Rethinking Strategy: Planning vs. Reacting

6 min read

April 8, 2024

“Everybody has a plan until they get punched in the face.”
— Mike Tyson ("Iron Mike")

I once worked with an organization that developed detailed five-year strategic plans, while at the same time telling its employees that we live in volatile, uncertain, complex, and ambiguous (VUCA) world. The company completed its latest strategic plan in 2019, for the period 2020-25 (right before COVID 19 arrived). See the irony?

Another organization I worked with created a three-year strategic vision and uses a rolling eighteen-month budget. Every six months the budget is be adjusted and re-forecasted. The strategic vision is accelerated in favorable times and delayed in lean times to match market conditions. This organization is much more agile and adapts much better to changes in market conditions than most. They have struck a better balance between planning and reacting.

Planning has a definite horizon - plans are always much more accurate near term. It's much easier and more accurate to predict next month vs. next year. Planning three to five years out is challenging, maybe impossible. Only long-term capital investments fit well into this time horizon.
Reacting also has a horizon - the shorter the better. The longer it takes to react to change the less time you have to respond to change.

In a VUCA world, traditional strategic planning faces an existential challenge. The ability to react to the world around you is a stronger indicator of success. The world is just too complex and unpredictable. Responding to such a world requires greater adaptability, and adaptability is not a characteristic of ridgid long-term strategies and top-down hierarchies.

“Setting oneself on a predetermined course in unknown waters is the perfect way to sail straight into an iceberg.”
— Henry Mintzberg, The Rise and Fall of Strategic Planning

The Fallacy of Traditional Planning

Many "strategies" or "strategic plans", particularly those created in large organizations, are overly generalized, rapidly become obsolete, and become frustrating to those asked to execute them. Often the goals are imprecise and hard to measure (sometimes intentionally) - goals such as "Recognized leader in (insert industry here) industry". The story of Chen Brothers highlights this common pitfall, where broad aspirations fail to translate into actionable initiatives.

“For example, Chen Brothers was a rapidly growing regional distributor of specialty foods. Its overall goals included growing profit, being a good place to work, and being seen as the go-to distributor for organic foods. These were all worthy goals. None of them, however, implied a particular strategy or action, although they can be seen as constraints (that is, these sorts of broad “goals” work like the rules of football in that they rule out a great many actions without specifying what the team should actually do).”
— Richard Rumelt, Good Strategy Bad Strategy

Typically, the goals of Chen Brothers, like most companies, would be translated into a list of specific actions/projects. Such lists usually grow out of planning meetings in which a wide variety of stakeholders provide input (often their own pet projects). Rather than focus on a few important items (and ignore anyone's pet project), the group sweeps the whole collection into the “strategic plan.” Then, in recognition that the entire list is unachievable, the label “long-term” is added so that none of them need be done today.

This strategic plan is then cascaded down the organization where the employees will wonder which initiatives have anything to do with being the "go-to distributor for organic foods" or "a good place to work". As it happens, no research exists showing that goals set for you from above stimulate you to greater productivity. In fact, the weight of evidence suggests that cascaded goals do the opposite: they limit performance.

“Your people want and need to engage with the world that they’re really in, and to interact with the world as it really is. By harnessing them to a prefabricated plan, you’re not only constraining your people but, quite possibly, also revealing how out of touch with reality you are.”
— Marcus Buckingham, Ashley Goodall, Nine Lies About Work

Your company needs a few clear objectives, and to be able to react while it's "in the fight". It needs to adapt to market conditions as they are today, not what you projected two years ago.

Embracing Adaptability

“...it is not the most intellectual of the species that survives; it is not the strongest that survives; but the species that survives is the one that is able best to adapt and adjust to the changing environment in which it finds itself.”

— Professor Leon C. Megginson, Louisiana State University, paraphrasing Charles Darwin

In a similar fashion, organizations must adapt rapidly to the world around them. The traditional model of gathering information (budget forecasts, sales forecasts, competitor analysis, etc.), pushing that information up the hierarchy where it will be discussed, debated, and finally used to create a "strategic plan" no longer works. That information will be stale and out of date (and the plan on which it's based) by the time planning is completed. There is a better way.

Planning systems act on summarized information fed to senior leaders to make strategic decisions and cascade them down. Instead of using a "planning system" create an "intelligence system". Intelligence systems move accurate real-time data across the organization as fast as possible so that all team members can see and respond in real-time. Intelligence systems empower everyone to take immediate and responsive action.

General Stanley McChrystal commanded the US Joint Special Operations Command (JSOC) from 2003 to 2008. His mission was to counter the terrorist threat to the US, specifically Al-Qaeda. JSOC brought together the "best of the best" - the special operators from each branch of the US military - the Army's Delta Force and 75th Rangers, Marine Force Recon, the Navy SEALs plus the Air Force Pararescue and Combat Control Teams. They were the most experienced and deadly operators on earth, yet they were losing the war.

They faced an enemy that was resilient, spontaneous, agile and decentralized. Enemy cells could plan and execute attacks independently without a chain of command. No matter how much McChrystal's planners optimized their processes they were never quite fast enough. By the time raw intelligence was analyzed, targets selected and approved, and operators sent out to intercept a target, the enemy would have left the building a few hours earlier. Something had to change.

“In the old model, subordinates provided information and leaders disseminated commands. We reversed it: we had our leaders provide information so that subordinates, armed with context, understanding, and connectivity, could take the initiative and make decisions.”
— General Stanley McChrystal, Team of Teams

His approach embodied these truths:

Information grows stale fast, and must therefore be shared fast; that the best way to enable coordinated action on the ground is to coordinate not actions themselves, but rather the information the ground needs right now; that the best judges of what information is and isn’t valuable are the end users of that information; and, critically, that the best people to make sense of information are the users of that information.
Liberate as much data as you can. Be vigilant about accuracy and timeliness. Most organizations are more concerned with how best to control information than how best to share it - break that model. Since the best judges of what information is and isn’t valuable are the end users you will be unable to predict what data is relevant. Watch what data your teams find useful and increase the depth, speed and accuracy of that data.
Trust your people to make sense of the data. Planning systems take the interpretation of the data away from those on the front lines, and hand it off to a select few, who analyze it and decipher its patterns, and then construct and communicate the plan. Intelligence systems do precisely the opposite — because the “intelligence” in an intelligence system lies not in the select few, but instead in the emergent interpretive powers of all front-line team members.

This approach allowed US forces to be as resilient, agile and responsive as our enemy. We were now as fast as the world around us, and we were winning. In 2009, as a result of JSOC's outstanding results, General McChrystal was appointed to lead all US forces in Afghanistan as Commander, United States Forces – Afghanistan (USFOR-A).

Shifting from Planning to Reacting: Reimagining Leadership

As organizations pivot towards agility, leadership must undergo a corresponding evolution. The role of the senior leader must change away from one centered on command and control. Agile leadership requires skills analogous to a "gardener" and an empathetic crafter of culture, rather than a task master. A gardener cannot actually “grow” tomatoes, squash, or beans — they can only foster an environment for the plants do so.

In addition to giving teams a real-time understanding of what is happening in the world, senior leaders must provide them a clear and unambiguous sense of "mission" and purpose. Senior leaders, instead of dictating plans and actions, cascade trust, purpose, and focus, empowering teams to navigate uncertainty with clarity. We must foster the right environment for our people to react in real-time. In the battle for relevance, the ability to react swiftly becomes the ultimate differentiator.

It’s not true that the best plan wins. The organizations best able to adapt to their environments win.

References

Image Credit: Mike Tyson vs. Jose Ribalta

Mike Tyson connects a left hook to Jose Ribalta during a bout at Trump Plaza Hotel on August 17, 1986 in Atlantic City, New Jersey. Mike Tyson defeated Jose Ribalta TKO 10. (Photo by: The Ring Magazine via Getty Images)

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