Leading Off: It’s a stretch: A leader’s guide to flexible strategic planning

Sounds like a plan ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌

ESSENTIALS FOR LEADERS AND THOSE THEY LEAD

Click to get this newsletter weekly

Brought to you by Liz Hilton Segel, chief client officer and managing partner, global industry practices, & Homayoun Hatami, managing partner, global client capabilities

More than 20 years ago, an executive told us that the annual strategic planning process at his organization resembled an exotic ritual put on for show. “No one is exactly sure why we do it, but there is an almost mystical hope that something good will come out of it.” By 2022, little had changed. “I have too often seen strategies that are actually a toxic mix of wishful thinking combined with a jumble of incoherent policies,” wrote the author of an article we published last year. To do what it’s supposed to do—advance an organization in the real world—strategy needs to be practical and dynamic, enabling leaders to remove obstacles to progress as they appear and solve problems on an ongoing basis. This flexible approach to strategic planning may involve broadening its traditional confines. This week, we explore some factors and trends to consider.

AN IDEA

An image linking to the web page “The triple play: Growth, profit, and sustainability” on McKinsey.com.

Count to three

Growth, profit, and sustainability—those are the three factors to include in a flexible strategic-planning model. Companies that offer better shareholder returns than their peers outperform on growth and profitability while improving sustainability and environmental, social, and governance (ESG) practices. These “triple outperformers” are more than twice as likely as their peers to grow revenue by more than 10 percent a year. If you’re not sure whether your organization can pull off this triple play, consider these five suggestions from McKinsey senior partner Lucy Pérez and colleagues. The strategies of top performers are decidedly not old school: for example, one software provider has created a user-friendly interactive tool that publicly tracks its progress on key ESG metrics, and a logistics company has developed innovative mechanisms to solve its customers’ supply chain challenges.

A BIG NUMBER

13

That’s the number of facets in a chief strategist’s role, according to classic McKinsey research. These facets, in turn, can be grouped into five clusters, or archetypes, that embody a strategist’s signature strengths. For example, in the “visionary” archetype, the strategist functions as a trend forecaster, innovator, and business developer—tasks that were relatively uncommon a few years ago but are becoming essential aspects of the role today. For more strategic principles that have stood the test of time, take a look at the probability-based research led by McKinsey senior partners Chris Bradley and Sven Smit, in which they discuss “the tension between the real data of what makes good strategy and the games that are being played in the strategy room.”

A QUOTE

“If space isn’t part of your strategy, it should be.”

That’s McKinsey global managing partner Bob Sternfels, senior partner Ryan Brukardt, and colleagues on why you shouldn’t ignore the space economy. Valued at nearly half a trillion dollars and growing at about 9 percent annually, space-related applications and technologies offer vast potential across most sectors: for example, satellites can detect weather patterns that may affect agriculture, energy generation, insurance, and shipping. “It’s no longer possible to say that space is too many degrees removed from your business,” say the McKinsey experts. “Create a new space business line, as some companies outside the aerospace industry have already done. Don’t be left on the ground.”

A SPOTLIGHT INTERVIEW

An image linking to the web page “The strategy leader’s evolving mandate” on McKinsey.com.

“What we know about volatility is that it’s a great time to be a strategist,” says McKinsey partner Emma Gibbs in an Inside the Strategy Room podcast. “You don’t need strategists when the world is smooth sailing.” An update of McKinsey research conducted ten years ago shows that the role of chief strategist has broadened considerably since then. “We’ve seen, in recent times, the rise of the ‘and’ strategist, which is, ‘I’m the chief strategist, and I also have another role,’” notes Gibbs. Ninety-one percent of respondents to our latest survey of strategy leaders say that besides strategy, they own other functions such as sustainability, digital, and data and analytics. “It’s not necessarily a bad thing that this is happening,” suggests Gibbs. “In many cases, I think it’s reflective of the breadth of topics that a strategist needs to consider as they think about the strategy.”

PLAY IT AGAIN

An image linking to the web page “10 songs (and 30 reads) to kick off your summer break” on McKinsey.com.

Listening to music can boost creativity—and what better creative juice than a McKinsey-curated playlist to inspire your best strategies? Check out our handpicked list of songs, which we’ve paired with McKinsey articles and interviews, along with books on business, social, environmental, and spiritual themes. These reading-and-song combos may be just what you need to spark the disruptive and innovative thinking that can advance your organization’s business.

Lead strategically.

— Edited by Rama Ramaswami, senior editor, New York

Out now: New issue of McKinsey Quarterly

Sign up for a free membership to start reading the digital version of McKinsey Quarterly. The latest issue focuses on transformation in a time of disruption.

Start reading

Click to get this newsletter weekly

Follow our thinking

Share these insights

Did you enjoy this newsletter? Forward it to colleagues and friends so they can subscribe too. Was this issue forwarded to you? Sign up for it and sample our 40+ other free email subscriptions here.

﻿Count to three

“If space isn’t part of your strategy, it should be.”

Out now: New issue of McKinsey Quarterly

Count to three