+ which allows users to bypass lines and sign up for other perks. They also introduced upsells everywhere to give customers a choice in their experience. Perks that used to be free, like parking, are now behind a fee. Your reaction may be that Disney is now nickel and diming customers but there’s a different interpretation. Disney is providing ways for customers to get more value.
The new strategy has allowed Disney to achieve record breaking profits and revenue with fewer visitors. They also updated their ideal customer profile to focus on the “once-in-a-lifetime” segment. These are the customers who only visit every few years. They want an unforgettable experience and are willing to pay for it.
Frequent visitors—so called annual pass holders—don’t like the new changes. For them, visiting Disney is just another Tuesday. That’s the sign of a great strategy. It polarizes and moves the organization forward. Some will be harmed—annual pass holders in this example—but growth requires bold actions.
Executives aren’t in the business of minimizing risk. They are in the business of creating long term growth and that starts with a bold strategy. Prudence needs to take a backseat.
Strategy is Changing. Are You?
The world of 5-year strategy plans will soon be a sign of the past. You will see subpar organizations tout their long term strategic plans while failing to adapt to the future. I wouldn’t be surprised if even the Chinese Communist Party drops their 5-year plan format and moves into a shorter timeline (3-years plans perhaps).
Perhaps David would have become king faster if he had thoughtfully approached his situation with a clear strategy. He could have formulated the plan rapidly and then started to work on it. Instead, he had to wait until God intervened and gave him the crown. Organizations can’t expect God to be so favorable. They need to make their own luck.
Photo by Steve Barker