We live in a time of high uncertainty, in which very few predictions or trends can be taken as certain or permanent. Until very recently we were projecting unprecedented growth in global trade after the pandemic, and now we see the world fragmenting into blocs and the Davos meeting becoming less relevant than it was in the past. Some argue: “why plan, if the conditions will change very soon anyway?”
The purpose of planning and strategizing is not to obtain a plan…
The purpose of planning and strategizing is not to obtain a plan… its value lies in the process followed, in the discussions and the disciplined structuring of ideas, which often serve to align the organization and its people around a common focal point.
The process of deciding or reviewing the direction of an organization, and the best way to allocate resources to get there, is known as strategic planning. Both for-profit and non-profit companies need it to avoid becoming “part of the landscape” and existing only to react to the ups and downs of the modern world.
In addition, in most organizations, employees demand, explicitly or tacitly, to understand why their company exists and to identify with the purpose of what their organization means to its environment. Increasingly, topics such as sustainability, social and environmental responsibility and transcendence are part of employees’ personal expectations, so a company’s planning exercise is consumed not only by management and shareholders, but also by the people who make the organization’s objectives possible.
… a management consulting service provider (MCSP) must know, and be able to adjust and combine, the different approaches according to the needs and conditions of its client.
There is no single way, nor a right or wrong way, to plan strategically, which is why a management consulting service provider (MCSP) must know, and be able to adjust and combine, the different methodologies according to the needs and conditions of its client. Organizations can create a strategic plan using a variety of methodologies or a combination of them. Let’s look at some of the most common.
Strategic planning methodologies can be categorized as “classic” and “modern” to start understanding and comparing them. Neither category is better than the other; they are elements or “options” adapted to the specific needs of a given moment in an organization’s life.
Some of the more traditional techniques are:
SWOT: it identifies the strengths, weaknesses, opportunities and threats facing an organization. This approach focuses on helping the company understand its internal and external environments, as well as its potential risks, in order to make strategic decisions that improve its resilience or take advantage of the opportunities it sees in its environment and immediate future.
BCG Matrix: the Boston Consulting Group developed the “BCG Matrix”, a methodology to evaluate a company’s business portfolio. Depending on growth potential and market attractiveness, it allows organizations to prioritize investments and allocate resources to various business units or products. The associated strategy is usually linked to understanding the relative weight of the company’s product or service categories in the revenue mix of the income statement, combined with the life-cycle stage of those products, which can anticipate a crisis and therefore mitigate it.
Ansoff Matrix: this methodology helps companies evaluate their current offerings and the competitive landscape to detect growth opportunities. Market penetration, product development, market development and diversification are the four growth strategies recommended from this type of analysis.
Porter’s Five Forces: this is one of the best-known approaches, as Harvard Professor Michael Porter has written best-sellers and entire books have been written about learning his concepts. He created the five forces framework to evaluate the level of competitiveness of an industry. It helps companies understand their competitive environment and make strategic direction decisions based on it.
These four schools of thought are the so-called “classic” ones. However, over the last 20 years, another series of approaches has emerged, which we will call more “modern” strategic planning techniques:
Lean planning: this approach, based on the principles of lean manufacturing, aims to reduce waste and increase value. Continuous reviews of planning, execution and progress are part of the process, turning planning into part of day-to-day work.
Agile planning: this methodology focuses on delivering value quickly and adapting to change. It is based on the agile principles of software development. Short iterations known as “sprints” are used to plan, execute and evaluate progress continuously. It also borrows from agile the concept of prototyping changes, executing them and only then expanding or deploying the strategy, once the “prototype”, pilot or experiment has proven that it delivers the expected results.
Design Thinking: a human-centered approach to problem solving that includes experimentation, iteration and empathy. Although it can be used for strategic planning, it originated as a way to create innovative new goods or services.
Scenario planning: this methodology involves creating and evaluating numerous scenarios to understand the potential effects of various future events on an organization. It helps organizations prepare for and deal with a variety of potential futures.
None of these approaches is better than the other; “classic” and “modern” methodologies each have their own advantages and disadvantages.
None of these approaches is better than the other; “classic” and “modern” methodologies each have their own advantages and disadvantages, and specific conditions in which one approach works better than another. There are even combined approaches promoted under a different brand that take elements from the schemes above, such as Verne Harnish’s approach for “gazelle” companies or Jim Collins’s line of thought, which takes some of these concepts and combines them with his own findings from empirical data.
Organizations must carefully weigh their options and select a methodology that helps them achieve their strategic objectives, while being sensitive to their specific environment, organizational culture and future plans.
That is why it is advisable to do this exercise alongside a management consultant with extensive experience not only in planning techniques but also in operations, who can better support the launch and implementation of that strategy.
At e-Consulting Global Solutions OÜ we work with small and medium consulting firms, consultant associations and business service providers on five continents, under their own brand, to improve and expand their service portfolio with the latest technologies and methodological tools.
At the time, we announced that we would also invest in developing capable management consultants, fully aligned with the highest global standards for the consulting industry (ISO 20700 and the international CMC certification), for both internal and external consultants. That work lives on today in our Academy.
From our archive. Originally published in Spanish on LinkedIn on 28 January 2023; translated into English. Read the original (in Spanish).