Is strategic planning still a worthwhile exercise?
Strategic planning can be a very frustrating process. Imagine yourself in the shoes of the strategic planning teams in most of the large Financial Institutions today. Given the pace of change in the economy, any long term plan gets abandoned long before completion. Whether because of changes in the economy, changes implemented by their competition, or pressure from their own management, banking analysts or rating agencies. Yesterday’s announcement that HSBC is going to cut 30,000 jobs is another proof of how hard it can be to be a planner. How does a strategic planner deal with the announcement that the bank is selling a large part of its branch network, acquired some years ago as part of the strategy to develop a retail presence in the US. Again, rising costs and pressure to refocus overall business portfolio were the killer. And they are not the only ones to change course as most of their European competition has to shed jobs as well, especially in investment banking.
Is strategic planning still a worthwhile exercise? Yes, absolutely, under the condition that the plan be flexible to adapt quickly to unforeseen challenges. The best way to do this is by developing performance measures that can signal early on that certain goals or objectives cannot be met so that alternative and corrective measures can be adopted. In addition, by fully integrating external and internal communication in the process it can help mitigate damage in the short and long term. As well described by Nicolas Taleb in his book The Black Swan, we have to cope with the unpredictable. However the impact of the unpredictable can be diminished with good external and internal communication as well as with flexibility in planning. What happened to BP a few months ago is a good reminder that these are important factors. – Antoine Broustra, Partner, Southwest Planning & Marketing