“Is strategic planning completely useless?”
That was the question the CEO of a global manufacturer asked himself, two years after launching an ambitious overhaul of his company's planning process. Michael Mankins and Richard Steele tell the story in Harvard Business Review. Under the old process, the executive committee had grown tired of endless PowerPoint presentations, and the reviews “led to very few worthwhile decisions.” After two cycles of the new one, participants' near-universal view was that it, too, “produced very few real decisions” 2.
Both processes ran. Neither connected to anything the executives decided.
What makes a strategy function mature? Not its headcount, the thickness of its plan or the polish of its board pack. A strategy function is mature when the executive team's decisions, and the money behind them, trace back to its work: which issues reach the agenda, where the budget goes, which initiatives get stopped, and whether anyone checks the bets afterward.
The assessment below has 20 statements across five dimensions. You get a score for each dimension, an overall band, and the one dimension to fix first, with what to do about it.
A strategy function is judged by other people's decisions. Its documents are only evidence.
Strategy function maturity assessment
Twenty statements, about five minutes. Answer for how things worked over the last twelve months, not how they are meant to work. Where you are unsure, pick the lower answer.
What the five dimensions look for
The dimensions draw on the processes Robert Kaplan and David Norton described for what they called an Office of Strategy Management, based on companies that ran strategy through the Balanced Scorecard 1. The statements, scoring and bands are ours.
| Dimension | What it looks for | The idea behind it |
|---|---|---|
| The executive agenda | Strategic issues reach the top team's agenda with owners and dates | The strategy office briefs the CEO before the management meeting so it centers on strategy, not only short-term results and firefighting 1 |
| Strategy and money | The budget follows the priorities | In the usual calendar, the budget is typically uninformed by the strategic plan 1 |
| Initiatives and follow-through | Initiatives are tracked to decisions and stopped when they fail | Monitor all strategic initiatives, with an eye to consolidating or eliminating those not delivering 1 |
| Mandate and access | A direct line to the CEO and a written mandate | The office is most effective with direct access to the CEO 1 |
| Learning from results | Bets are written down and checked | Strategy as hypotheses, tested against evidence during the year, not once at the annual meeting 1 |
Our page on what a corporate strategy team actually does covers the work behind each row. This page is the check.
Why the statements ask about decisions
Every statement asks about something that happened or is written down: a list, a briefing, a stopped initiative, a review. None asks whether people feel the function is strategic. Feelings about a strategy team track how much people like its documents, and documents are the part that can be produced without any decision being made.
Kaplan and Norton's sketch of the usual management calendar shows why this matters. A strategy offsite in mid-year; business-unit plans written separately; a budget built by finance in the third and fourth quarters that is typically uninformed by the strategic plan; monthly reviews that drift to short-term operations and firefighting 1. Each step can run well and still decide nothing, because nothing joins them.
The mandate dimension asks about reporting lines for the same reason. In Kaplan and Norton's words, executing strategy “requires ongoing organization changes that only the CEO can empower” 1. They found two configurations in successful implementations: reporting to the CEO, or a solid line to the CFO or COO with a dotted line to the CEO. An office two or three levels down, with no direct access, was less desirable 1.
Reading your profile
Each answer scores from 0 to 100; a dimension is the average of its four statements, and the overall score is the average of all twenty. The bands are our rubric, not a validated scale, and they do not compare you with other companies.
| Band | What it usually means | First move |
|---|---|---|
| Producing documents (0–39) | Plans exist; decisions and money ignore them | Write the decision list and get it on the CEO's agenda |
| Running the process (40–59) | The calendar runs alongside the real decisions | Fix your lowest dimension before the next cycle |
| Shaping decisions (60–79) | The agenda and much of the money follow the work | Stop an initiative; review a past decision |
| Steering the agenda (80–100) | Decisions, money and reviews trace to the work | Have the CEO and a unit head score it too |
Read the profile before the total. A function that scores high on the agenda and low on learning makes decisions fast and never finds out which ones were wrong. One that scores high on money and low on mandate usually has a strong CFO doing the strategy work through the budget. The weakest dimension is where the result tells you to start.
What a score like this cannot tell you
Three honest limits. First, the rubric is ours, built from practitioner judgment; it has not been tested against company performance, and a high score is not a promise of better results. Second, Kaplan and Norton's processes come from companies that adopted the Balanced Scorecard, which is a particular kind of company, not a cross-section 1. Third, it scores a function, and some companies are better off without one.
That last point is the strongest objection to any maturity model: more maturity is not always better. A founder-led company with one business may need no strategy function at all, because the CEO holds the agenda, the money and the bets in one head. For that company, a low score is not a gap to close. The question is whether the CEO's time still covers the work; if it does not, the chief strategy officer page and our guide to hiring consultants are the next stops.
Size is the other trap. Kaplan and Norton report that an office running all nine of their processes typically had six to eight full-time staff, and that most had ten or fewer 1. A function that grows past the decisions it shapes produces more documents, not more maturity.
Monday: one list, one date
Whatever your score, the next step is the same. List the decisions your executive team must make in the next twelve months. Next to each, write the owner, the date and what your function is doing about it. Work with no line to a decision is a candidate to stop; decisions with no line to your function are the ones you are not shaping.
Take the assessment again in six months. Mankins and Steele's CEO ran two planning processes, and neither reached a decision. That is the gap this score measures, and the list is how you close it.
Questions
- What does a strategy function do?
- A strategy function helps the executive team make and carry out company-level choices: it runs the planning cycle, frames the strategic decisions, supports portfolio and investment choices, tracks strategic initiatives and checks whether the strategy is working. Its real output is decisions made by others.
- Is this a validated strategy maturity model?
- No. The statements, scoring and bands are Stratrix's rubric, built from practitioner judgment and the strategy-management processes Kaplan and Norton described. It has not been benchmarked or validated, and it does not compare you with other companies. Use it to structure a conversation, ideally by comparing scores from the strategy team, the CEO and a business-unit head.
- Where should a strategy function report?
- Kaplan and Norton found two configurations in successful implementations of a strategy office: reporting directly to the CEO, or a solid line to the CFO or COO with a dotted line and direct access to the CEO. Offices two or three levels below the CEO with no direct access were less desirable, because executing strategy needs changes only the CEO can empower.
Sources
- Kaplan, R. S., and Norton, D. P. (2005). Creating the Office of Strategy Management. Harvard Business School Working Paper 05-071, April 2005. The fragmented management calendar and the budget typically uninformed by the strategic plan; the nine strategy-management processes; briefing the CEO before the management meeting; monitoring initiatives with an eye to consolidating or eliminating them; strategy as hypotheses reviewed during the year; the quotation on organization changes only the CEO can empower; the four reporting configurations (Figure 4); typical staffing of six to eight FTEs and ten or fewer in most organizations.
- Mankins, M. C., and Steele, R. (2006). Stop Making Plans; Start Making Decisions. Harvard Business Review, January 2006. Opening: the CEO of a global manufacturer asking whether strategic planning was completely useless; under the old process, an executive committee tired of endless PowerPoint presentations and reviews that led to very few worthwhile decisions; after two cycles of the revamped process, the near-universal view that it produced very few real decisions.
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