Even in these tumultuous times, strategic planning doesn’t have to be an exercise in anxiety—or futility.
McKinsey APRIL 2009 • Renée Dye, Olivier Sibony, and S. Patrick Viguerie
Source: Strategy Practice
I hope I do not seem obsessed with the impact of today’s economic situation on how we plan for the future, but I believe it is critical. Positioning you company to get through these times as well setting the stage for substantial growth as the economy emerges is an essential job of leadership. I thought the following three tips on planning to be quite worthwhile:
"Be realistic about scenario planning
In a highly uncertain environment, the advantages of scenario planning are clear: since no one base case can be regarded as probable, it’s necessary to develop plans on the assumption that several different futures are possible and to focus
attention on the underlying drivers of uncertainty.
The company’s strategy, in short, must account for many more contingencies than it has until recently. Since the effectiveness of such a strategy depends on an organization’s ability to adjust rapidly as the fog starts to lift, managers must identify and intensively monitor key indicators suggesting which scenario might unfold.
Look beyond the crisis
Given the vastness of the
economic change now under way, the temptation for many planners will be to gaze, mesmerized, at the unfolding crisis. That’s a mistake, for at least two reasons.
First, devastating as the current downturn may be, it cannot roll back
fundamental market trends—such as the aging of consumers in Europe and North
America or the continued economic development of Brazil, China, India, and
Russia—which will continue to create strategic opportunities and threats.
Managers must focus their eyes—and resources—on these trends no matter what
Second, planners who become fixated on current economic events run
the risk of overlooking a core responsibility: evaluating the effectiveness of
current strategies. Although the crisis may force companies to suspend or
redirect some of them, others will remain relevant even in the changed
environment. This year’s strategic-planning process is a time to encourage
managers to sort out which current strategies the crisis has helped, hurt, or
failed to affect and to ensure that a system and metrics are in place to track
their performance. While all this may sound like common sense, extreme
uncertainty makes it easy to overlook "