The Essence of Strategy; (Strategic Planning)

Article excerpt

Strategic planning is more than a top executive's hunch about where the company is going and when. Or at least it should be.

It felt like I was reliving a scene from a grade-B movie. There I was, during last December's holiday crunch, standing amid a dozen or more seething parents all clamoring to get just one Nintendo 64 game for their kids. Attempts to grasp or clutch a new shipment of this winning toy were futile for many of us: There were none available.

After a couple of years hinting that it would start selling a successor to its super-successful basic Nintendo units (which sold 40 million units in the '80s), Nintendo started shipping its "N64" units toward the end of summer. But during the first weeks of December, the quality of Nintendo's strategic planning had to be in serious doubt, even if its new product was a blowout success.

In my local stores, all "N64" shelves were bare of product: Neither the interactive computer toy nor any of its accompanying games or accessories were available--for weeks! One Toys "R" Us customer-service clerk told me that he had more than 300 deposits from customers waiting for the interactive computer starter set to arrive. A Kmart salesperson told me that a shipment of 30 games received one Thursday evening was reduced to one game by noon the next day. An e-mail message sent to a major video-game store in the Southeastern United States yielded a quick "regrets" in return. "Sorry that we couldn't be more help to you, but those darn 64 games are flying off the shelves faster than anyone can keep up" zapped the salesman in reply. I sensed he was shaking his head in disbelief as he wrote the words. He must have been thinking, "Can't sell a product I don't have!"

Ultimately, my 12-year-old was the lucky recipient of relentless searching by her weary parents; it turned out to be an "N64" holiday for her, after all. But the strategic question remains for the rest of us to think about: How did consumer demand and manufacturer's supply get so out of whack, especially during such a critical buying-and-selling season?

If the management at Nintendo is like that at a lot of other corporations, it may be because the concept of "strategic planning" is fraught with misunderstanding. Strategic thinking is, for all its glamour, still a mystic art in most companies I visit. Too often, the strategic plan that a company follows comes down to one senior executive's hunch about what to produce, how to sell it and how much to ship. Business schools have been teaching the subject for years, and with dense textbooks and numerous articles and journals dedicated to the subject, now is as good a time as any to ask a simple question: Why is strategic planning so darn hard to pull off successfully?

To be sure, there are a few oft-quoted reasons that strategic planning seems to be clumsy and ineffective, especially inside the large corporation. Executives have complained that much of the strategic planning scholarship to date is aimed at "ground zero" companies: start-ups playing in an open field that don't need to regard the intricacies of the corporate world. Others have said that too many people are involved in their company's strategic planning process; others argue that not enough people are. I've lost track of how many managers have said that the strategic planning process inside their companies is too cumbersome, too ponderous, to be effective. It's as if the goal of some corporate strategic planning processes is only to produce a plan requiring six 3-inch binders to embrace. An impressive set of documents? Yes. Such planning muscle answers the question of "Where's the sheaR" But the "beef" has too often been lost before the real competitive game has started.

Even Michael Porter, the Harvard-based guru whose fame is inextricably linked to the word "strategy" (He's the one who wrote three books on the subject, totaling more than 1,200 pages. …