Rich Howarth’s view on Annual vs. Continuous Strategy Assessment

Strategic leadership is a continuous approach to leadership. It is not annual strategic planning. In his book “Deep Dive” Rich Howarth describes the pitfalls of purely annual strategy reviews.

He puts it like this:

The inability to understand context is at the heart of numerous failures. There are three pitfalls of context to avoid if you are to be successful: (1) annual assessment, (2) relative versus absolute performance, and (3) prescription without diagnosis.

He then says the following about annual assessments:

From a business-planning perspective, context is often expressed as the “situational analysis.” The problem with this is that business planning generally happens once a year in most organizations, if that (nearly 40 percent of organizations have no formal business-planning process). This means that the majority of managers don’t have a solid understanding of the context of their business. This is like attempting to map out driving directions to a destination without knowing whence the car is leaving. It’s the “You Are Here” map at the museum minus the big red dot to indicate where you are. Niccolo Machiavelli wrote the following in The Prince: “I have often reflected that the causes of the successes or failures of men are dependent on their ability to suit their manner to the times.” And, as they say, “The times, they are a-changing”— usually more than once a year.

Howarth goes on to describe three tools that we can use to ensure that we remain connected to the context in which we are trying to set and implement a strategy. The first he describes as follows:

Strategy Tune-up Sessions Those who drive a car every day wouldn’t dream of going an entire year without a tune-up to check fluid levels, gauge tire pressure, change the oil, replace filters, etc. Nevertheless, while we regularly check our $ 35,000 automobiles, we wait a full year (and sometimes longer) to do a diagnostic check on our multimillion- or multibillion-dollar businesses. Now that makes sense! A simple solution is to conduct periodic (weekly, monthly, or quarterly) strategy tune-ups to check on the context of the business. The focus of these sessions isn’t to arrive at new conclusions; rather, it’s to openly discuss the four areas that constitute the context of the business: market, customers, competitors, and the company. The goal is to find changes in the context of the business and use the resulting insights to leverage opportunities and to blunt threats in a timely manner. Honda has used this technique (called “Nimawashi sessions” in Japan) with great success as one of the pillars of its strategic action plans.

Horwath, Rich (2009-08-01). Deep Dive: The Proven Method for Building Strategy, Focusing Your Resources, and Taking Smart Action. Greenleaf Book Group Press.

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