Resource Planning v. Strategic Planning: Which Are You Doing?
When you mention strategic planning what are you referring to? If you mean an annual review of how to deploy available resources to best grow your company, then UCLA Anderson School of Management professor Richard Rumelt believes you've mislabeled an essential business practice. This activity could more accurately be referred to as "long term resource planning." What's the difference? According to a recent interview with Rumelt in the McKinsey Quarterly:
Plans are essential management tools. Take, for example, a rapidly growing retail chain, which needs a plan to guide property acquisition, construction, training, et cetera. This plan coordinates the deployment of resources--but it's not strategy. These resource budgets simply cannot deliver what senior managers want: a pathway to substantially higher performance.So, what can deliver higher performance?
There are only two ways to get that. One, you can invent your way to success. Unfortunately, you can't count on that. The second path is to exploit some change in your environment--in technology, consumer tastes, laws, resource prices, or competitive behavior--and ride that change with quickness and skill. This second path is how most successful companies make it.Or, to put the question differently, what exactly does real strategic planning look like? It's not routine 'door knob polishing' -- cutting costs, forming alliances -- but instead a risky pounce when something in the business environment changes. For example, the rise of MP3s changed how people listened to music. Apple leaped to take advantage of this change with the iPod. Success wasn't guaranteed, and vision was required, but the payoff for the company was vast. Real strategic planning , as Rumelt sees it, is not for the faint of heart.
Read the rest of Rumelt's fascinating and in depth interview here.
(Image of planning session by Futuristmovies.com, CC 2.0)