Many executives have grown skeptical of strategic planning. Is it any wonder? Despite all the time and energy that go into it, strategic planning most often acts as a barrier to good decision making and does little to influence strategy. Strategic planning fails because of two factors: It typically occurs annually, and it focuses on individual business units. As such, the process is completely at odds with the way executives actually make important strategy decisions, which are neither constrained by the calendar nor defined by unit boundaries. Thus, according to a survey of 156 large companies, senior executives often make strategic decisions outside the planning process, in an ad hoc fashion and without rigorous analysis or productive debate. But companies can fix the process if they attack its root problems. A few forward-looking firms have thrown out their calendar-driven, business-unit-focused planning procedures and replaced them with continuous, issues-focused decision making. In doing so, they rely on several basic principles: They separate, but integrate, decision making and plan making. They focus on a few key themes. And they structure strategy reviews to produce real decisions. When companies change the timing and focus of strategic planning, they also change the nature of senior management's discussions about strategy--from "review and approve" to "debate and decide," in which top executives actively think through every major decision and its implications for the company's performance and value. The authors have found that these companies make more than twice as many important strategic decisions per year as companies that follow the traditional planning model.

Despite the enormous time and energy that goes into strategy development, many companies have little to show for their efforts. Indeed, research by the consultancy Marakon Associates suggests that companies on average deliver only 63% of the financial performance their strategies promise. In this article, Michael Mankins and Richard Steele of Marakon present the findings of this research. They draw on their experience with high-performing companies like Barclays, Cisco, Dow Chemical, 3M, and Roche to establish some basic rules for setting and delivering strategy: Keep it simple, make it concrete. Avoid long, drawn-out descriptions of lofty goals and instead stick to clear language describing what your company will and won't do. Debate assumptions, not forecasts. Create cross-functional teams drawn from strategy, marketing, and finance to ensure the assumptions underlying your long-term plans reflect both the real economics of your company's markets and its actual performance relative to competitors. Use a rigorous analytic framework. Ensure that the dialogue between the corporate center and the business units about market trends and assumptions is conducted within a rigorous framework, such as that of "profit pools." Discuss resource deployments early. Create more realistic forecasts and more executable plans by discussing up-front the level and timing of critical deployments. Clearly identify priorities. Prioritize tactics so that employees have a clear sense of where to direct their efforts. Continuously monitor performance. Track resource deployment and results against plan, using continuous feedback to reset assumptions and reallocate resources. Reward and develop execution capabilities. Motivate and develop staff. Following these rules strictly can help narrow the strategy-to-performance gap.

This is an MIT Sloan Management Review article. One of the most thoroughly studied questions in business is how, at budgeting time, large corporations should choose among investment opportunities. Why, then, are so many senior executives frustrated with the process and convinced that their companies' capital is not being invested as well as it could be? One reason is that even the best-designed systems can be trumped by the power of personality. It has become commonplace, in fact, for talented and charismatic managers to spin, manipulate, and otherwise cajole senior management into funding their business ideas--often in the face of numbers that would, on their own, dictate a negative decision. Having guided dozens of major corporations through the budgeting process and watched hundreds of presentations by line managers asking for capital, the authors have profiled five archetypes of bad behavior commonly used by managers to subvert decision-making standards and win resources. They also explain how senior managers can counteract such behavior and instill values that lead to better use of investment capital.