Back in January, McKinsey published an article with the great title "Hockey Stick Dreams, Hairy Back Results" which so epitomizes the challenge facing strategy management. They list a few remedies which are interesting, but we offer additional insight into this phenomena
From personal experience I have seen how the corporate culture of an organisation almost inevitably leads to this behavior. There is competition for resources behind this as McKinsey rightly highlight, but there is more.
The fundamental challenge with most strategic planning processes is they are often closely linked to the annual budgeting cycle, the first year of the plan becomes the budget. "How else can we ensure commitment?". Before long, "the plan" has an advocate and success of failure become personal. Commitment to deterministic targets becomes the main purpose of the exercise.
With this as the background, its hardly surprising that plans are more about self preservation than sound business analysis and insight. Who would every propose a plan that showed the demise of their business!.
This become very real when planning the future of the Cathode Ray Tube business, at the time supplying almost all of the TV market. 3 to 5 year "strategic plans never included the rapid replacement by LCD, because it had always been talked about but never happened.
The breakthrough for the organisation was a realization that to break the "hairy back" syndrome meant fully embracing the uncertainty the business. This meant creating the space for exploration of alternatives, fully recognizing the range of potential outcomes, AND allowing business leaders to outline the range of possible outcomes from the different strategic options.
This needs a culture change by Senior Teams and Business Leaders alike. By placing more emphasis on the quality of the decisions being made, the focus moves from "do we trust this person to deliver", to a more insightful appreciation of the true business potential.
Its not easy, but its our experience that by moving the focus from the person to the business and breaking this advocacy mentality unlocks significant value and allows far more insight into the true nature of the uncertainty (both positive and negative) that the business faces.
There are tools and techniques to support this approach. Addressing key strategic challenges through a dialogue based approach, which we refer to as the Dialogue Decision Process allows these biases to be controlled and the true nature of the business opportunity to emerge.
Check out our Insightful Strategy page (http://www.valuesourcehk.com/strategy) to learn more about this.
If you find yourself in a "Hairy Back" situation, things must change quickly or you really do risk losing your shirt!.