Strategic planning issues are fundamental in corporate strategic planning

Corporate strategic planning should aim to surface strategic planning issues. Strategic issues are fundamental to the process of corporate strategic planning. As explained at this site, strategic planning is a systematic procedure for identifying the top most key issues - the half-dozen that every organization must get right if it is to prosper over the next few years.

A formal definition of this kind of strategic planning would probably include the phrase 'identifying and addressing the Unresolved Key Issues' (UKI). As UKI is so close to YUKI I will not call these really big Strategic Planning Issues UKIs or YUKIs I did do this when I was teaching strategic planning years ago. However I realized that this gave an unbalanced view of strategic issues as being only negative. Some of them are not at all frightening or horrible. Some of the truly strategic issues facing organizations are positive.

Strategic Issues as organizational elephants

John Argenti, developer of the Argenti System of Strategic Planning, refers to the process of unearthing strategic issues as an 'elephant hunt'. It is a process of looking for ‘strategic elephants’ in the organization's undergrowth, identifying them, then corralling them in one place so everyone can see all of them together and can note the sum total of the organization's strategic situation. It is very important to see these elephants against a very broad, panoramic, background and then to deal with all of them at once in one major, holistic, strategic review.

What are strategic planning issues?

Let us avoid the following confusion on this point. An organization can have issues or problems with its strategic planning process. Or it can have issues facing the organization that the strategic planning process can help the managers to understand and address. It is this second sense of big challenges facing the organization that I call Strategic Planning Issues or simply strategic issues.

Issues with the planning process itself are dealt with by having a sound process, one which meets the criteria we have stated elsewhere on this site. You could start with Strategic Planning Process.

Every organization I have ever worked in as an employee, or worked with as consultant, has had one or more of these elephant sized 'strategic planning issues'.

Examples of Strategic Planning Issues

Want to have some illustrations of these strategic elephants? Glad you asked!

Example 1 - The big product elephant

Organizational situation
A manufacturing business has two main product lines, one with sales revenue of $6m, and the other with sales of $12m. Both make about 20 per cent contribution to overheads and profit. The larger $12m product is made under a licensing arrangement with an international firm.

Strategic Planning Issues
The plant facilities used to make the larger volume product are designed to make only this product and are not easily reconfigured for other work. The license is renewable on an annual basis following a review by both parties to the arrangement. The firm offering the license is showing an increasing tendency to shift work to lowest cost producers.

Why the issue is a strategic issue
The risk of losing a contribution to profits of about 20% definitely marks out this dependence of a large customer as a strategic planning issue. The difficulty of redeploying the assets involved simply adds to the significance of this as a strategic elephant.

Example 2 - Having to go on a capital diet

Type of organizational situation
A British subsidiary of a US conglomerate has been producing five products for many years. The time has come to upgrade the production plant, and to ensure the company keeps up with the market's increasing demands for quicker service, lower maintenance costs and higher quality, will require the expenditure of £50m over the next five years.

Strategic Planning Issues
This company's parent has told them they may spend only £21m.

Why the issue is a strategic issue
A judgment would need to be made whether the available capital could be used in way that would enable improved production fast enough to keep up with the changes in the market. These risks would make this matter an item on the short list of strategic planning issues.

Example 3 - Let go of yesterday to pay for tomorrow

Type of organizational situation
A diversified group of clothing and footwear companies has seven divisions. The largest subsidiary is a maker of work clothes with a long established reputation for quality. It makes a moderate and slowly declining return on capital although nothing like as high as the other six smaller subsidiaries. These are engaged in specialized footwear for people in dangerous occupations, like firefighters, safety gear like harnesses for electrical linesmen, and so on. These smaller companies have steadily expanded in recent years, and have arranged their manufacturing off shore, turning themselves into design and marketing companies.

Strategic Planning Issues
They are emerging as leaders in their respective fields, which are less and less related to the manufacturer of general purpose work clothing, which is facing increasingly fierce competition from cheap imported products. The smaller companies are seeking additional capital for expansion into other markets. A debate is brewing about the need to sell the older traditional manufacturing division of the firm to raise the capital required.

Why the issue is a strategic issue
The planning team would have to look at the relative size of the contribution from the manufacturing business compared with the other areas of the enterprise, and the point at which the decline in the former would be overtaken by growth in the latter. Also given the decline, a judgment on the quantum of capital that might be realized by the sale could be significant in timing the sale. This is a strategic planning issue because of the potential size of the impacts and the time horizon over which this may impact the business.

Example 4 - When no one cares about the carer

Type of organizational situation
A long established nonprofit organization, has for more than 70 years gained a reputation for integrity and caring relationships with its community, donors and relevant government agencies.

Strategic Planning Issues
Despite good relationships with its donor base and other stakeholder groups, because of severe economic recession, donor income is starting to slide. The Chief Finance Officer estimates that the income could decline between 40 and 50% over the next five years, while expenses have begun to drift upwards at about 3% above inflation in recent years. This is bad enough, but this is a warning sign that its original purpose, set 60 years ago, is becoming less relevant in the current situation with other agencies undertaking the work in more cost effective ways.

Why the issue is a strategic issue
While the cost donor income gap is obviously a strategic elephant, perhaps of even more significance is the fact the founding purpose of the organization may no longer be valid. If not addressed the very existence of the organization is called into question. There are profound strategic planning issues to be addressed by this organization.

Example 5 - Death and taxes

Type of organizational situation
A large university restructures to support growing thrust in research and industry related consulting and training. The university commercial subsidiary restructured to parallel the parent organization, into four new separate companies and align company staff more effectively with relevant schools of the university.

Strategic Planning Issues
The single company previously enjoyed tax exempt status as a unit within the nonprofit university. After the restructure two out of the four new subsidiary companies lose their tax exempt status and are subject to full corporate taxation. They happen to be the least profitable of the four companies!

Why the issue is a strategic issue
The possibility arises of the collection of businesses going into a net loss position. The taxation issue appears to be a strategic planning issue that was missed in the process leading up to the decision to restructure the businesses. It may also be the case that the previous set up was masking some poor performance that should have been addressed.

For a useful list of questions to help you in your search for strategic planning issues try here.

What we know about strategic elephants


You will notice that in all of these examples financial numbers associated with the situation are an important input to the strategic planning deliberations, these strategic issues are very much about judgment, anticipating the likely impact on the organization as whole, and the length of time over which the impact will occur.

Having worked on strategic plans for many organizations over more than forty years I think we can say some things about the patterns that emerge with strategic issues of the very large or elephant variety I have been referring to.

Practically every organization has at least one of these elephantine strategic issues lurking in the organization, which has not been dealt with, and needs to be addressed.

In a very few cases there will be only one major strategic elephant. It is more usual for there to be a few, perhaps up to a handful. In only one case we counted six. I have never seen more than six listed.

I have certainly seen long lists of fifty or sixty issues that were judged to be major or key issues for the organization at the commencement of a strategic planning process.

However, when tested against the criteria of likely impact on the overall corporate performance being impacted by 10, 20 or more percent, most of these ‘key issues’ fell off the lists, or were seen to be symptoms of a larger underlying strategic issue we have described as being ‘strategic elephants’.

In some cases the alleged corporate strategic planning issues were clearly of significance to a part of the organization, but not of corporate significance. This may sometimes be a misunderstanding. In other cases it may be a case of ‘empire building’.

No shades of grey among these elephants

These strategic issues or major themes stand out like the proverbial sore thumb once they are acknowledged. These strategic planning issues are those factors, trends, obstacles or other matters that have the potential to affect the shape and performance of the organization for quite a few years.

It may run counter to the intuition of most people, but it is my experience that the issues surfaced during strategic planning do not fit a neat, smooth, or gradual ranking in severity or importance. Generally speaking either an issue is clearly a strategic planning issue or it is clearly not.

How could you miss seeing an elephant?

You will have noted in the example of the university commercial subsidiaries above that the issue of taxation was completely overlooked. Organizational management teams that have completed conventional business planning and budgeting, or revised their ‘marketing strategies’, or carried a review of organizational structure, sometimes believe they have d also ‘done strategic planning’, yet they often miss one or more of these truly strategic planning issues altogether!

None of these exercises is really designed for the purpose of surfacing and addressing the strategic planning issues that are of significance to the long term future of the enterprise as a corporate whole.

Sadly, even organizations with professional corporate or strategic planning departments which engage in exercises called ‘strategic planning’ can also miss these elephant sized strategic planning issues!

Why is this? Because usually the staff in these strategic planning units are insufficiently experienced in management, or too specialized in their expertise to identify these strategic planning issues, let alone be able to address them.

Strategic issues are not all bad news

Before you think it is too difficult to get agreement on these strategic issues or elephants because they are too difficult to acknowledge, you should realize they are not all bad news!

Possibly about one in three of the strategic issues that are surfaced will be good news, e.g., such as the charitable organization that finds its donations rising at a rate 30% faster than they had projected in their budget.

Of course the bad news is the bad news; one third of strategic planning issues being good news leaves about two thirds of all major issues are bad news. The main product line is fast becoming obsolete, the governing board is elderly, but through shareholding has a lock on changes to the board, and so on.

Because these strategic elephants have not been addressed, and left to undermine organizational effectiveness for perhaps years, there will be a chain reaction through the enterprise of myriads of smaller troubles that absorb management attention and other resources in unproductive ways.

Untamed

The metaphorical idiom, ‘elephant in the room’ is commonly used to refer to an obvious, but ‘inconvenient truth’ that is being ignored or goes unaddressed. The expression also applies to an obvious problem or risk no one wants to discuss. Of course the expression embodies the notion that an elephant in a room would be impossible to avoid, so that, people in the room who pretend the elephant is not there have chosen to avoid dealing with the biggest issue.

Some of these strategic issues or strategic elephants will have been present, untamed, in the enterprise for many years. Some of them will be known to nearly everyone in the company but no one will have tackled them, partly because, as explained above, they have no systematic planning system for raising and addressing such major interlocking strategic issues.

Strategic planning and strategic issues

Corporate strategic planning is planning for the corporate whole, not for its parts. It is not business planning, production planning, strategic planning or any other type of partial planning, and it certainly is not marketing. It is not coordinating, forecasting or budgeting. It is a process designed to yield a corporate plan - a statement of strategies designed to affect the organization as a corporate whole.

The small number and the great impact of the decisions are two of its notable features. Because these are not complex and because they are highly judgmental in character advanced planning techniques are not often helpful and may actually hinder a clear, simple conclusion.

Clear insight into the organization in its environment, and the courage to face the big strategic planning issues are more important than excessively detailed numerical analysis of the organization.

The purpose of the corporate planning process described at this site is to reach an consensus among the top executives in an organization as to the very few really significant strategic planning issues facing the enterprise, and then to commit enthusiastically to the half-dozen actions that they have to take in order to place their organization in a strong position to face the long-term future.

Return from Strategic Planning Issues to Definition of Strategic Planning.

Return from Strategic Planning Issues to Simply Strategic Planning Home Page.

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The Argenti Strategic Planning Process can improve the Performance of Your Organization by helping you to find Strategic Elephants!

Argenti Strategic Planning is a process which, for more than forty years, has been used by over 2000 companies and NPOs around the world. Many of them have since become world class performers.

One key lesson from all this experience is that the starting point for a successful strategic plan is categorically not to announce a Mission or Vision Statement. Instead your planning team must move carefully through the ‘Argenti Purpose Sequence©’.
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Another key lesson from the Argenti Strategic Planning experience is that, throughout the process, you must avoid being caught in the details. Ignoring this rule can derail your entire planning process. The Argenti Strategic Planning Process shows you how to concentrate like a laser on the ‘The Strategic Elephants’.

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