Should strategic planning be a projected or creative process? Is there one right way to develop organizational strategy? Are some organizations better suited to adopting one approach rather than another? Projection and creation can be considered philosophically different approaches to strategy development and can have a significant impact upon the future of an organization.

Strategy by projection

Strategy by projection is based on looking internally at your organization’s strengths, weaknesses, processes, structure, culture, technology, financial capacity etc. and projecting what you can achieve with these resources over a certain period of time. It is a powerful tool, built on analysis of data collected through established organizational structures and understood and accepted processes. Strategy by projection ensures the strategic direction chosen is based upon the resources and skills of the organization.

An organization’s management and business processes, reward systems, performance management systems, budgeting processes, technology infrastructure and even planning processes all work within an organization too reduce dramatic change. As such, many organizations have a natural tendency towards the status quo. Strategy by projection supports this natural tendency and as such, is often associated with incremental improvement. Proponents of this approach don’t see strategy by projection as limiting; rather, it represents prudent management controls that reduce the probability of placing the organization at significant risk.

Strategy by creation

Strategy by creation is based on the concept that you create a vision of your organization and build your strategy in order to realize that vision. Many organizations want “out-of-the-box” thinking during their strategic planning sessions. This type of thinking allows organizations to assess opportunities and threats that might not otherwise be considered. The concept of creating what the organization will look like in the future has the comfort of self-determination and reduces the risk of developing organizational blind-spots. However, strategy by creation, at the extreme comes with the expectation of significant and fundamental change. Such change is not easily accepted or undertaken by an organization.

With the constant and ever-increasing degree of change within the organization’s environment, proponents of this approach see the organization’s inherent bias to the status quo as a significant risk, and view strategy by creation as the catalyst to “get out-of-the-box” and ensure continued long-term growth and success.

So which approach is best?

The quick answer is, it depends. Each of these approaches to strategy development has its benefits and challenges. Which approach is best depends upon the needs and situation of the specific organization. So, the question should not be which approach is best, but rather, “how to I determine which approach is most appropriate for my organization?”

The spectrum of approaches to strategy development

The most appropriate approach to strategy development for your organization will probably have some combination of projection and creation. The key is to ascertain whether the projection or creation approach should dominate. The following table outlines a few, though certainly not all, the factors that you should consider when determining which approach should dominate your strategy development process.

FACTOR
Strategy by Projection
Strategy by Creation
Business flux
Low degree of flux
High degree of flux
Revenue stream
Largely predictable
Largely unpredictable
Organizational situation
Not in crises
In crises
Revenue growth
Slow
Fast
Organizational goals
Moderate
Aggressive
Organization’s stage of development
Middle to late
Early to middle
Acquisition target
Want to be acquired
Don’t want to be acquired
Primary basis for planning
Financial or Control
Business development

 

The most important points are:

  • There are many different approaches to strategy development, all of which fall along the spectrum between the extremes of solely projection and solely creation.
  • You can determine the most appropriate process for your organization before you start your strategy development.
  • No single approach to strategy development is appropriate, or optimal, for all organizations.

Selected References

Fulmer, Robert M., and Perret, Solange., “The Merlin Exercise: Future by Forecast or Future by Invention?”, Journal of Management Development, Volume 12, No.6, 1993, 44-52.

Hamel, G. and Pralahad, C.K., “Strategy as Stretch and Leverage”, Harvard Business Review, March-April 1993, 75-85.

Hamel, G. and Prahlad, C.K., “Strategic Intent”, Harvard Business Review, May-June 1989, 63-76.

Hamel, G. and Prahlad, C.K., “Competing for the Future”, Harvard Business Review, July-August 1994, 122-128.

McDowell, Lucy Barnes., “Capturing the Future: Strategic Intent & Core Competencies”, Resource, June 1995, 17-21.

Mintzberg, H., “Planning on the Left side and Managing on the Right”, Harvard Business Review, July-August 1976, 53.

Ron Robinson is the president of ABARIS Consulting Inc. He can be reached at (519) 472-9788 or rrobinson@abarisconsulting.com. This article is provided free of charge, for information purposes only and is not intended, represented or to be inferred as providing advice. ABARIS Consulting Inc. makes no warranty, express or implied, or assumes any legal liability for accuracy, completeness, or usefulness of any information provided in whole or in part within this article.