Strategy: A Jumping-Off Point
Strategic planning may be most successful when accompanied by scenario planning - asking the traditional What if? "It means looking at your business and deciding if the trees really grow to the sky or not," says Michael Franks, director of strategic planning for O'Sullivan Furniture; with $US394 million in annual revenue, the Missouri-based company is the second-largest manufacturer of ready-to-assemble furniture in the United States. "Most people who have to forecast do so based on what's happened historically. If you do so, you're assuming all trends are linear, and very few things in business are. If you don't have any tool other than history, you're at the mercy of things that have no precedent," says Franks. Examining what you might do if all plans go south means that the company has alternative paths roughly traced instead of having to bushwhack untrodden forest.
To perform that examination, Franks says, "You have to really understand the assumptions that underlie your original plan."
The fact is that without the short term, there is no long term. The company overall is forced to deliver quarter-by-quarter without much breathing space. However, unless they are tied to an overarching vision that all managers understand, those results will not be relevant to the long-term direction.
One example of a company that aligns its vision and strategy with its ability to manage for the short term is MasterCard International. "Being flexible and being able to respond to problems and opportunities is important," says MasterCard International president and CEO Robert W Selander. "While we may have set objectives, new things come about, and you need to have a reprioritisation. You have to walk away from budgeted items sometimes."
MasterCard set a new strategy in 1997 that is still in place. "But you add to it, rather than redo it," says Selander, who reorganised the company so that it could take advantage of new developments, such as e-business and projects that require nurturing. Selander modified the processes for reaching the organisation's goals while keeping them linked to the strategic objectives. "We're recycling through our objectives more than once a year," he says. "An individual will come in and say, I was working on this, but things changed, so we adapt. If you have a strategy you believe in, you can motivate your people. If you're successful at one thing, you do more of that."
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