Strategic Planning & Innovation

There seems to be a new wave of thinking, that in essence believes that businesses should move away from strategic planning and budgeting, as by doing so they are stifling innovation. I find this thinking to be complete hogwash.

Strategic planning and innovation actually move hand in hand. They can help consolidate a company and contribute to its success. In an increasingly turbulent, global and competitive environment, it is no longer enough to have a good idea, capitalise on a market opportunity and try to maximise short-term benefits. Even the most flexible and opportunistic businesses, feel the need to be well structured with a direction and meaning.

The essence of the strategy lies in deciding what is going and not going to be done. A strategic position is not sustainable if others are not abandoned. To put it simply, to have more than one thing it is necessary to have less than others. But wanting to have both in the organisation can lead to significant inefficiencies. Many times I see businesses trying to be everything for everyone, instead of something for someone and they end up being nothing for everyone.

In this currently volatile external environment it is very difficult to have all the information to make decisions – if you wait to have all the information, it will be too late. So you have to find a balance between the speed of decision making and, of course, the success, what is called “uncertain knowledge, right decisions”. But it’s not easy, because in the world of business and strategy, unlike other worlds, you do not play alone. You can make your strategic decisions, but every time you do it, the market responds and acts, there is always action-reaction and this forces us to be permanently in motion.

The great objective of a company is competitiveness. Productivity & efficiency is a very important factor, but not enough. The productivity is the internal look of the company, but the fundamental thing, where companies play their lives, is the external look; that is, when the market compares us with our competitors and decides who to buy from. Unfortunately, many organizations are only focused on productivity and cost reduction, and end up being unable to compete. So, competitiveness is much more than operational efficiency (good product/service, adequate price and effective distribution). Competitiveness is the result of the sum of two variables, “operational efficiency” and “perceived differentiation”, the image that is transmitted, that is, the perceived positioning.

So, as I hope you understand by now, strategic planning and innovation actually move hand in hand, as strategic planning rests on the need of the business to look around it and not remain internally focused. Thus, I am totally against the thinking that strategic planning is the enemy of creativity because it limits innovation possibilities. Actually the latest strategic planning thinking and research identifies that attempting to innovate without boundaries overwhelms people with options. Without guidelines to structure any innovation, is likely to have team members struggle to coordinate such innovative activities. This is why we are now seeing the rise of the so called disciplined approach to innovation. Why is a disciplined approach important? Because new value does not always come from radical innovation. Sometimes substantial value can be unlocked from incremental product or service improvements, advances in existing business models and moves into adjacent markets.

In essence strategic planning and innovation are part of the same thing. Innovating without discipline and a proper analysis set out in a plan, becomes more like taking a lottery ticket.

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