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Strategic Plans Lose Favor
Perhaps the world is catching on to Berkshire's philosophy of not having a strategic plan.
During the recession, as business forecasts based on seemingly plausible swings in sales smacked up against reality, executives discovered that strategic planning doesn't always work.
Some business leaders came away convinced that the new priority was to be able to shift course on the fly. Office Depot Inc., for example, began updating its annual budget every month, starting in early 2009. Other companies started to factor more extreme scenarios into their thinking. A few even set up “situation rooms,” where staffers glued to computer screens monitored developments affecting sales and finances.
Now, even though the economy is slowly picking up, those fresh habits aren't fading. “This downturn has changed the way we will think about our business for many years to come,” says Steve Odland, Office Depot's chairman and chief executive.
Walt Shill, head of the North American management consulting practice for Accenture Ltd., is even more blunt: “Strategy, as we knew it, is dead,” he contends. “Corporate clients decided that increased flexibility and accelerated decision making are much more important than simply predicting the future.”
Companies have long planned for changing circumstances. What's new—and a switch from the distant calendars and rigid forecasts of the past—is the heavy dose of opportunism. Office Depot stuck with its three-year planning process after the recession hit, largely to make sure employees had a common plan to rally around, Mr. Odland says. But the CEO decided to review the budget every month rather than quarterly so the office-supply chain could react faster to changes in customers' needs.