Friday, October 30, 2009

The State of the Art

Despite what people might tell you, strategic planning is an art. As with other arts, you can do better with good training and tools, but at the end of the day, there is no replacement for skill and experience.

In times of economic turmoil - or even just turmoil in a specific industry - many companies turn away from their strategic planning to focus on short-term issues. In many cases this is warranted - your course may not be as important if the ship is sinking - but in far more cases, this departure can lead to bad strategy and failure.

One of the best (and to me, the most painful) examples of this departure from the path of good strategy occurred at Disney from 2001 to 2008. In the years before this - from 1991 to 2001 - Disney operated an excellent park at Disney World called Pleasure Island. This park filled in an important gap for both families and convention attendees in the area - the absence of nightlife for adults. While this fell outside the Disney strategic competency of family entertainment (viewed on its own), it was well within that competency when seen as a part of the bigger picture, answering the question "How can we keep the whole family happy during a week at Disney World?". Unlike any other place in the world, Pleasure Island offered (during its peak years) family oriented nightlife - a place where I wouldn't mind taking my young children to go dancing or take in a comedy show.

In 2001, the aftermath of 9/11 devastated the travel industry, and hit Disney hard. To overcome this, Pleasure Island management started targeting the local nightclub crowd, making changes to the operation that made it more appealing to young local people. This change may have decreased losses in 2001-2002, but it also decreased the family appeal of the attraction, and Pleasure Island started to fade as a part of the Disney destination as it became more of a local hang-out spot. As you might expect, the very non-family oriented problems of nightclubs - drugs, violence, gangs - also seemed to be increasing during this time. Attendance -especially by families and Disney vacation-goers- declined steadily as the Pleasure Island operation became less of a distinct entity and more of an imitation of Citywalk at Universal Studios nearby.

In 2008, the entire operation was shut down, to make room for more shops in the Downtown Disney area. Thus, a unique part of the strategic competency of Disney World suffered a strategic loss due to changes that were made for tactical reasons seven years before.

While the decisions involved in the decline of Pleasure Island may well have been made in strategic planning, there was a clear departure from strategic competency-based thinking for more tactical considerations of short-term revenue enhancement in 2001-2002. Small changes, like the cessation of fireworks and live shows, and big changes, like the removal of admission gates from the island entrance, led very directly to the decline and, ultimately, the failure of the operation.

Has your company departed from its strategy in the past year? Do you need to return to strategic competency-based planning to renew the true distinction that your company can have in the marketplace? Now would be a good time to consider returning to a discipline of formal strategic planning to assure success not just next year, but for years to come.


T Welch said...

Yes, there is no replacement for skill and exerience in strategic planning. Seeking the right tools and training however, will increase your skills.
The best ideas go nowhere without the tools to get your ideas out there for others to see and hopefully buy into.
Disney, while trying to increase revenue, lost what made them attractive in the first place. They did not follow-up and change strategies quickly enough to stop the downward slide.
In my work, we use ManagePro software to stay organized, and track how well we are doing. Without it, we would be flying blind. No feed-back, No follow-up! Having the right tools can is essential when implementing your strategy. You must be able to track progress and see what works vs. what needs to be scrapped.

Elaine @ O2 ideas room said...

Hi Robert, this is a great post, thanks very much. Your analysis that strategy is so important is very relevant because many companies are losing sight of this and focusing on short term survival given the economic situation. This is the opinion of Lisa Scully-O’Grady, who recently posted about the importance of ‘thinking big’ with regards to business goals, and therefore it’s very relevant to your post.

Look forward to reading more in the future Robert.

Elaine @ O2 IdeasRoom

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