Is the era of Strategic Planning ending?

Sean Bowman, Director Stagira Consulting Pty Ltd  

Let me start with a question.

How many companies in 2018 are currently in the process of implementing the third year of the strategic plan they developed in 2015? 

I could have posed the question about how many are implementing the fifth year of a strategic plan signed off in 2013 – but I suspect this would be an even more pointless rhetorical question. 

Don’t get me wrong – I’m not suggesting for a moment that strategy isn’t important. In fact I think that strategy is more important than ever. But spending loads of time and resources on writing 3 or 5 year plans?

The reason why I ask this question relates to the pace and impact of exponential change. In a previous article I referred to Ray Kurzweil’s concept of the Law of Accelerating Returns. [The Law of Accelerating Returns; Ray Kurzweil March 2001] .  Put simply – a more advanced society produces progress at a faster rate than previous societies. Why? Because they are more advanced.

Kurzweil articulates this rate of progress by referring to the amount of human progress that occurred during the 20th century. Now the 20th century was a period of unprecedented change in human history. The progress was so fast that by the year 2000, Kurzweil estimated that the rate of human progress was five times the average rate of progress that occurred during the 20th century. 

Kurzweil further estimates that between 2000 and 2014 another 20th century’s worth of change occurred. And right now we are in a period where a 20th century’s worth of change is happening within 7 years.

If this rate continues, then by around the year 2028, a 20th century’s worth of change will be occurring every year. And by 2030 multiple times a year. And by 2045, multiple times a month.

In fact Kurzweil believes that the amount of change in the 21st century will be 1000 times that of the 20th century. 

So let’s put strategic planning in the context of this period of exponential change. 

The origins of organisational strategic planning date back to around 1950 and gained momentum through to the 1980s. This is when the era of strategic planning gained full steam – Porter’s 5 Forces,  Scenario Planning,  SWOT analysis and Balanced Scorecards. The heyday of consulting firms commenced –  well-funded strategic planning teams, complex competitor analysis, large strategy packs and Board strategy days.

Companies were able to differentiate themselves through marketplace analysis, resource allocation and making planful choices.

BUT….…all in a world when a 20th century’s worth of progress happened in 20 or more years. Ten years and ago and beyond was a time when the world was far more predictable. Not a piece of cake. But nonetheless progress was moving at a pace where thoughtful investment in planning paid dividends.

But we are now in a period where, according to Kurzweil, a 20th century’s worth of change happens in 7 years. By 2021 it will be every three years and by 2028 every year. 

Now if any strategist is able to put together a plan that can predict the social, political and technological disruptions that will occur in a world where a 20th century of change happens in 1 or 2 years, along with all of the other competitor and marketplace stuff around SWOT and 5 Forces, then they truly will be genius. 

But this will involve planning around change that we can’t even envisage – massive game changes like the next Blockchain that doesn’t exist yet. Changes that will take out whole companies, industries and hundreds of millions of workers, let alone making a strategic plan meaningless. But these seismic disruptions will also create new unforeseen and hard to predict opportunities, something almost equally impossible to strategically plan for. 

Or let me put it another way. Imagine having a strategy team and an army of consultants in 1900 trying to put together a 100 year strategic plan for the 20th century. How would that have gone? Would they have predicted TV, the internet, jet engines and space stations etc by 1990? 

Well – when a 20th century’s worth of change happens in 5 years, this is exactly what a 5 year strategic plan will be attempting to do

So what’s my point? 

Well actually I have two points I want to make.

The first is the planning horizon. Of course having a strategy is important. Sporting teams have strategies – usually an overall team strategy for the season combined with a strategy based on who they are playing next week. But they don’t try and predict what their competitors will be doing in 3 to 5 years’ time. Similarly in a period of exponential change I question the future and ongoing worth of 3+ year plans. As the time horizon of change and disruption shortens, so should the planning cycle.

Secondly, and more critically, is the emergence of the importance of organisational and individual adaptivity. Instead of investing loads of money in strategic planning only to be sideswiped by disruption and technological and social volatility, isn’t this now the era to be redirecting strategic planning investment into building the talent and capability to adapt and respond with speed and impact to situations that can’t be “strategically planned” for? 

Surely the organisations and individuals who will flourish in a world of unpredictable, volatile and ever increasing exponential change are those who can adapt quickly and differentiate themselves through speed and real time innovation and strategic response. This adaptive capability will be more important than building large teams and investing significant funds building plans that attempt to predict a world where a 20th century’s worth of change will be happening in 5 or so years.

This doesn’t mean that strategic planning is no longer relevant. It just means that the time horizon has to correspond to the pace of exponential change. And more importantly, organisations need to be building the Adaptive Intelligence and capability of the organisation and their people.

For more about Adaptive Intelligence, please see my previous article https://www.linkedin.com/pulse/what-adaptive-intelligence-sean-bowman/ or visit our website at https://stagiraconsulting.com/adaptive-intelligence