Strategic budget planning2/17/2024 Something fascinating happens when they go agile. It’s very rare, but increasingly we’re seeing companies move to more agile ways of working, even outside of the tech space. For example, some companies have, outside of their normal strategy-planning season, a set of regular meetings with an evolving agenda of big strategic topics and stimulating discussions about them to make decisions, so you get into a discipline and a cadence of strategic conversations. If you want to reengineer the way a company works, you can talk in themes and theories, but it tends to come down to lots of small things you do differently. I’m going to bring this to life through what we call micropractices. By the time you come to planning, you should already have your strategy in mind. But you need a parallel track to do strategy, and that has completely different timing. First you need an efficient way of doing your plans-that’s really important, making sure the budget lines up every year. Let me make that practical: you need a two-track process. The shift we suggest making is to go from this annual planning ritual to treating strategy as a journey. As soon as you put strategy and planning together, planning will always win. The problem is, that’s a different mode of thinking from strategy. It’s extraordinarily important to know what is going to happen next month, what resources need to move, and what initiatives you have to launch. There are eight shifts we propose (exhibit). What we need to do is reengineer the way we do strategy. So, we ended our book with a kind of manifesto for how you could manage your company differently. There is so much else going on than just strategy. There are other people, and you want to look good to them. There are negotiations, there are egos, there are last year’s plans. ![]() But when you get to the strategy room, you find it crowded with all sorts of stuff. You start your strategy season with high hopes. Rather than causing big catastrophes, it usually causes inertia, and the risk that your company moves slower than the market it’s in. ![]() What is it that gets in the way? It’s called the social side of strategy. If your goal is to scale the power curve of economic profit and make big moves to beat the odds of strategic success, the villain is the thing that gets in your way of achieving that goal. To make any story interesting, you need a villain. Here’s Chris on how he and his co-authors approach the challenges faced by executive teams in the strategy room, and how they help them make the first shift.Ĭhris Bradley: Business books are notoriously boring. Chris will take us through some of the practical changes that companies can make to their strategic planning process to unlock those bold moves. ![]() Today we’d like to share excerpts from a presentation Chris gave at our Global Business Leaders Forum in New York. We also heard about the most important strategic moves companies can make to rise up that power curve. In our two earlier podcasts, Chris and his co-authors, Sven Smit and Martin Hirt, talked about how social dynamics and biases can undermine strategy development, and explained the power curve of economic profit, which shows how well-or how poorly-the strategies of the world’s largest companies are succeeding. In today’s episode we will hear from Chris Bradley, a senior partner based in our Sydney office and one of the authors of McKinsey’s recent book Strategy Beyond the Hockey Stick: People, Probabilities, and Big Moves to Beat the Odds (John Wiley & Sons, 2018). Sean Brown: From McKinsey’s Strategy and Corporate Finance Practice, I’m Sean Brown. You can listen to the episode on Apple Podcasts, Spotify, or Google Podcasts. He discusses the eight practical shifts that executive teams can make to move their strategy into high gear. This episode of the Inside the Strategy Room podcast features excerpts from an address that McKinsey senior partner Chris Bradley gave at our recent Global Business Leaders Forum.
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