Insight into driving strategic objectives and the consequences of a lack of planning.
Nicolas is the European leader for BCG’s Strategy practice and a BCG fellow. He has advised companies across a broad range of industries, including consumer, health care, and private equity.
Why is strategic planning important?
I’ve seen a number of companies that by lack of foresight have missed a key strategic turn. By doing that, they either missed a big opportunity or hit a wall that they hadn’t seen coming. In a recent BCG research effort, we interviewed executives from approximately 20 high-profile companies across sectors and geographies on how they do strategy planning—and what works and what doesn’t work. We found a kind of paradox. The majority of companies found that in the current environment it is even more important to do strategic planning, and they wanted to invest in the capability. But at the same time, they were quite disappointed with the results of their current processes.
How are leading companies changing their approaches to planning?
We learned three major lessons. The first is that strategy is not one thing. It is very important to look at strategy at multiple time horizons:
The long-term horizon, where the company will define its vision and its ambition
The medium-term horizon, where the company will define its path for the next three to five years through concrete initiatives
The short-term horizon, which is really an annual discussion and validation of activities and budgets
The second finding of the study was about thinking methods. You need to develop lateral thinking, inductive thinking methods, such as analyzing other business models from other sectors. It’s thinking by analogies—like analyzing your under-valued assets and how you can create new businesses around those assets, or looking at megatrends and how those megatrends will affect your industry and your company.
The third finding is about the engagement model, and we found some companies that consider strategy as being the exclusive domain of a very small group at the top of the company. But the big new ideas are often at the periphery of the organization. This is where people will have new ideas and will see and touch new things.
Often a company has a financial dashboard and an operational dashboard. We believe they must also have a strategic dashboard, where the key strategic objectives for the company for the next three or five years are measured. In this time of uncertainty, it’s even more important to develop a robust strategy and to have the whole management agree on it, because when the visibility is reduced, it’s even more important to have a good compass.