Content marketing delivers a steady stream of leads through your website. Learn how Truebridge can help.   SEE IT LIVE
Raoust+Partners | The Plus+ Factor

3 Reasons Why Strategic Planning Efforts Fall Short (According to Pink Floyd)

A Snarketing post by Ron Shevlin

dlibert_planning

From my consulting experience, I know that many financial institutions are frustrated with their strategic planning efforts. Too many times, one of two things happen:

  1. Great visions and plans are developed that never see the light of day, or
  2. Strategic planning efforts fail to provide creative ideas for strategic direction and correction.

Why is this the case? As I sat at my desk, staring at the black light that illuminates my Pink Floyd Dark Side of the Moon poster, I realized that the answer was right in front of me. The three reasons why strategic planning efforts fall short:

  1. Money.
  2. Time.
  3. Us and Them.

For the uninitiated, these are the names of songs on the Dark Side of the Moon album. For the initiated, no — “Brain Damage” is not one of the reasons why your firm’s strategic planning efforts fall short.

Money, So They Say

The money problem in strategic planning isn’t what you might think it is. It’s not about how much money is spent on strategic initiatives. The problem is the inconsistent treatment of money during the strategic planning effort.

There are two sides of the coin, here. Companies either:

  1. Get too bogged down by financial details, or
  2. Don’t identify financial details at all.

Some firms come up with detailed cost estimates for strategic initiatives and — worse — detailed estimates of financial return (revenue and/or cost reduction). Sadly, these estimates are less reliable predictions of what the stock market will do 10 years from now. The detailed focus on cost and benefit estimates during the strategic planning effort itself chokes off creative, strategic thinking.

On the other hand, some firms, in their strategic planning efforts, don’t discuss cost or return at a quantitative level at all. Then when budgeting time comes around, no one has a clue how much strategic initiatives are going to cost, so they often don’t get funded at the appropriate level.

I wish I could give you a magic bullet for finding the balance between these extremes, but I can’t. The challenge — from a strategic planning perspective — is that it takes time to estimate costs and benefits, and that could bog down the strategic planning effort itself. Which is a good lead-in to the second reason strategic planning efforts fall short.

The Time is Gone (But This Post’s Not Over)

“Every year is getting shorter, never seem to find the time
Plans that either come to naught or half a page of scribbled lines.”
— Pink Floyd, “Time”

Every year, in late summer or early fall, banks and credit unions begin their strategic planning efforts for the upcoming year. And they expect to finish those efforts before the end of the year (or at worse, sometime in January of the new year).

Problem is, some potential strategic initiatives, directions, and strategies need more time for discussion and analysis. But everything has to get crammed into the planning process or it doesn’t get defined, evaluated, and vetted.

I have found few firms (I’m lying, I haven’t found any) that understand the concept of “planning arcs.” That is, different planning timelines that correspond to the complexity of the strategic decision the firm faces.

For example, deciding whether or not to develop and deploy online account opening tools next year is a (relatively) well-defined initiative that fits neatly into the existing planning process.

But what about a decision to get into an entirely new line of business, or decide whether or not to spin-off a business? Think you can make that decision in a 3-month time frame? You can’t. That kind of decision requires more time, and has to go through various stages of decision-making. How does that fit with the current strategic planning process? For most of you, the answer is “it doesn’t.”

MARQUIS | TriggerPro

Us Us Us and Them Them Them

The “time” and “money” problems  are solvable with some effort, thinking, and time. The third cause of strategic planning failure, however, is a bit more troublesome, and, in my opinion, the biggest cause of the shortfall.

The first two causes fit nicely with two of the Pink Floyd songs, but for this third cause, I’ve had to cheat a bit. It would have been more convenient if there was a song titled “People” on the album, because the third cause of strategic planning shortfall is people-related.

But there is no song by that name, so I’ve had go with “Us” — the executives who are good at strategic planning — and “Them,” the executives who aren’t good as strategic planning.

A recent study, published in the Harvard Business Review, found that just 8% of senior executives are “very effective” at both strategy formulation and strategy execution. That’s a bit restrictive, but even relaxing the constraints only puts 37% of executives in the “effective as strategy and execution”.

Looking at it from another angle, more relevant to this post, roughly half of executives were categorized as less than effective at strategy development.

leadership_strategy_skills_execution

Bottom Line: Even if your firm addresses the time and money issues described above, if your executive team conforms to the norm, half the team isn’t effective at developing strategy. And that’s not good.

Digital Banking Report | The Power of Personalization

Hey CEOs, try this: Call in one of your direct reports to your office. Start with the 55 year old EVP who runs a major line of business in your organization. Sit him or her down, look him/her in the eye, and say: “You know what? You suck at developing strategy.”

I don’t know of too many CEOs that would do that, and I know even fewer EVPs who would take kindly to hearing that statement. Actually, I lied: I don’t know any that would take kindly to it.

Here’s the problem, though: These guys (and ladies) know it. They don’t have to be told. They know they’re not that good at strategic thinking. So you know what they do? They discreetly — and often subconsciously — thwart the strategic planning process. They downplay the importance of the process, and dismiss the process as a waste of time.

The rest of “us” think that these executives are resisting change. That’s not it. The problem is that “they” are simply not that good at thinking strategically and figuring out what to change to (oh, they know what needs to be changed, they just don’t know what the change needs to be).

Yet, strategic planning processes are designed to get input from these executives on what the strategic direction of the company needs to be.

***

Here’s a tough thing for companies to do: Face up to this fact, and tell those members of the executive team who aren’t good at strategy formulation to stay home (or, at least away from the strategic planning process). Have those executives identify their direct reports who are good at strategic thinking, and let those folks participate in the process.

In one recent strategy planning effort I worked, the CEO did something like that (but not exactly). He did invite direct report of the EVPs to participate in some parts of the process. That’s good.

But their bosses were still in the room, and that probably squelched some of the ideas and contributions those folks could have made.

What’s a CEO to Do?

Addressing the money challenge requires some policy setting, and perhaps some negotiation with the CFO. Fixing this problem starts with the recognition that it is a problem.

Fixing the time and “us and them” problems are bit more challenging. Here’s what financial institutions need to do:

Make strategic planning a project/process.

We often talk about strategic planning being a process, but it’s really not–it’s more like a project that occurs every year during a specified time frame. A business process is something that typically happens throughout the course of the year. What most companies need is a hybrid of this.

To address the need for “planning arcs,” strategic planning should be ongoing. Many senior executives (the “them” more than the “us”) will balk and scoff at this idea, because the last thing they want to do is subject themselves to “needless” and painful strategic thinking.

No problem. Kick them off the project/process.

Create a project/process team that includes the truly strategic thinkers. The CEO and executive team can be the project sponsor(s), who the planning team reports to. For some mid-level (and even more junior?) execs, this assignment could be, dare I say, the great gig in the sky.


Ron ShevlinRon Shevlin is Director of Research at Cornerstone Advisors. Get a copy of his best-selling book, Smarter Bank: Why Money Management is More Important Than Money Movement. And don't forget to follow him on Twitter at @rshevlin.

Search For More: Snarketing

All content © 2016 by The Financial Brand and may not be reproduced by any means without permission.

MX | The Ultimate Guide to Bank Marketing

Comments

  1. Ron, this post is positively “consulting” of you. Nicely done. The idea of the planning arc seems to me to be something like “continuous improvement process,” but for strategic planning. Is it right to say it should be more iterative than definitive?

    Another question I have is about your conclusion: if the suggestion is to make a standalone project/process team, isn’t there a risk of a rift between the team/sponsor and the EVP/business line head? And if so, how can such a rift be avoided?

  2. Ron Shevlin says:

    JJ: Thanks for commenting. I hesitate to use the word “iterative” since I think “continuous” has the more accurate implication.

    As for the potential rift, yes my proposal could easily produce some tension with the exec(s) excluded from the project team. It’s likely, though, that they would have representation from their function or line of business on the project/process team, although I’m not sure if that’s good or bad, 🙁

    But having these folks participate on the strategic planning team itself is hampering the strategic thinking in many organizations. There’s probably no easy silver bullet here.

    Ron

  3. Ron,

    Thanks for taking the time to write a post about strategic planning. To say banks and credit unions could/should do that process better is a understatement. Stop spending so much money on hiring expensive consultants (present company excluded of course) and spend more time thinking. I would say this about your post: if a CEO has an EVP who is not good at strategic planning then that EVP should not be an EVP. If a member of your executive team is more tactical and operational rather than less strategic and long-term focused, maybe they shouldn’t serve as an executive.

    Mark

  4. Mark, As always, thank you for commenting, and for being such a vocal supporter/tweeter of what I write.

    But…

    I have to disagree with you. Saying an EVP shouldn’t be an EVP if s/he isn’t a good strategic thinker ignores two facts: 1) not everybody is great at everything, and 2) what got him/her to the EVP position wasn’t necessarily great strategic thinking.

    One of the big problems in a lot of financial institutions is the reverse side of the coin: Folks lower on the org ladder may be great at strategic thinking but don’t get a chance to contribute because they’re not at the right rung of the ladder.

    As an employee of a consulting firm (and not just ANY consulting firm, but the leading consulting firm in the country serving mid-sized banks and credit unions), I clearly am not objective here, but an outside consultant is often necessary to help provide an outside perspective, shape and run the process, and help stimulate strategic thinking.

    What we consultants need to do is convince our clients that to make sure the RIGHT people from the client organization is involved with the effort.

    Ron

  5. Ron, really great article here!

    I think you nailed it in one of the comments above. Why should we expect bank execs, including the CEO, to be great at everything? Maybe they are terrific at creating a sales culture to drive revenues? Or have been a leader in driving flawless execution.

    One of the best strategic planning sessions I ever participated in used scenario based planning. Step one is to develop a short list of the top 2-3 scenarios that might occur. For each one, what steps would you take in the then-current world? Not trying to predict which scenario is most likely, just trying to manage well within it. This might be a nice addition to your planning arcs.

    As usual, I’m in awe. Thanks for putting the issues on the table in such a clear and incisive way!

  6. Having helped guide dozens of banks and credit unions through the planning of digital marketing strategy I agree with your perspective. When it comes to digital marketing strategy, I recommend a four-phase approach rooted in agile and built around 3-6 month sprints.

    Step 1: Plan out the next 3-6 months
    Step 2: Produce digital marketing assets that have a long shelf life
    Step 3: Distribute digital marketing assets
    Step 4: Review, refine, and optimize
    Step 5: Go back to step 1

    When dealing with digital marketing strategy, it is important to remember we are dealing with human beings who are very unpredictable. Strategy can and should be planned upon past behaviour but it is impossible to predict how thing will work in the real world once launched and made live.

    The key for digital marketing strategy is to first implement it and then to optimize it as you mentioned with “planning arcs” while ensuring the right people are involved in the process.

  7. Ron,

    Thanks for disagreeing with me–I was expecting and hoping you would! Great points about the EVP position. Yes, you can’t be great at everything. While not a must for an EVP, I sure would hope she/he is thinking about long-term growth opportunities for the bank or credit union.

    Regarding the “lower ladder” folks being more strategic, I agree with you. In fact, one of the best things you can do at your financial institution is to engage everyone (or least the strategic thinkers) in the planning process. Don’t limit it to just the “big dogs.”

    As always, I appreciate the dialogue and conversation.

    Mark

  8. Hi Ron.

    Great article. Just pointing out a small error on it:

    “is a (relatively) well-defined initiativeS”

    Cheers,

    Marcelo

  9. On a tangent, any Pink Floyd fans going to CUNA conference in Anaheim next week have a rare opportunity to see David Gilmour play some of this album, live on that Thursday night.

Speak Your Mind

*

Read more:
Help First, Sell Second And You Will Grow With Content Marketing
Close