Leading companies often think of strategy at three time horizons (see Exhibit 1): Much of the frustration expressed about strategic-planning processes arises when companies try to address the long, medium, and short terms through a single, inflexible process. Each has different goals and requires different approaches, a different frequency, and the involvement of different people. It is important to think about strategy at different time horizons.
In short, the problem isn’t strategic planning. And achieving strategic preparedness takes a structured, organized thought process to identify and consider potential threats, disruptions, and opportunities-which is, for want of a better term, strategic planning. Agility is great, but it’s more powerful when paired with preparedness. (See “ Die Another Day: What Leaders Can Do About the Shrinking Life Expectancy of Corporations,” BCG article, December 2015.) Faced with those odds, it doesn’t make sense to put all your chips on agility. And the life span of the average company has halved since 1970.
Nearly one-tenth of public companies disappear each year-a fourfold increase in mortality since 1965. More than ever, companies need to devote time to strategy. Some even argue that strategic planning is a relic that should be relegated to the past and that organizations seeking to prosper in turbulent times should instead invest in market intelligence and agility.Īlthough the diagnosis is largely right, the prescription is wrong. Executives at most companies criticize it as overly bureaucratic, insufficiently insightful, and ill suited for today’s rapidly changing markets. Strategic planning is one of the least-loved organizational processes.