Business research methods and applications

¶ … Tired of Strategic Planning? Many Companies Get Little Value from Their Annual Strategic-Planning Process. It Should Be Redesigned to Support Real-Time Strategy Making and to Encourage 'Creative Accidents'" by Eric D. Beinhocker and Sarah Kaplan, The McKinsey Quarterly, 2002

Definition of the business research and its purpose. Effective strategic planning has been cited as an absolute must for virtually all types of businesses today. Top executives have generally agreed that conducting strategic planning is one of the most important parts of their jobs (Beinhocker & Kaplan, 2002). As a result, most companies tend to invest a significant amount of time, effort and resources in a formal, annual strategic-planning process that typically ends with a series of business unit and corporate strategy reviews with the CEO and the top management team. However, the unfortunate reality for many companies is that not many executives are convinced that this time-consuming and expensive process is worth the investment, and many corporate leaders have complained that their strategic-planning process provides few new ideas and is frequently plagued with office politics and "turf" battles.

b.

Explanation of the business problem(s) under investigation. Because of all the attention focused on effective strategic planning initiatives in an increasingly globalized marketplace, Beinhocker and Kaplan sought to determine just how much "bang from the buck" major companies were getting from the strategic planning exercise.

c.

Identification of the parties involved in conducting the research. The article reports that Eric Beinhocker is a principal in McKinsey's London office, and Sarah Kapian, an former staff member at the New York office, was a doctoral candidate at the Sloan School of Management, at the Massachusetts Institute of Technology at the time of publication.

d.

Description of the method(s) used to conduct the research project. Beinhocker and Kaplan began their investigation with an in-depth examination of the strategic-planning processes of 30 companies (listed at the appendix). Some of these companies had highly regarded records of long-term strategic success, while others were noted for having made serious strategic errors in the recent past. The firms analyzed were drawn from a variety of industries and represent a range of approaches to strategic planning. Access to these 30 companies was varied; in some, the authors enjoyed extensive internal access (which included interviews with top managers); in others, the companies were analyzed using "outside-in" using public information, interviews with former executives, earlier research by McKinsey, as well as academic research.

The researchers then tested the findings from these cases in workshops and discussions with people from approximately 50 additional companies around the world. The final step in the research process was a synthesis of the lessons learned from this collective analysis based on the growing body of information accumulated by McKinsey for this purpose. The results of this study showed that in many companies, the annual strategy review frequently amounts to "little more than a stage on which business unit leaders present warmed-over updates of last year's presentations, take few risks in broaching new ideas, and strive above all to avoid embarrassment" (p. 50). Rather that assisting key executives better understand the strategic risks and uncertainties that are implicit to their industries, such strategic planning was found to frequently be just a facade, with little actual understanding or innovations resulting from the process; for instance, one executive said his company's strategic planning process "is like some primitive tribal ritual"; and another reported, "There is a lot of dancing, waving of feathers, and beating of drums. No one is exactly sure why we do it, but there is an almost mystical hope that something good will come out of it" (p. 50).