Most strategic plans are financial plans in disguise

In a recent column in CIO magazine Daniel Burrus points out the flaw he sees in many strategic plans by saying, “Most strategic plans are financial plans in disguise” and goes on to say that a strategy built around maximizing profits in the near-term limits long-term growth activities. A recent study by Rita Gunther McGrath of Columbia Business School published in The Harvard Business Review echoes this sentiment. In the study she looked at the number of public companies with more than $1B in revenue that achieved an annual 5% growth rate between 1998 and 2008. Only 15% of companies met this criterion. One of the common characteristics of these companies is that innovation is strategically managed from the top and they do not overreact to financial markets pressures by making radical changes (e.g. big investments or big cuts). Instead, they take a steady, long term strategic view and make small, on-going bets along the way and make adjustments as needed.