In 2019, I helped an institution develop their maiden strategic plan. In April 2023, I met the board of directors and senior management for a review and was impressed by the progress made since inception of the plan. For example, despite the negative impact of COVID 19, the institution had surpassed annual performance targets in 7 0ut of 11 financial parameters in both 2021 and 2022. Interestingly, missing the target in the other 4 parameters has been contributed mainly by the institutions generous dividend policy. Consequently, the institution can be considered to be financially better off than it was in 2019. I could also sense a shift in organizational culture emanating from a general focus on performance despite the fact that they were lagging behind in a large number of the non-financial initiatives such as risk management, audit, process automation and review of client satisfaction amongst others.
The foregoing experience reminded me of an entrepreneur I interacted with in 2016, reviewed her company’s financials and recommended strategic planning among other initiatives. To my surprise she rubbished strategic planning as an expensive and “theoretical” process without benefits. When challenged for evidence on the “without benefits” assertion, she gave some examples but never supported any with data. Fast forward 2023, one of the product lines in the company is operating at a loss but remains operational since the losses are being off-set by profits from other product lines.
The assertion that strategic planning is an expensive and “theoretical” process without benefits reminded me of another client whose maiden strategic plan we reviewed in 2018. The review was necessitated by the board’s dissatisfaction with progress in the implementation process. The company’s turnover, profitability and liquidity were on decline while customer dormancy and non-performing debts were on an upward trend. During review of the strategic plan, we established among other reasons, that the decline in performance emanated from a misalignment between the strategic plan and the institution’s programs. To align the two, we recommended implementation of a staff performance management system developed in line with the strategic plan. Two years after implementation of the performance management system, the company’s performance improved.
In my article on “Good is the enemy of great,” I demonstrated the disparities in performance between companies operating in the same industry. Having worked with two of the companies (banks A & B), I can confidently state that the disparity can be explained by strategy implementation. In bank A, before, during and after my period of service, strategy implementation, monitoring and evaluation is a monthly exercise. In addition, staff performance is monitored on a daily basis using performance dashboards and documented quarterly through appraisal. There are multiple performance incentives within the company. Within bank B, though formal strategic planning started in the early 2000s, performance management was not a major issue until 2012. However, despite implementation of the performance management framework in 2012, performance related rewards are not emphasized. Performance incentives are rare while some people get rewarded regardless of performance.
Benjamin Franklin famously stated that “If You Fail to Plan, You Are Planning to Fail.” However, planning alone does not guarantee success since good planning coupled by poor implementation can easily yield poor results. In fact, poor or no planning couple by good execution of ideas can easily yield better results compared to good planning coupled with poor execution. Poor execution is therefore worse than poor or no planning.
Dr. Weru Mwangi is the CEO & Lead Consultant at Ultimate Management Solutions, a firm specializing in training & consultancy in Finance, Governance, Strategy, Risk Management and Leadership Development. He can be contacted on weru@umslgroup.com
