Question of the Day: How healthy is your strategic planning process?

Key question: Want to get back on track?

A few years ago the Wall Street Journal reported that companies typically realize only about 60% of their strategies’ potential value because of defects and breakdowns in planning and execution.¹ The corporate annual planning process is at the heart of healthy corporate long-term performance. Yet, in our humanity, it’s also vulnerable to some of our most basic corporate weaknesses – discipline. Here is a story all too often encountered in businesses.

I recently had my client relay a story to me.

She said that last week she had her annual review meeting with her company’s banker. Her banker surprised her with a rather strong suggestion that she get serious about her strategic planning process. The banker’s elevated attention to her planning process no doubt was due to her dad’s pending retirement and how that possibly affects the future of the business. The banker, who regularly plays golf with her uncle, was aware there had been concern amongst some of the family members regarding management going forward. There was the usual concern about decision making and capital allocation like investment in growth vs profit distribution. The banker suggested tightening up her planning process to prepare for a discussion with her family shareholders. She admitted that she had let the ball drop on their strategic plan and had not addressed it all year. She said that she had too many issues to deal with to stay on top of regular review meetings and the meetings just kept getting postponed all year.

This is not a rare event in the strategic planning world. Dropping out of regular meetings that is. It’s one of the more common issues we help clients with. It’s an overall process that takes a lot of discipline to keep going in a way that supports it being valuable and contributive to the business’ good health. Done well, it can support not only keeping your business profitable but also supporting long term business health as well as keeping meaningful communication going among family members. But it’s got to be done right. Once you let the system get away from you – not meeting for a year – you almost have to start over.

 Strategic Planning is one of the core courses in the Academy of Family Business’s curriculum. The Academy offers a curriculum of classes designed to prepare members of a family business with knowledge and skills to lead and manage their business to what we call Prime Performance.

To learn more about the Academy of Family Business, please email me at: info@myAFB.org 

¹Harvard Business Review Reprint R0507E