10 Steps for Strategic Planning to Defend Your Future (Videocast and Podcast)

Effective strategic planning involves: 1) Identifying potential threats and opportunities; 2) Planning how to deal with them; 3) Reserving sufficient resources to address threats and opportunities; 4) Making your plans resilient and flexible. That's the key take-away message of this episode of the Wise Decision Maker Guide, which describes the 10 Steps for Strategic Planning to Defend Your Future.

Videocast: “10 Steps for Strategic Planning to Defend Your Future”

Podcast: “10 Steps for Strategic Planning to Defend Your Future”

Links Mentioned in Videocast and Podcast

• Here’s the article on 10 Steps for Strategic Planning to Defend Your Future
• The book Never Go With Your Gut: How Pioneering Leaders Make the Best Decisions and Avoid Business Disasters is available here
• You are welcome to register for the free Wise Decision Maker Course

Transcript

Welcome to another episode of the Wise Decision Maker show.

Today we’ll discuss strategic planning. Did you know that most strategic planning processes are done wrong? Unfortunately, the kind of strategic planning process forecasts that we make are… actually, they don’t work out. It’s about as good as using a dart throwing chimpanzee, in other words, no better than chance. That’s what the research shows on this topic by Philip Tetlock, on Super Forecasters, plenty of other research in cognitive neuroscience and behavioral economics shows that strategic planning processes that we do are actually… they don’t work out well. 

So this was a problem, and this was a problem for me when I discovered it. Because, I read research that most successful people do quite a lot of strategic planning for their own careers. Not simply their business, but their own careers, their own lives, so I did that as I wanted to be a successful person right? 

Now, in my PhD Graduate program, when I discovered this topic, I was kind of pissed. I was like, “Well no, I’m mean, that’s really not good. Why do people do that and why are people successful if they still do that strategic planning forecasts?” Well, I found that they were successful not because of the success of their strategic planning forecasts but kind of in spite of them and the same goes for successful businesses. They are successful not because of the accuracy of their forecasts but in spite of the accuracy of their forecasts.  

Now, think about yourself, 5 years ago. Do you think you, 5 years ago, could really effectively imagine where you are right now? What about in your business? Can you imagine that the business environment for your business would look how it looks right now, if you think about it 5 years ago? It’s probably going to be pretty hard to do that for you. I know I could, 5 years ago, it would have been really hard for me to imagine where I am right now.

So, keeping that in mind, there is still usefulness in doing strategic planning and there is an effective strategic planning process that we’ll talk about. So it’s not completely useless at all. That is not what I want to say. The forecasts are pretty much useless if you go beyond say about 3 or so years according to the research, but you can get a lot of benefit out of strategic planning, if you do the strategic planning process right as opposed to relying on the forecasts. However, before talking about how you do the strategic planning process right, let’s talk a little bit about a couple of more serious serious problems with the strategic planning process that you need to avoid before we talk about how to do it right. 

So, a major problem with a typical strategic planning process for an individual, if you are planning out your career or anything like that, or for a business is that they don’t account for major dangerous judgment errors. Now, if you have been listening to the Wise Decision Maker show for a while, you know that we as human beings are wired, our brains are wired to make serious judgment errors that scholars in cognitive neuroscience and behavioral economics like myself call cognitive biases. Now, there are over 100 cognitive biases that have been discovered and more are being discovered every month. So, there might be quite a bit more over 100 by the time you check out this episode of the Wise Decision Maker Guide. You can go to Wikipedia and look at the list of cognitive biases which is kept pretty updated so you can see what kind of cognitive biases there are. You will see that there are definitely over 100 there. 

And studies show that these cognitive biases pose a serious threat to successful strategic planning processes. How do they do so? Well, one of these cognitive biases is known as the planning fallacy. The planning fallacy is a mental blind spot where we tend to think that our plans will actually go according to plan. Often does not happen. We tend to be way too optimistic about our plans going according to plan. That’s another cognitive bias, the optimism bias where we think things will go rosy, we think that the future will be nice and bright and cheery and we don’t account nearly enough for various sorts of problems, various sorts of threats, various sorts of challenges. So that’s another dangerous cognitive bias that threatens strategic planning process effectiveness.

Another one - a third one is called the normalcy bias and this is a biggie, this is a pretty serious issue. We basically tend to look at our lives, in our business environment and the marketplace and think that everything will go along pretty much as it did in the past. It’s, in other words, we tend to underestimate the extent of change. So we tend to have too much of a perception of future normalcy compared to the reality of the situation and we don’t account nearly enough for major disruptors, for what’s called the unknown unknowns that we can’t know and what are also called black swans, you might have heard of them referred to as black swans. We don’t anticipate and predict major disruptors. So for example, the dot com boom and bust, was a major disruptor for the stock market. Folks didn’t predict it, and many many were wiped out, really hurt by it. Another major disrupter was the 2008 great recession. That was a major major disruptor that people didn’t predict really hurt a lot of people. And there might be many many other future disruptors that specifically affect your market, affect your business, affect your career that you don’t predict. So that’s the normalcy bias and again this is just three out of over 100 cognitive biases that can pose serious risks to your business and your career.

Now, I made an assessment of dangerous judgment errors in the workplace, specifically to use for professionals, for businesses, looking at the 30 most dangerous cognitive biases and there will be a link to the article on that in the show notes. So if you don’t want to look for all 100 and you want to figure out how they specifically impact your business and your life, check out the assessment. Take a look at that. So I want to also mention that typical strategy – I made the assessment to help address cognitive biases. Unfortunately, typical strategic planning assessments don’t account for cognitive biases, and thus they really lead businesses and professionals in the wrong direction. Take the most popular of them, SWOT, where leaders evaluate the Strengths, Weaknesses, Opportunities, and Threats (that’s the SWOT acronym) for their business. Unfortunately, if you look at the Strengths, Weaknesses, Opportunities, and Threats but don’t consider cognitive biases, you’re likely to really lead yourself astray and have the wrong ideas about what are your Strengths, what are your Weaknesses, what are your Opportunities, and what are your Threats. So that really gives you a false sense of comfort and really harms your strategic plan that you make on the SWOT. It’s especially problematic that SWOT is typically done in a group setting. In a group setting, a lot of cognitive biases may well be exacerbated and they often are because of a phenomenon known as group think. Groupthink refers to a group thinking the same way. That’s the name, group think, and they think the same way. They align their thoughts based usually around the leadership or the most loud person in the group, or the most charismatic, usually the most powerful in some way. The most influential leads the whole group to think in the same way. And then when they think in the same way, when they coalesce around their opinions of this one powerful individual, it’s much harder for them to change their mind because they reinforce each other’s beliefs. And they’re much less likely to change their minds based on outside input. So SWOT is actually quite quite dangerous if you don’t approach it in the right way. So, I would strongly discourage you from doing it until you learn about effective strategies to address these dangerous judgment errors. 

Now fortunately like I mentioned, far from all is lost. There are much more effective strategies to have a good high-quality strategic planning process based on my over 20 years of experience consulting and coaching for business leaders in mid-size and large non-profits and businesses. So the front lines of business reality, as well as my understanding of cognitive science and behavioral economics. I’ve spent over 15 years in academia researching and studying these topics. So I combined these into a technique that you can use to make a very effective strategic plan for yourself that doesn’t rely simply on forecasts. 

This technique is called “Defend Your Future.” Now as part of this technique, what you do, and here are some of the differences between a typical strategic plan, you focus on assessing potential threats and potential opportunities rather than saying “this is what will happen”, you think about what kind of threats and what kind of opportunities might I face. You also emphasize making your plan flexible and resilient. And those are effective strategies to address unknown unknowns or black swans. Whatever might happen, having a more flexible and resilient personal plan for your career or organizational plan for your organization, for your business, for your non-profit, for whatever, for your municipality will be really helpful. 

Now you also, as part of the third point of this technique, is that you emphasize counteracting the typical cognitive biases that lead our strategic plans astray, so that’s what you want to do. So that’s what the “Defend your Future” technique involves. By using this method, you can tap both into my extensive business expertise on the front lines of business reality working with leaders, a whole lot of different contexts as well as the groundbreaking research without breaking your own budget by hiring me if that’s not something you can afford.

Now the benefits of this technique, as I mentioned, don’t come from a perfect forecast. I do not claim that you should try to forecast perfectly what will happen to you. As I mentioned, that’s about as good as using a dart throwing chimpanzee. It's a completely random chance if you go more than a couple of years out. The best forecasters, according to a lot of research on this topic, can’t make effective economic forecasts more than 3 years out. So, someone tells you they are making a 5 year forecast, 10-year forecast , 20… oh jeez, don’t trust them. Don’t think that they will get it right. They’re just kind of, you know, anyway, I will not tell you the exact terminology that I would prefer to use colloquially for what they’re doing to you. 

So, the benefits of this technique again stem from you knowing that you’ve done your best to make yourself, your career, and your organization as safe, secure, and stable as possible given the information and resources you have available. No one can ask for more, really no one can ask for more. That’s what you should focus on doing.

Now, while I provide guiding to my coaching and consulting clients when we do this technique together, if you don’t have me available or somebody else with expertise on using this technique available to guide you through it, I strongly recommend that you learn about other techniques prior or as part of going through this technique to recognize effectively what kind of cognitive biases you’re facing. To assess the kind of cognitive biases are most problematic for your organization and for your career, and learn about how to address these cognitive biases, both learning about the mental skills that you need to address cognitive biases, and structured decision-making techniques to make the most effective decision whether in the moment, whether critically important decisions and implementing these techniques. Why is that important? Well because “Defend Your Future”, the technique I am talking about is about making a broad overarching strategic plan and other things, the decision-making techniques will be really important for you to address the various sub-components of the plan, the projects which you decide to take on, the next steps that you take. So those are more specific and targeted techniques that you will use to address the subcomponents of the broader and strategic plan that you take on.

So let’s talk a little bit about these techniques. Oh, I should mention that the techniques will be all linked in show notes so you don’t need to worry about how you will find them. They will all be linked in the show notes and the article on the Defend your Future technique, which is also linked in the show notes, has links to these techniques. 

So I want to mention that Defend your Future is a good fit for an individual or a team. As I mentioned, for an individual, you can shape your own career or let’s say you are a solo entrepreneur, you can focus on shaping the marketing strategy for your own business, your small business, your activities that you are doing over a certain time period. As well as, of course for a larger organization that shapes out a strategic plan going forward. So you can use it for strategy, for your personal career, your business, your organization, an area within your business or your organization, like the marketing strategy, your physical or your mental health, that’s also something that you can use it for, so you can use it for personal life. You can use it for your relationships, your social life, and any other areas. Now at this time, let’s dive into the techniques and not preamble. The technique has 10 steps.

So the first step is you decide on the scope of the activity, you decide on the activity and the scope of that activity that you will assess. You probably want to access no less than 6 months and no more than 5 years. And again remember when you are going toward that longer-term period, the closer to the 5, I mean, anywhere past 3 years, anywhere past one year and the further out you go, the more problematic your forecasts are likely to be including your anticipated threats and opportunities. So what you want to do, the longer out you are accessing your future and making the strategic plan, the more additional resources you want to build into it, the more resilience you want to build into it. The more flexibility you want to build into it to address the unknown unknowns and the deterioration, the inherent weakness and badness of the chimpanzee dartness of our forecasting going to the future. You want to build in, again resources, by resources I mean things, not simply money. Money is really important, but you also want to think about time, so kind of time you’re building in, and social capital. So you’re going to draw on social capital as well. That’s another important resource. So social capital has to do both with connections and reputation. 

So that’s the first step. So you decide on those things. Go on to step 2. You gather all the people relevant to making the decision. You don’t want to have more than 10 people in the room, 6 is ideal. If you have more than 10 people in the room who are relevant to making the decision, gather representatives of these people. Get 6 is the best number. Try not to go over 6 if you have to. Go up to 10, no more because otherwise you really won’t have a manageable discussion. It’s going to be really hard. Now make sure that the people in the room have a mixture of expertise and authority. Expertise, you know, someone, let’s say you are making a plan for, let’s say going into marketing. If you’re making a marketing plan, then people in front lines of marketing might have a lot of expertise even if they don’t have a lot of authority to make decisions. So you want to bring a couple of them into the room as well as, of course, people with authority who can make the decisions and commit to the decisions going forward, so who can address potential problems, potential opportunities that you will uncover. Now at the same time if you are doing this by yourself, what you want to do is write out independent parts of yourself who might have different priorities. So for example if you are a sole entrepreneur, you might have a part of yourself that wants to cut costs, make sure the costs are controlled as well as another one that wants to have more clients if you are looking at the marketing strategy. So write those two separate parts out that you will be able to acknowledge all the different parts of your business.  

Now I strongly encourage that you get yourself an independent facilitator who will manage this technique for you. You don’t want someone who has a stake in the final outcome of the strategic plan actually managing the discussion because they will inevitably tend to bias it toward their own perspective. So you can get somebody from your organization who doesn’t have a stake in the specific strategic plan. If you are, again, doing a marketing mix, you could have someone from, let’s say the HR department or something like that. If you have a broader organizational strategic plan, then what you want to do is have someone, let’s say from your advisory board or from your board of directors who doesn’t have a specific stake in the outcome of the strategic plan who can become and remain neutral. If you have a peer from outside your organization or a mentor, you can get this person. You can have a coach or consultant, someone you pay to do so. So somebody who is an independent facilitator. 

Okay, going on to step 3. Now step 3 involves explaining the exercise to everyone. Getting everyone on the same page. Pretty simple. 

Step 4. Consider what the future would look like for this area if everything goes according to plan, everything goes wonderfully, no problems at all. How many resources would you need if that’s the case? So do that and what your plan would look like. 

Here regarding step 5, we’re getting to the more crucial things that makes Defend Your Future different. So, consider what the future would look like if there are serious serious problems internal to the evaluation, to what you are evaluating. So, for example, within the marketing, if you are looking at the marketing, your marketing plan, imagine that the marketing manager has some sort of issue, you know, gets hit by a bus, you know, the simplest thing. How would you handle the plan then? Think about all the resources that would be needed for any sort of internal problems that you assess. All the resources, money, time, social capital and so on. Then think about the likelihood of this will happen. How likely is it that the marketing manager will be hit by a bus and then multiply the likelihood by the resources. So, let’s say, in an organization you decide that replacing the marketing manager, training up this new person, the challenge to the plan will be something like $250,000. Just go with that. And let’s say you evaluate the likelihood of that happening within the two years for which you are evaluating the plan, is 10%. So then you multiply 10% by $250,000 and you get $25,000. So you need to budget just for that specific internal problem and there might be many, and there are many potential internal problems you want to budget $25,000 extra into the marketing aspects of your plan to address this potential problem. So you budget that, you make that sort of commitment. Now you want to consider what you are going to do if you can anticipate some potential problems and address them in advance. Let’s say you think that a potential problem that might be an accusation of sexual harassment, a common thing right now, the “me too” movement is really powerful and it’s doing some really good things in addressing the problematic sexual harassment that’s been happening in a number of organizations. So what you want to do then is think about how can you address what the problem of accusations of sexual harassment? Can you change your HR policies? Can you do some training? Can you do some diversity training? Unconscious bias training, whatever. Other things like this to address this potential problem. It will cost you much less than a serious accusation and a lawsuit, and the PR hit that follows. So maybe you can take these steps to address the potential problems in advance. And then you commit to these steps.  

And what you do if you are doing this as a group is you want to first have people suggest problems anonymously, then have the facilitator gather these suggestions to make sure that the problems indeed stay anonymous. And then discuss each scenario as a group and come up with resource amounts anonymously as well as solutions. Come up with them anonymously and finally average out the differences between the group to decide on the final commitments of resources.  

Now, why is anonymity important? Well one of the issues that you want to make sure to avoid is groupthink. So I talked about groupthink earlier - you want to make sure to avoid it and anonymity helps you avoid it. Now another one is that it encourages people to share potentially unpopular opinions, you know, accusations of sexual harassment might not be a popular opinion to state in the group and people might not like it being brought up. So, you want to make sure to allow people to say things like this or something like “this plan won’t work out because the CEO is really incompetent in this specific area”. People might not want to say that. So, you want to make sure to have some anonymity for it. So that’s the step 5. 

Step 6 is doing exactly the same thing except for external problems. So you did the internal problems, do the same things for external problems.

Step 7. You took care of potential threats, now you want to seize opportunities. Think about what your anticipated plan might look like if you have unanticipated opportunities come up. Most will be external, of course, but some will be internal, and you want to consider both. So, step 7 is about opportunities, consider both external and internal opportunities, mostly external. Consider what they might look like and what would be the resources that you would specifically need to address these opportunities. Try to convert these resources into money if possible, to have a certain equality of measurement of resources. By the way, this is something you would do in Step 5 as well and Step 6, convert the resources, in step 4, convert the resources into money if possible. It should be especially possible for an organizational setting to turn these things into money.

Think about what steps you can take in advance to take advantage of these opportunities. So, let’s say you might think that an opportunity would be that your competitor goes out of business and you have an opportunity to buy their, let’s say you are a manufacturer, you have an opportunity to buy their factory and to hire a number of their staff. You want to say that will cost you 7 million to do that and that the likelihood of that happening within the 2 years of your assessment of the plan is 5%. So you multiply 7 million by 5% and you get $350,000. So, you want to budget an extra $350,000 to help yourself take advantage of that potential opportunity. So that’s how you address that and then you think about what kind of next steps can you take to help yourself be prepared for potential opportunities that might arise. So, let’s say if you are thinking that there might be legislation coming your way, potential legislation coming from your city government, some tax breaks that might help. You might want to consider, “Hey, we might want to fund a certain candidate for mayor who will give us certain tax breaks if they get elected.” So that might be a next step that you choose to take – something like that. So think about any next steps that can help you accomplish your goals. 

Step 8. Oh, of course, for groups you want to discuss, this is part of step 7, just want to make sure that, the same applies that applied to step 5 and step 6 - have everyone suggest opportunities anonymously then discuss them together as a group, then have everyone come up with resource amounts anonymously and also strategies to get to solve these potential opportunities, to achieve these opportunities, ways to take advantage of opportunities anonymously and then discuss them as a group and then average out the resources needed.  

So step 8, you want to check for potential cognitive biases that might be going on with all of the steps. And so I mentioned the assessment on the dangerous judgment errors in the workplace. I strongly, strongly recommend that you use that assessment to go through the potential cognitive biases that might be a challenge for you, a challenge for your organization, a challenge for your career. So that’s my strong recommendation. Now if you don’t have the opportunity to do so for some reason, you want to at least check out the following biases: loss aversion, status quo bias, confirmation bias, attentional bias, overconfidence effect, optimism bias, pessimism bias, halo effect, and horns effect.

If you are doing this out as a team, discuss the cognitive biases anonymously. Come up with resource amounts anonymously that you think might be needed to address the potential cognitive biases and then average out the differences.

Step 9. Here’s where you address the real threat of the unknown unknowns, the black swans. You want to add 40% to all the resources that you have come up with previously to address this potential threat. And you also want to decide on what steps you can take to make your plans more flexible and resilient than you intuitively feel is needed. So 40% is really the minimal amount you should be adding. This is really really important. People push back on this. It’s really important. I show them how in their previous careers, in their business, they should have really added 40% or more to address threats, take advantage of opportunities. So that’s step 9. 

Step 10. You want to communicate effectively if you are not the only one doing this, to all the other organizational stakeholders about the steps to which you committed, and all the resources that will be needed. And then, take the next steps that were discussed and exercised to address the threats, take advantage of opportunities by improving your plans and reserving the resources.

So that’s how you do actually effective strategic planning which will actually help you achieve your long-term goals without setting up false comforts and unrealistic expectations. So that’s an effective strategic planning process.

Now, I want you to check out the blog on “Defending Your Future”, the article on “Defending Your Future” which is linked in the show notes. It goes more in depth into all of these things and has a lot of links to all the research and case studies that you might want to check out on using this technique as well as a variety of other articles on the assessment on the “30 Most Dangerous Judgment Errors”, the mental fitness skills that you require to spot and address dangerous judgment errors, all the content that you need, the strategies, the structured decision-making strategies that you need to make effective decisions and them implement them effectively which will be part of your broader strategic plan. So that’s why it’s really helpful to have these techniques available as you implement your strategic plan. 

Now I want to ask you what do you think about this innovative approach to strategic planning? Do you think you see yourself using “Defend Your Future” technique in your professional life, in your personal life, in your business? How do you think you can integrate it into your organization? How do you think it can help you? I’d like to hear from you. Leave your thoughts in the comments to this episode. Now click “like” if you liked this episode and share this episode with others folks who you want to help have an effective strategic planning processes, make the best decisions and avoid business disasters. Make sure to click “subscribe” to continue getting the Wise Decision Maker Show episodes and follow me on social media to not only get, and the social media is linked in the show notes. Follow me on social media in order to get not only the Wise Decision Maker Show episodes but also plenty of other content that I create. Articles, blogs, books, others, online courses and content I curate from others to help you make the best decisions, have the best strategic planning process, make the best decisions and avoid cognitive biases.  

You can learn much more about these topics in my book on addressing dangerous judgment errors and making the best decisions. “Never Go With Your Gut: How Pioneering Leaders Make the Best Decisions and Avoid Business Disasters”.

The best free resource I can offer is the Wise Decision Maker Course which is linked in the show notes. I hope to see you on the next episode of the “Wise Decision Maker Show” and I’m wishing you wisest decisions, my friends. 

---

Want to make the wisest and most profitable decisions via neuroscience? This article is part of my new LinkedIn newsletter series on this topic, called the Wise Decision Maker Guide.

If you want to avoid decision disasters and instead maximize success in your business and career, register to get notifications about new posts by clicking the blue Subscribe button at the top of this page below the image. Also, make sure to get your FREE “Assessment on Dangerous Judgment Errors in the Workplace” and other resources by signing up here.