How is Strategic Planning for Your Company?
Need to Use Cone, Not Timeline. How are strategic plans made for the future of the company with experiences? How should strategy formulation and date selection be?
Last year I gave consultancy services to a large company on strategic planning. Since there are many uncertainties such as driverless vehicles, 5G, robots, artificial intelligence, the global economy, and the oil market, the company's board of directors needed a link between the future of the company and its current situation.
They called this new initiative the 2030 Strategy.
I was very curious why they chose 2030. Because the factors that affect the future of the company do not proceed in the same timeline. In other words, while the recession in the global economy has its direct effect, it may take 50 years before robot technology affects the activities of this company.
Why was the year 2030 an important date for the company?
It turns out that the reason for choosing the year 2030 was that it was lacking and pleasing to the eye. Against the uncertain future, the management wanted to have a sense of control by choosing the year 2030.
On the other hand, “2030 Strategy” is also a good name choice for employees and customers to understand the initiative. The company can explain its message and vision more clearly under the name of “2030 Strategy”.
But the real life we live is not as perfect as the numbers ending in 0 or 5. State policies or natural disasters are not under our control. Things like workforce, product development, R&D depend on decisions taken at the corporate level. When all these variables come together, the future of the company is shaped.
Senior managers responsible for business development and strategy of a company are generally responsible for determining the direction of the company and drawing a vision for the company. In these meetings, "brainstorming" is done. But the difference between brainstorming and critical thinking must be well understood. Neither 3-5 year strategic plans nor short term operational goals say anything about the future of the company. Big uncertainties require asking big questions. Responses do not necessarily refer to a specific future date (2030).
In which areas is it intended to make an impact?
What steps will be taken to achieve success?
How will the company transform against future conditions and challenges?
These deep and fundamental questions are the questions a company should ask when planning long term.
Why Can't We Make Long Term Plans?
As a futurist working with quantitative methods, my job is to research the future based on data.
According to my observations, leaders suggest short-term solutions to long-term risks. This creates contradiction within the company.
Teams and companies that adopt a classic linear timeline are developing tactics against the constant change that appears to them as an external force. These tactical moves, prepared with great effort over time, consume the company's resources and make the company fragile.
In 2001, I attended a meeting with the managers of some newspapers. I have been asked to analyze the future of the news industry. 2005 was chosen as the target in this meeting. In other words, I have been asked to explain the changes the news industry will undergo in 4 years.
When we look at the year 2001, we can say that the internet and online newspapers started to be determined and widespread gradually. In other words, there was a big and rapid change in journalism at that time.
At this meeting, I realized that the strategies we will develop to reduce future risks and create new opportunities are only tactical. But tactics that do not have a long-term vision have a very low success rate. It is also difficult to have control over how the future news ecosystem will evolve without long-term planning.
To better illustrate this situation, I gave the board of directors an example of a mobile phone called i-Mode that I used while living in Japan. This phone, which could be considered as the pioneer of smartphones, was connected to the internet, allowed me to pay and had a camera. At that time, I thought that if the cost of mobile device production decreased, mobile content, digital advertising and profit-sharing business models would increase significantly. Which is how it happened. Within a few years, smartphones gained popularity and a huge mobile ecosystem emerged.
Although the introduction of smartphones brought a major existential crisis to classic newspaper publishing, there was still time to prepare a long-term business model in 2005. However, broadcasters were making 3-month plans and they did not pay much attention to long-term planning, considering that their smartphone was a remote possibility around 2005.
After that meeting, newspaper sales steadily dropped. Even American newspapers have failed to do long-term planning. Ad revenue of $ 65 billion in 2000 fell to $ 19 billion in 2016. 1800 newspapers were closed between 2004-2018. Media outlets gave short-term tactical reactions. In other words, they renewed their websites and developed mobile applications; But while doing these, they could not develop a vision suitable for the transformation of the sector. It is possible to see the same “bagging” stories in many sectors.
Need to Use Cone, Not Timeline
Futurists take time differently. Companies can also take advantage of this futurist approach. When it comes to uncertainties (risk, growth, opportunity) about the future, futurists try to think both short-term and long-term.
In doing so, it is necessary to use a cone that usually represents a basic frame.
So "What will be done in the years 2020-2025-2030?" Cone is used instead of a timeline such as. This cone has 4 elements: tactics, strategy, vision and transformation.
First, identify possible incidents for which you have data and evidence. Each piece of the cone implies a strategic approach, and each approach encompasses the previous one ultimately achieving the company's transformation / evolution.
Let's start with the pointed end of the cone. This place represents the events most likely to happen. There is already enough evidence and data for these events to happen. The duration for this phase varies from company to company, but 12 to 24 months is a reasonable time. Planning is in a tactical form at this stage, as we are likely to predict trends and possible developments. We can give examples of things like designing new products, determining a new customer base.
Tactical decisions must be in line with the company's strategy. Uncertainty increases slightly in the strategy part of the cone. Because there is a period of 2-5 years now. This region generally concerns strategy departments. This issue is about the general strategy of the company and which direction to go. Determining the priorities of the company, adjusting its resources and changing personnel when necessary are strategic moves.
Many companies find it difficult to switch between strategy and tactics, at which point they get stuck. In this process that requires serious planning for the future, a vicious circle is often entered. Struggle is made against competitors, new companies and external factors.
That's why you have to accept uncertainty while setting a vision for your company for the future. A company's vision does not have to be detailed from A to Z, because there are many unknowns. Leaders can set a solid vision for a 10-15 year future, and while doing this, they can organize strategies and tactics in the process according to trends, global and social developments, and economic situation. In the vision category of the cone, we mean the actions of senior executives about how to research, where to invest and how to develop their workforce.
But a company's vision must also fit into the last category, the distant future transformation. If a leader cannot feel how the industry will evolve, cannot predict what the new technologies will be in the market and cannot keep the pulse of the market; This leader's company is suspended by another firm. The tip of the cone is pretty straightforward, because distant future events are too open-ended to predict. In other words, the steps to be taken by the company at this point must be based on the predictions and hopes of how the industry will develop.
Unlike the classical timeline, the cone always moves forward. As we obtain data and evidence; As the action progresses, the pointed part of the cone and the tactical category adapts itself to the conditions of the day. Finally, the company is expected to constantly improve itself against both internal and external developments.
Today, dozens of large companies are trying to understand future uncertainties using the cone method. Because the leaders of these companies prefer to think logarithmically and take small and solid steps. This enables these companies to shape their own futures with their own hands.
In that respect, we can say this: As a company manager, give your employees the habit of thinking both short-term and long-term at the same time. It may be tempting to choose dates that look smooth and beautiful, such as 2020, 2025, but when planning for the future, take into account tactics, strategy, vision, and evolution.