The notion of planning fell out of fashion about two years ago - after all, business models and technologies were shifting at such speed, how could you plan anything effectively? In the past six months there's been a rebirth of interest in how you can plan effectively in an e-world.
Driving revenues, reshaping services, gaining and sustaining customer mindshare, and making real profits where processes and transactions are enabled by technology requires real focus - and a different approach to strategising and planning.
Planning is not dead. The planning process is essential to understand options and trade-offs. But smart planning is changing. Business leaders indicate directions, rather than specify paths. Enterprises develop a strategic envelope, rather than detailed fixed strategic plans. The focus is on getting the inputs right and then being able to shift and change, rather than focusing on a large number of desired outcomes a long way in advance.
Let's look at the components of today's smart planning processes and what this means for CIOs. The challenge is to synchronise critical competing forces and tensions to move the business forward - faster and more effectively than competitors.
Understand multiple horizons. In most businesses, it is useful to think about different types of horizons. First there is the time horizon - long and short term. For longer-term horizons use strategic aspirations and maxims. Shorter-term horizons are about tactical plans and actions. The long-term horizons suit the systemic needs of the enterprise, while the short-term horizons allow for opportunistic situations.
A second type of horizon is the business horizon - where are you compared to competitors - ahead or lagging? How mature is your business model - fixed, emerging or working to integrate acquisitions. And what does this mean for your current investment climate?
Third, what type of technology horizon are you in - a greenfield site, a new business with many options, or an established business with a mix of legacy and "crafted on" systems? How e-enabled are you really? How big is the task ahead of you?
Understanding and articulating these multiple horizons in the executive team is a sound first step to a shared reality base. The CIO of a leading Italian-headquarter manufacturing firm shared his perspective with me recently saying: "We have physical assets - many plants - that we run efficiently as part of our core capabilities. We were also established decades ago - long before the computer. My colleagues need to understand that we are not a Cisco or a Dell, but we are taking our own approach to e-enabling the business and it is working".
This firm is working to different horizons, and a different business model, but has evolved planning processes which have long- and short-term time horizons and are well informed by their business and technology horizons.
Concentrate planning efforts, then continue to iterate. The elapsed time for any type of planning effort should be no more than three months - then iterate, and treat any emerging documentation as "work-in-progress". Planning is a continuous process. You need to "sense and respond" in your internal processes as well as with customers.
In advising a large US-based financial services organisation on its globalisation plans earlier this year, I referred to the three-month time frame. The executives looked somewhat distressed. They were into the 14th month of their thinking and had generated massive amounts of documentation thinking they had to do everything in one hit. Our advice was to be very clear about goals and time horizons, and work on one or two high-value or high-impact processes to start testing assumptions and approaches. Then feed back this learning as part of the strategy iteration and to accelerate subsequent moves.
You should try for 80 per cent of the benefits of planning, with 20 per cent of the possible effort. Use the data you have or can get easily rather than undertake extensive data collection. Decisions based on what the planning participants already know are usually the right ones. Rapid planning requires those with the best insights to do the planning - which may mean the people closest to a market, partner or supplier. It is a leadership responsibility that cannot be delegated.
Lay out a strategic envelope. Successful organisations that have harmonised long- and short-term horizons have some form of strategic envelope identifying strategic aspirations and assumptions. This "envelope" underpins planning adroitness and indicates the "degrees of freedom" that apply to opportunistic agendas.
Successful strategic envelopes allow for "granularised" strategies for different market segments, geographies and cultures.
Aspirations frame the context. Aspirations provide guidance and the broad context for people at all levels in the enterprise while creating the frame of reference for business directions. Achieving aspirations requires voicing and communicating them - especially in large organisations with dispersed workforces. For BP Amoco, it is now to be "one of the great and distinctive corporations of the world: Beyond Petroleum", and an operational strategy to "live on the Web". These aspirations might well be the outcome of scenario planning because scenarios stimulate the thinking of those working at the corporate touch-points with external customers and trading partners. Achieving an aspiration requires a solid foundation of business maxims.
Scenario planning sets the boundaries. The route to achieving aspirations can take many paths. A single view of the future is always risky. In unpredictable times it may prove fatal. Scenario planning allows organisations to develop several plausible scenarios or pictures of the future, and to consider what the potential consequences of each may be. These scenarios allow time and space for people to create their own stories about plausible future worlds.
The objective of scenario planning is not to predict which scenario will occur, rather to understand the underlying forces that drive the future. Making these forces explicit and visible creates an early warning system, allowing you to shift between the present and the future. This enables you to spot and respond to subtle shifts in market drivers before your competitors. The fallout from no "Plan B" is now evident in too many firms.
As part of the process of generating scenarios, it is useful to define a series of confirming events. For example: China reaches a level of Internet access equivalent to the United States by 2006. The more concrete these events, the better, because they can then be monitored as part of the ongoing strategic dialogue. The results help update the future view regarding which scenario is actually taking place, its impact on current events and the business implications.
Scenario thinking encourages ongoing dialogues within the executive team on plausible futures, the robustness of current strategies, and key events that point to shifts in the environment.
But effective use of scenario requires discipline, practical focus, resource dedication and executive buy-in. Where these conditions can't be met, business leaders often turn to models that more closely resemble the opportunity and visioning approaches used by venture capitalists. These models start with opportunities described in terms of markets.
Business maxims clarify focus. Business maxims are a series of short statements expressing the shared future focus of the business in actionable business terms. A maxim translates aspects of strategic context into terms that can be easily communicated and understood across the organisation. Business maxims provide the frame of reference for every important aspect of business activity, from customer service to IT, finance to human resource and asset management to logistics.
Using aspirations and business maxims, the future can be tracked (and created) as it unfolds, with a strong sense of the underlying business rationale and a shared lexicon to express that rationale. They empower managers to "perceive and act" in short time frames, using iterative experiments.
But every organisation has many competing pressures and tensions to balance. How does this impact on strategising and planning?
Smart planning leads to better synchronisation. Planning processes help enterprises to clarify scenarios, possible directions and the time frames and resources required. But there are many forces over which you have little control - and each of these are critical inputs to planning and execution.
Professor Jeff Sampler, from London Business School, speaking at a recent Gartner Executive Programs global CIO Summit referred to the challenge of strategy as the challenge of "synchronisation".
"There is a series of external and internal forces that are like cogs, moving at different speeds. There are external forces, such as the economies and political environments in which you operate. There are technology developments that tend to move at speeds faster that you can sensibly utilise them. You might have identified aspirations and business strategies you want to pursue. But at the same time, your own internal processes and culture are shifting at much slower speeds. Change takes time - and a lot of effort."
You will never get "alignment"; it is no longer the best way to think of integrating business and technology. Instead, think of the role of business leaders as managing these different tensions with the goal of synchronising the speeds as well as possible. The executive who bears perhaps the biggest challenge in this area is the CIO.
Sampler suggests that managing these tensions is really what the role of CIO is about. This of course gives rise to a new perspective of the CIO as Chief Tension Officer, which is probably not such a bad description of how many CIOs feel.