You Don't Have a Strategy. You Have a Budget Cycle.

 

By Nadir Ahmad, CEO at Dowling Street

Every October, the invitation arrives: Next Year Planning Kickoff. A day is blocked, a facilitator is booked, and by late afternoon the team has a one-page plan and the warm glow that comes from feeling aligned.

Then the page goes quiet.

We saw this up close with a lean organization we began working with a few years ago. They planned in a single day, filed the page, and rarely touched it again. Twelve months later they reviewed it, and something remarkable happened. The year's activities were reshaped to fit the plan, and everyone concluded they had achieved what they set out to do. Then the whole cycle started over.

Nobody was lying. The ritual simply rewarded feeling aligned over being right. So here is the uncomfortable question for your own Q4: is your planning process producing strategy, or producing comfort?

When the Plan Becomes a Ritual

That organization was not an outlier. Roger Martin, the former dean of the Rotman School of Management, has argued for years that executives mistake planning for strategy. Planning feels safe because it deals with what we can control: budgets, headcount, timelines. Strategy means making choices about customers and competitors we cannot control. In his words, "a detailed plan may be comforting, but it's not a strategy."

Research on planning in practice points the same way. In a McKinsey survey of nearly 800 executives, conducted in 2007, just 45 percent were satisfied with their strategic planning process, and only 23 percent said major strategic decisions were made within it. The real decisions were happening somewhere else.

The annual budget cycle compounds the problem. Consultants at BCG describe the process at most companies as "an exercise in artificial precision." Bain partners writing in Harvard Business Review urge leaders to "shift the focus from financial precision to strategic success."

Call it calendar-driven planning: a plan built to satisfy the calendar instead of guiding decisions. It produces a polished document, a sense of closure, and very little change in how anyone behaves on a Tuesday in March.

Three Layers, Three Speeds

The instinct is to fix this by planning faster or more often. That treats the symptom. The deeper issue is that a plan is really three different things moving at three different speeds, and we cram them into one document.

Some parts should barely move: why you exist and the choices that define you. Some deserve a fresh look every quarter. Others need a pulse check every month. Fixed intent, flexible execution. We think about it as an Anchor, a set of Bets, and a Rhythm.

The Anchor

The Anchor is a single page that answers three questions: why do we exist, where will we compete, and what will we deliberately not do? It changes rarely, and that is the point. When the choices are explicit, you can say no without reopening the whole plan.

The last question is the one most plans skip. Martin observes that planning "typically isn't explicit about what the organization chooses not to do and why." Michael Porter put it more bluntly in Harvard Business Review: "The essence of strategy is choosing what not to do." An Anchor that never says no is a wish list.

What makes an Anchor hold is where it comes from. Most plans are written from the executive suite alone. A durable one starts with a short diagnostic that gathers three views: leadership, the people who execute the work, and the outside parties who depend on you, such as customers, partners, and funders. The gaps between those views are the most useful data you will collect.

Three questions you can ask this week:

  1. Leadership: What is the first thing we would stop doing if we had to?

  2. The people doing the work: Which of our priorities do you see us acting on, and which exist only on paper?

  3. Outside parties: What do you count on us for, and where have we let you down?

A one-page Anchor is not enough on its own, as the organization above learned. It needs the next two layers.

The Bets

Bets are the three to five priorities you will pursue over the next two quarters. Not twelve, and not a year of detailed targets. The word is deliberate: a bet admits that you are acting on a belief about the future that might be wrong.

Each bet carries two lines that most plans leave out. The first is the assumption it rests on, for example: "Our largest customers will renew if we fix onboarding." The second is a tripwire, a specific signal that tells you the assumption has failed, such as: "If early renewal conversations show no change by week six, we revisit." A tripwire turns a surprise into a scheduled decision.

The shorter horizon also means less detail. BCG's authors recommend planning in less detail, and the Bain authors advise leaders to "set bold, challenging objectives and then adjust plans to incorporate valuable lessons learned along the way." Two quarters is long enough to commit and short enough to stay honest.

The Rhythm

The Rhythm is what keeps a plan alive between planning days. Once a month, the leadership team holds a 60-minute review with one question on the table: are our assumptions still true? It is not a status update. Nobody reports green, yellow, or red.

Two small habits make it work. A named owner runs the session and protects it from being swallowed by urgent business. And a short decision log records what was decided, what was learned, and which tripwires were tripped. Six months later, that log is the honest account of the year, the opposite of a story reshaped to fit the plan.

The Rhythm also asks something of your people, which is where IQ and EQ meet. The review only works if someone can say, out loud, that a bet is not working. That takes psychological safety, and it is built by how leaders react the first time someone says it. Reward the messenger, and the Rhythm becomes your early warning system. Punish them, and you will be back to a ritual by spring.

Your Q4 in Three Sessions

You do not need a retreat or new software. You need three working sessions between now and year-end.

  1. Listen. Run the diagnostic: short conversations with leadership, the people who execute the work, and the outside parties who depend on you. Look for where the three views disagree.

  2. Anchor. Draft the one page. Settle your purpose, where you will compete, and what you will not do. If the team cannot agree on the last one, you have found your most important conversation.

  3. Bet. Choose three to five priorities for the first two quarters of next year. Write each as one sentence: "We are betting that ___, and we will know we are wrong if ___."

Before the third session ends, put the first Rhythm review on the calendar. A plan without a next meeting is just a poster.

We have spent five years refining this approach with leadership teams. The details vary from one organization to the next, but the principle does not: a plan earns its keep after the planning day is over.

The Real Test of a Plan

Think back to the organization with the planning day and the page that went quiet. Years later, that institution looks very different. It has grown substantially, and its long-tenured executive, who had never felt able to step away, gained the confidence to hand the organization to a successor. What we saw was a leader who could trust the stability and infrastructure underneath them, and a once-a-year page cannot provide that.

That is the real test of a plan. Not whether it looks good in October, but whether the organization can run on it when the person who wrote it is not in the room.

So what would happen to yours if you stepped away tomorrow?

Sources:

 
Sana KhanStrategic Planning, Leadership, Organizational Strategy, Decision-MakingComment