Who says long term strategic planning is dead? In many of the business acumen learning workshops that I conduct, participants push back on the concept of long term strategic planning. They feel that in these days of Wall Street-driven results that the concept of long-term planning is dead; replaced by the emphasis on quarterly results and short term payouts of dividends.The recent announcement by Toyota that they are going to eliminate gasoline powered automobiles from their product line by the year 2050 illustrates that long term planning is still part of business acumen. In their announcement, Toyota is betting on hydrogen powered vehicles instead of electric or battery powered vehicles. The Mirai is their flagship hydrogen powered vehicle that will be the beneficiary of millions of dollars of R&D and marketing investments over the next few years to achieve their results. Toyota’s modest goal is to sell 30,000 Mirais by the end of 2020 on their path to dominating markets by 2050.
Hydrogen powered cars – also called fuel-cell cars – are thought of as the most ecology-friendly, green car technology known to scientists today. The technology uses hydrogen and oxygen from air and the only exhaust is water vapor. The prototype Mirai has a driving range of around 300 miles and can be refueled in less than five minutes which is exponentially better than battery-driven cars that can take hours to recharge.
Obviously it is a long time between 2015 and 2050 and many things can and will change. However, the best organizations in the world will engage in a long-term planning process that assesses markets, makes assumptions about customers and technologies, and makes investments in people and R&D to make ideas and plans turn into business results.
If you or your organization doesn’t have or utilize a long term strategic planning process, here are three reasons why you should get back to your long-term planning routes:
The Strategic plan should be living document
One of the worst things to happen to strategic planning over the past few years has been the misguided tactic of creating an annual plan and putting it on the wall or in the drawer. A strategic plan should be a living document and should evolve and change every day just like the business world. Customers change, technology changes, markets change, and people change. So should the strategic plan. The recommendation here is to revisit and modify your strategic plan on a monthly basis.
Even though you can’t predict the future, you still need to make smart assumptions
One of the loudest complaints from people who don’t develop long-term strategic plans is that since you can’t predict the future, it’s stupid to develop a long-term strategic plan. In my opinion, that is a last excuse. Leaders are paid to look at data, situations, challenges, and opportunities and to make the best business decisions for long term success. They need to have the right business acumen skills to make assumptions that will lead to the right business decisions. Toyota has clearly made several assumptions: that there will be no more fossil fuel resources by 2050 and that hydrogen cells will be more accepted and viable than electric batteries. Given the data that we have now, it is an interesting and profound big bet.
Long-Term Strategic plans need to be disseminated for alignment
The worst thing a company can do is develop the right long-term strategic plan and not disseminate it and create long-term leadership alignment. The leadership strategy of cascading the vision, values, and ideas down to the rest of the organization is just as important as the ideas in the long-term plan. It’s also important to create the alignment needed to make the right business decisions that support it. If you review the most successful long-term organizations like GE, Apple, and Toyota, they are just as good at leadership and executing strategy as they are developing the right strategy.