BY DR. TANAI CHARINSARN

JUNE 9, 2016

“SOMETIMES STRATEGIES MUST BE LEFT AS BROAD VISIONS, NOT PRECISELY ARTICULATED, TO ADAPT TO A CHANGING ENVIRONMENT.” - The Rise and Fall of Strategic Planning

HOW TO CREATE THE STRATEGY

In the past, strategists believed in and prioritized planning. What strategists looked at then was where the business was, where it was headed, and how it would get there. This approach has continued to evolve, with strategic planning requiring a wealth of data to be comprehensive and complete. From a single strategist, it has expanded to become a strategy development team. Each day, those working in this strategy development team gather and analyze data, including the current business status, market changes, and competition. This is to predict the future and determine the ultimate strategy that the business must employ.

This approach was subsequently viewed as ineffective and heavily criticized within the strategist community because the outcomes did not align with the expectations. This was due to two main reasons:

1. The plans designed were inherently flawed. Predicting the future is inherently uncertain, as it involves guessing what will happen. This leads to potential inaccuracies. Many changes often occur while strategic planning is underway, and these changes are challenging to predict, especially concerning shifts in competition.

2. The planners and the implementers were often disconnected. Often, those who create the plans may not have a deep understanding of the actual company's situation because they are not directly involved in the day-to-day operations. On the other hand, those implementing the plans may not fully grasp the origin of the plans or may not have been part of the planning process from the beginning. This disconnect can lead to a lack of motivation to make the plan succeed. Therefore, strategic plans began to be viewed as not adding value to the business.

Focusing solely on planning also caused issues, as the rapidly changing world today makes long-term predictions difficult. Many industries, such as the computer, mobile, and telecommunications sectors, are now unable to predict what the future holds in the next 3-5 years. As a result, many business long-term plans typically extend only about three years into the future, to be more adaptable to the swift changes in the global landscape. Notable recent examples of situations closely watched by strategists and investors include the U.S. Fiscal Cliff and the Eurozone crisis, both of which could significantly impact the global economy in the near future.

In response to these challenges, some strategists started to shift their focus to adapt their businesses continuously (Sense and Response) instead of long-term planning. This approach emphasizes observing how the business environment is changing and making decisions based on these observations. Although this type of strategy may not appear to be a traditional strategy, it helps businesses to continuously adjust to evolving situations. Notably, Japanese companies have been successful in implementing such strategies, adapting to changing circumstances and maintaining a competitive edge.

To succeed with this approach, organizations need to be able to gather information quickly about the market, customers, and competitors to respond promptly and effectively to changing events (Learning Organization). The benefit of this approach is that everyone in the organization plays a role in shaping the organization's direction. However, the downside is that the organization might sometimes change direction too frequently or inappropriately, making it less stable in the long run.

In summary, a good strategy should be designed to allow an organization to carry it out steadily for some time without changing it. It must perform well in the long term because changes occurring each time impact the work of everyone in the organization.