The Association for Strategic Planning held its annual meeting in Denver where over 250 attendees shared experiences in planning, developing, and implementing strategy.
The kick-off keynote was an overview of how the State of Colorado used strategic planning to become an innovation hub. The process started with some serendipitous alignments. The first was a decision by the US government to locate some scientific development labs in Colorado which would be far from the coasts. From that starting point, Colorado grew to have 35 federal labs, 20 research universities and colleges, and 20 industrial and economic development organizations. The presenter noted that the federal research ecosystem is behind many of the top technology developments that are at the core of everyday items such as touchscreens, GPS, voice controls, solar power, and many others. Technology developed from government labs in Colorado by the CDC and the EPA also, keeps drinking water safe and even created the technology to produce wrinkle free cotton.
Importance of Strategy and Scenario Planning:
Our keynoter moved into strategy when discussing why sources of technology are important. The presenter noted that by 2025 China will outspend the US in basic and applied science research. Losing the research leadership puts the U.S. at risk of losing the advantages of being the first to develop technology. Maintaining leadership requires a mixture of funding (mostly taxpayer dollars), attracting the top minds, developing new regulations that foster technologies, and new ideas to apply the technology.
Our first keynote was followed by a presentation from one of the Colorado based federal labs, Sandia Labs. This group has developed a series of game type programs that stimulate strategic thinking. For the presentation, we learned about a specific application of the games. Sandia was challenged to develop strategy for 2040, requiring participants to imagine the future in 2040 and complete a “pre-mortem” that looked at how that future arrived. In their game, the first effort was to define a country’s national security strategy. Once the strategy was defined, the next step was to model how the country would react to changes in neighboring nations. The result of the game was to define common elements of a global strategy. According to the presenter, the game encourages open thinking and open talking by participants.
To be effective, the game organizer must provide lots of data and some imagination. Five keys that contribute to a successful game were presented:
- The game needs to be run at the macro level, which is difficult when players want to stay on micro issues
- Pinpoint questions are needed to keep the focus on what is important and the desired outcomes
- Prior to the start of the game, determine what the ideal outcome is (not the specifics, but rather how the information is presented and how it will be used)
- Engage and include outside experts in the development of the game and the game itself
- Transition the game results into strategy with implementation steps
These elements are, in our experience also the root causes of success in all strategy workshops.
In a presentation on scenario planning, the message was that scenario planning is an ideal tool to build strategy in a volatile, uncertain, complex, ambiguous (VUCA) environment. Our presenter pointed out that in such environments there are elements which are not known, the unknown unknowns, which poses a problem for strategy development. A tool suggested to mitigate the unknowns was to engage a wider range of stakeholders in the process. Using this wider range increases the knowledge base, which reduces the number of unknown unknowns. Engaging a larger group of stakeholders also helps to build more robust advocates to support the implementation of strategies that come from scenario planning events.
What is the most Common Problem with Strategic Panning?
Our next session pointed out that a persistent problem with most strategic planning is a failure to incorporate change by competitors. Most strategy is good at including change in the STEEP areas, but seems to assume that the competitors will continue to operate in the same way and will not adjust to changing market conditions. According to the presenter, this is a potentially fatal mistake, especially given that over 90% of strategic plans are not put into action. Change rather than being driven by strategy, is driven more by structural coupling between systems and the environment. In this model, strategic direction is set by the many micro-adaptions to small changes in the business environment. What in hindsight seems to be a planned development is really more of a haphazard process where each individual action is thought out and planned but done so in isolation of a larger strategy.
Our next presenter used a case study of Honda and Yamaha’s motorcycle business in the 1970’s to show how the coupling of companies can work out. The presentation showed how the companies started at equal and mostly static positions, evolved into very dynamic and unequal positions. The pathway was not triggered by a single overarching strategic move, but rather through a series of calculated steps in response to an action.
In this case the action as a plant expansion by Yamaha and Honda’s response. Honda’s strategic options did not include a similar motorcycle plant expansion, which forced the company to try a different angle. The new angle was to increase the diversity of models Honda could offer through small changes in design. This action changed the market dynamics and allowed Honda to leverage time (faster model switchovers in the production line) which increased its product diversity. Honda could not match total product volume of the new Yamaha plant, but it could outsmart them by changing the rules of the game.
The message from the example was that strategy does not always follow a set path for the long term. Rather, it seeks to exploit strategic elements where possible to change the power relationships with competitors. The key elements are:
- Strength – Which competitor is stronger in the market
- Time – How fast the company and competitors can react to change
- Differentiation – How your company and product is different from competitors
- Drive – Lead, Follow, or Get Out of The Way
- Stretch – How much strategic range there is
Our last speaker had the members spellbound. Her presentation was about new ways to leverage social goals with financial returns. Using a process called “Full Spectrum Investing” the presenter illustrated how to transfer a charitable funding act into a positive return by changing the funding from a donation to a loan. This move allows the donor to get a tax deduction as well as the return of capital while at the same time helping the charity to create self-funding enterprises that support its mission. Some examples were funding affordable housing through loans to a charity that then finances the house, with the buyer’s mortgage payments being used to cover operating expenses and repay the initial charity loan. The Full Spectrum Investing process leverages the combination of a tax write-off through the grant/loan for the charity, with the interest earned on the loan to generate a positive return on what would otherwise be only a tax write-off. All this is possible without detracting from the key charitable goals of the receiving entity.
Solving Strategic Problems Across Organizational Boundaries:
The second day’s keynote presentation was a panel discussion on solving big strategic problems across organizational boundaries. Panelists agreed that there are several solutions which apply across most organizations.
- Agile and adaptable organizations are better able to apply the solutions
- Strategy should be delivered across the entity in a standardized format, but with flexibility to adjust for local conditions
- A framework to get the actual strategy work done and assign resources to make it all happen is a key condition
- Actions taken in one area have impact on other areas, but it is important to look past a narrow geographic scope (unless the company only operates in one geography) and include inputs from partners in other geographies)
- Multicultural issues for collaboration need to be understood and included in any strategy implementation plan
- Understand and accept different time scales – not everyone has the same concept of time or urgency
In the opinion of the panelists, if these steps are followed there is a greater likelihood of a successful strategy implementation.
In addition to the keynotes, there were many breakout sessions focused on single topics and strategic exercises. These sessions showcased tools such as competitive simulation applied to national security, creating non-profit collaboration, and continuity strategy.
For strategic planners in all industries, the ASP event offers a good chance to interact with fellow planners who are using strategic planning tools across a wide range of industries. We picked up a few new techniques that are used in the public and non-profit sectors that can create a different awareness of the competitive market and how to identify leverage and forces with a new perspective.
Click here for our 2017 ASP RECAP!