by Jack Calhoun, on Sep 12, 2022 9:30:00 AM
Conventional strategic planning will not work in an era of digital transformation.
Arguably one of the most important business processes in an organization is the strategic planning process. In a time when digital transformation is required ask yourself - does our conventional strategic planning process have the elements needed to drive digital transformation? in fact, there are four salient questions you as the CEO or Senior Executive about your strategic planning.
Transformational elements
First, most strategic planning processes are heavy on planning and light on strategy. Why? We are more comfortable with conventional planning than with the tough choices which are part of a transformational strategy. Most strategic planning processes are predominantly a planning and budgeting exercise aimed at functional optimization not transformational strategy execution. Conventional strategic planning worked OK during a period when the process was seeking predictable growth, in a stable environment to drive continuous improvement of the existing business model. But what if your business model is reaching the arc of obsolescence? What if you need a process to drive innovation, disruption, and digital transformation?
So, question one is, “What new elements have you introduced into the strategic planning process to frame your digital transformation and business model innovation agenda?”
A process-based operating model
Second, a strategic plan describes both where you want to play (your target customers, products, and services) and how you play with distinction (your operating model - your value-chain of processes and capabilities)?
If you’re like most companies, you represent your operating model and you organize work through a functional hierarchy and organization chart. This centuries old model of work does not reflect how your business creates value or delivers a compelling customer experience – the only way to do that is through an enterprise process model.
Importantly you also digitize processes not departments -yet 99% of businesses do not have a process-based model of the enterprise. This work of operating model design and reengineering is not an implementation detail but in fact, is a central part of strategy.
The second question is, “Do you have a process model of the enterprise and do you know how you’re your strategy process facilitates operating model redesign?”
Enabling technologies
Third, new technologies. Digital transformation starts with harnessing new technologies in particular new platform-as-a-service technologies which can transform your products, services, and operating model. This means understanding how those new technologies can transform your business is a prerequisite part of operating model design. This means that knowledge and even mastery of critical technology platforms is part of the strategy – they offer prescriptive design options of new digital processes which have no analog equivalent. In other words, we are not automating legacy processes but leveraging these new platforms to invent a fundamentally new operating model.
Question number 3 is, “How are transformational technologies and the prescriptive designs they enable, used to drive your product, service and operating model redesign?”
Communicate and measure
The final question is about bringing strategy to life – how do you communicate and measure your strategy? Too often strategies are expressed as high-level goals which are then handed over to functional heads to create the projects to execute on the strategy. These projects often end up being more about functional optimization than strategy execution.
A good strategy goes deeper – it addresses the “how” of execution and then tracks our progress toward those ambitious objectives – it creates a new culture of efficient execution of ambitious, breakthrough ideas. We have found John Doerr’s Objectives and Key Results to be a good framework for this – with one profound enhancement. The OKRs should be set up along process families- not functions, or departments. Linking OKRs to the products, services and new process-based operating model creates a powerful and pragmatic new way to communicate and measure execution. And so, the final question is, “How do you communicate strategy and measure progress?”
Examination of these four questions and a walkthrough of your current Strategy and Planning process will hi-lite that your current, traditional process will not work to foster digital transformation – it simply wasn’t designed for it.
Here at Accelare we help organizations implement a new strategy, planning and execution process. We call it the Strategy-to-Execution or S2E Process. We help organizations master the process of simultaneously run and improve their 1.0 Model while they transform to their 2.0 Model. If you are interested in learning more, please contact us.