It was the astringent smell of the chemicals and the magic of seeing an image appear on a blank piece of paper that first got me hooked on photography. Although film still has its aficionados, those days are, for the most part, long gone. And many of the companies that dominated the photography industry at that time such as Ilford and Kodak are but a shadow of their former selves. By the 1990s, the camera world had gone digital with brands such as Canon, Nikon, and Fuji dominating the market. The advent of digital cameras and the immediacy of digital photography saw the market boom and by 2006, manufacturers were shipping 130 million units a year.
But today, less than a decade later, global sales of dedicated digital and compact cameras have collapsed to 30 million units—less than a quarter of what they were at their peak. Once smartphones were able to produce quality images, most consumers abandoned digital cameras altogether, preferring the convenience of having a single device to carry around. Film dominated the photography industry for a century while dedicated digital cameras managed just a couple of decades. A different group of companies has dominated each phase in the history of mass-market photography, as disruptors with better and broader technological capabilities replaced existing incumbents.
Why strategy execution fails
You do not have to look far to find other instances where disruptors have rapidly replaced the dominant players in other markets. But why does history keep repeating itself when it comes to strategy execution? A recent article in the Harvard Business Review (HBR) cites three reasons for poor strategic execution:
- Failure to align departmental goals and actions to high-level strategy.
- Difficulty in finding a balance between agility and staying the course, with some organizations responding too slowly to fleeting opportunities while others react too swiftly and make decisions they live to regret.
- In many companies, strategy is still not widely communicated or understood.
Closer consideration of this list shows that formulating and implementing strategy is a far more complex process than most people might imagine. It involves a number of individual steps, which are summarized in the table below.
|Exploration||Analysis of the current business and how internal and external changes are creating new opportunities and threats||Limited number of potentially viable strategies|
|Evaluation||Evaluation of options to ascertain which are financially viable and what strategic capabilities the company needs to develop to be successful||Chosen strategy|
|Planning||Translating strategy into strategic imperatives and detailed financial plans||Long-range plans and budgets|
|Communication||Cascading the strategy down the organization||Aligned action plans and annual budgets|
|Monitoring||Continual monitoring of all the assumptions that underpin the strategy and the key performance indicators that need to be achieved to successfully implement it||Tracking of progress and early warning of changing conditions|
Table 1: Key steps in the formulation and implementation of strategy
As the HBR article suggests, neglecting to adequately address any of these five steps will result in failure. Sometimes, companies become too focused on their existing markets and fail to explore disruptive technologies that rapidly make their products obsolete; and sometimes, companies hit on a great strategy, but a combination of poor communication and slow implementation means they are soon overtaken by their competitors.
Problems with strategic planning software today
Given the diverse activities involved at each stage of the planning process, it is clear that no single packaged strategic planning software solution can support the entire process. Typically, spreadsheets or packaged planning and budgeting applications have been the main tools used for the first part of the process, and balanced scorecard solutions or dashboards are for the final couple of steps. However, spreadsheets are laborious to work with, error-prone, and not at all conducive to collaboration, while packaged applications tend to be inflexible and ill-suited to the ad-hoc modeling needed to evaluate different strategic options. Having to export data into a balanced scorecard solution or dashboarding tool for communication and monitoring simply adds to the complexity. Luckily, now there is an alternative.
Anaplan: Functionality for the entire strategic planning process
The functionality and flexibility of the Anaplan platform means it can be used at every stage of the strategy formulation and implementation process. Because it is a solution that can be self-managed by finance users, they can build and maintain models themselves, manage the complex and overlapping relationships between the changing business entities over time, and quickly update key variables such as cost of capital, depreciation methods, taxation rates, and exchange rates. They can also quickly integrate data from other parts of the business to see the recent history of key drivers that underpin the longer-term strategic planning model. Since Anaplan is designed for self-management, users can quickly create and test new scenarios delivering just the type of agility and understanding that the authors of the HBR article suggest is frequently lacking in strategic planning today.
Anaplan also negates the need to resort to a stand-alone solution for communicating and monitoring strategy. Our partner, Executit, has developed a new Strategic Execution tool that specifically addresses the final two steps in the process. This new app, which is available in the Anaplan App Hub, helps management teams to deconstruct their strategy (i.e., identify what factors are critical to a company’s success and track them by monitoring the appropriate key performance indicators [KPIs]). Critically, the app also monitors the assumptions that underpin strategy and progress against strategic imperatives so that the management team gets the early warnings needed to react and change course before it is too late.
By providing functionality that covers the entire end-to-end process, Anaplan is an obvious choice for those seeking to replace or upgrade their strategic planning software. If you are currently in that situation, then start by downloading this data sheet for strategic planning. Meanwhile, rest assured that disruption does not necessarily mean disaster. In recent times, Canon, a company that was founded in 1937, has diversified into other imaging and optical products so it is now better able to cope with the fickleness inherent in its consumer markets.