»Make everything as simple as possible, but not simpler.«
— Albert Einstein
Many Tools for Strategy & Planning Fall Short
While industries and markets matter we should make no mistake: future performance will largely depend on available resources and how they are managed.
Tangible resources (capital, human resources, and loyal customers) as well as intangible ones (information, reputation and capabilities) must be acquired, nurtured and grown in time consuming processes. Next to sheer numbers quality will matter and has to be accounted for.
Conventional value driver trees and other management tools like the balanced scorecard fail to meet the complex demands of strategy & planning:
- They do not sufficiently map the complex interdependencies of value drivers – too often they are analytical one way tracks which suggest that turning one lever will improve performance without accounting for second order effects (feedback matters).
- They are too far removed from operational reality – the true causes and influences behind the financials are intransparent (explanation matters).
- Business dynamics are not factored in: significant delays for planned actions and developments are neglected (time matters).
- There is no explicit risk dimension – uncertainty, including variability, is insufficiently accounted for (risk matters)