The Death of the Five Year Plan

Just a few weeks ago Financial Times columnist Stefan Stern wrote an article entitled, "Living Strategy and the Death of the Five Year Plan." He begins the article with a simple question: "Is strategy dead?" To save you the suspense, he goes on to say that while it might not be completely moribund, it is certainly on life support. The gist of the article is that recent economic events have rendered traditional strategic planning processes obsolete. Gone are the days where leadership teams could sit and deduce the future over planning horizons as long as five years. As Lowell Bryan a senior McKinsey Director notes in the article, "You have to give up the pretence that you can predict the future. This is about managing much more dynamically. How can you say today what the economy will be like even six months from now?" It's hard to argue his point

That said, most of the main street strategists I come across don't really subscribe to the notion they can predict the future anyway. What they try to do is make an intelligent estimate of what might happen, document it in a plan and then adjust the plan as they go. Even Mr. Bryan has to admit his own firm's research has seen an uptick in the use of scenario planning this year—a tool designed specifically to help leaders anticipate the future. But the article does raise an interesting issue: how do we manage dynamically and what does managing dynamically actually mean? Stay tuned as there will no doubt be more ink forthcoming on this topic.

Read the Financial Times article

Causation, Counterfactuals and Competitive Advantage

Despite the oft levied criticism that academics never think practically, a recent paper in the Strategic Management Journal gives rise to hopes that they do.* Two scholars, Rodolphe Durand of HEC School of Management and Eero Vaara of Hanken School of Economics, note in their article Causation, Counterfactuals and Competitive Advantage that their "key concern is that current disparate interpretations of causation generate wide-open questions that plague the future development of strategy as a scientific and applied science." They assert the study of competitive advantage can be accomplished with non-traditional methods not normally employed by researchers. They advocate using what are called "counterfactuals" or an approach to analyzing causation by asking questions regarding what would have happened in various prior situations.

One specific type of counterfactual is counterfactual history development. This is a technique used by historians and political scientists to examine what would have happened if certain events had not taken place. A counterfactual case is developed by suppressing a key event or activity and then examining what might have happened if it did not occur. In so doing, researchers are able to evaluate if relationships—causal relationships—really exist or not.

So why should managers care about something as complex as counterfactual history development? Consider this: many organizations employ ‘lessons learned' processes. But rarely do lessons learned approaches dig any deeper than simply asking the question: ‘what happened?' Techniques like the one Durand and Vaara present offer a practical way for managers in any setting to begin to understand not only what happened but what caused it to happen.

Read the actual Strategic Management Journal article

*NOTE: If you're one of the managers that share this sentiment—that academics never think practically—don't feel bad. Most academics believe that practioners don't think at all.

Strategy Execution

In the September/October edition of the Planning through Performance e-Newsletter I summarized Arnoud Franken, Chris Edwards and Rob Lambert's findings regarding the top elements that lead to successful execution. In this bi-month's Planning through Performance Brief I've assembled a summary of what strategy execution is and detailed ten steps that comprise an effective strategy execution system.

For more information on strategy execution and other great content, visit the PTP section of edbarrows.com:

• Strategy Execution Brief

Let's Start the Conversation, Part Deux: Update

The conversation I referenced in my last newsletter is now underway thanks to those who have dialed in. Since the kickoff of my PTP blog I've discussed Strategy Visualization, The Confused Role of Communication in Strategy, Defined strategy (again) for the 163 respondent to the Forbes Insight survey who couldn't describe what it was and unveiled—with the help of Thinkers 50—the top management thinkers of 2009. If you haven't had a chance to visit, please do!

To log into my blog visit http://edbarrows.wordpress.com or access it via my LinkedIn profile.

I hope you enjoyed the November/December issue of my e-Newsletter, and thanks for reading. As always, keep improving your Planning through Performance! For more on strategy and performance coaching, visit EdBarrows.com.

Here's what I'm up to over the coming weeks:

January-May, 2010
Wellesley, Massachusetts

Babson College, Olin Graduate School of Business: Competitive Environment & Strategy

I will be teaching a section of the capstone MBA course on business strategy to graduate students at Babson.

Jeff Avalon and Morgen Newman!

Jeff Avalon and Morgen Newman, Co-Founders, IdeaPaint (www.ideapaint.com)

Necessity is indeed the mother of invention. So when two of my strategy students at Babson found themselves unable to afford whiteboards for their work sessions, they turned to developing a product—an adhesive paint—that turns any wall into a dry-erase surface—at a lower cost than installing whiteboards themselves. Their company, IdeaPaint, raised $5 million from Breakaway Ventures last fall. To date, the company has sold paint that has been used in more than 6,000 installations in offices, schools and homes. Just a few weeks ago they found themselves smack dab on the list of 30 finalists for BusinessWeek's America's Best young Entrepreneurs. Not bad for a couple of 25 year olds from a small college in Wellesley, Massachusetts. Seems there is something in the Babson water after all.

Jeff and Morgen will each receive a men's Vineyard Vines tie for the Pink Tie Award, (women Pink Tie Award winners receive a Vineyard Vines handbag).