In the Industrial Age, public and private enterprises built their future by the expansion of present technology, internal assumptions, and day to day operations. In today’s rapidly changing environment based on global information, this strategy of merely building on the present is defunct. Worldwide markets and instant global communications are now multiplying all our opportunities.
To keep pace in today’s world, a company must be flexible and agile and must continually reinvent itself. It must have more than a traditional strategic plan to guild its direction; it require a Strategic Management System built from a vision of the future and created using a dynamic systems approach that works backwards from the future. Unlike other approaches to planning a strategic management system focuses on the customer, implementation and market outcomes.
The Systems Way of Strategic Thinking
What’s required to make planning successful is a new way of thinking based on concepts that govern natural living systems. It is more normal, natural, and dynamic way for all of us to think and live than traditional linear and piecemeal/analytical approaches. All living systems naturally live and compete for resources within this General Systems Theory framework. Since our organizations are living human systems that exist within an environment made up of markets and society it makes sense that these principles will apply directly to our planning efforts. By understanding these systems concepts outstanding performance can be delivered over a long period of time.
In the natural world things are cyclical. Effective organizational systems also operate as cycles where the environment and feedback are fully integrated.
In addition, the starting point needs to be redefined. As Stephen Covey said in his book The 7 Habits of Highly Effective People, “Begin with the end in mind”. We need to start thinking backwards from our goals. First define what the objectives are for the organization (especially as they relate to the customer in an ideal future world), while keeping in mind the environment as it will exist in the future. We can then create the measurement criteria (Key Success Measures) that define success. These clear, concise and bounded measurement criteria will be used to evaluate all the strategies that will be implemented in the company.
Once this is complete, we can evaluate any new initiative in the light of these criteria and decide if it is truly strategic. Doing this and communicating this analysis to all the stakeholders in the organization, while getting their input, will be a powerful tool in obtaining general acceptance of the need for change.
In the systems approach to planning for the future it is only necessary to answer five basic questions to develop a plan that truly creates a sustainable competitive advantage.
A Where do we want to be? (i.e. our ends, outcomes, purposes, goals, destination, vision) This is the basic question of systems thinking and needs to be future-oriented and focused on the customer. Before starting a project or implementing any company-wide initiative, the end results must be clearly visualized and communicated. Goal setting that requires a significant rate of improvement in business performance leads to more systemic improvement.
B How will we know when we get there? (i.e. the customer’s needs connected to a quantifiable feedback system) This establishes the criteria to measure the success of the plan throughout the organization. To benefit, everyone in the organization must recognize the value of higher profitability, have passion to achieve outstanding results, and become committed to improving customer satisfaction. A balanced approach that measures and reports financial, customer, employee and societal outcomes are necessary to insure overall success.
C Where are we now? (i.e. today’s issues and problems) At this point a baseline must be established by collecting data under normal operating conditions. This is the time to do a Strength, Weakness, Opportunity and Threats (SWOT) analysis. The organizational baseline includes understanding organizational structure, policy and procedures, informal structure (politics), human capital and liability, and financial impact and investment resources. A facts base analysis of the market and its environment are also critical.
D How do we get to the future? (i.e. close the gap from C to A in a complete and holistic way) This is where strategic approaches emerge and align all the processes involved in the organization. Human attunement processes, such as reward and recognition programs, leadership development, and employee evaluation systems are installed with employees receiving any necessary training to ensure a successful implementation.
E Ongoing: What will/may change in the future environment? (i.e. what’s happening that could change our plans) To prevent wasteful planning and implementations it is critical to consider future, as well as current events, that could change plans. This is both the beginning and the end of the planning system. The first time that a systems approach is used in planning start by doing an environmental scan and analysis. Anticipating changes in the environment, the organization, and internal capabilities, is fundamental to a successful plan. The best way to anticipate changes is to understand all of the surroundings, and take a proactive, holistic approach based on solid and factual based market analysis.
This natural model of strategy is very dynamic. Each individual case will require leadership to evaluate how often to react to changes in the market and the environment. The more often the changes, the more often it will be necessary to loop through the system and again ask the five basic strategic questions.
This simple but eloquent systems approach to planning allows organizations to be strategically consistent while operationally flexible in today’s dynamic environment that leads to superior results.