ABOUT BRANDSYNC SERVICES APPROACH CONTACT US Tired of strategic planning? Many companies get little value from their annual strategic-planning process. It should be redesigned to support real-time strategy making and to encourage ‘creative accidents.’ Eric D. Beinhocker and Sarah Kaplan ‘…chance favors only the prepared mind.' —Louis Pasteur Senior executives generally agree that crafting strategy is one of the most important parts of their job. As a result, most companies invest significant time and effort in a formal, annual strategic- planning process that typically culminates in a series of business unit and corporate strategy reviews with the CEO and the top management team. Yet the extraordinary reality is that few executives think this time-consuming process pays off, and many CEOs complain that their strategic-planning process yields few new ideas and is often fraught with politics. Why the mismatch between effort and result? Evidence we culled from research on the planning processes at 30 companies and work with more than 50 additional companies points to a common dispiriting explanation: the annual strategy review frequently amounts to little more than a stage on which business unit leaders present warmed-over updates of last year's presentations, take few risks in broaching new ideas, and strive above all to avoid embarrassment. Rather than preparing executives to face the strategic uncertainties ahead or serving as the focal point for creative thinking about a company's vision and direction, the planning process "is like some primitive tribal ritual," one executive told us. "There is a lot of dancing, waving of feathers, and beating of drums. No one is exactly sure why we do it, but there is an almost mystical hope that something good will come out of it." But something good ought to come out of it. In a business environment of heightened risk and uncertainty, developing effective strategies is crucial. But how can companies reform the process in order to get the payoff they need? New goals for strategic planning Part of the answer lies in taking a fresh look at the substance of business unit and corporate strategy. But a more important—and often overlooked—element is to rethink the process by which strategy is made. It can even be argued that without a strong process, it is unlikely that the substance will come out right. A key starting point is the acceptance of the counterintuitive notion that the strategic-planning process should not be designed to make strategy. Henry Mintzberg, a professor of management at McGill University, calls the phrase "strategic planning" an oxymoron. 1 He argues that real strategies are rarely made in paneled conference rooms but are more likely to be cooked up informally and often in real time—in hallway conversations, casual working groups, or quiet moments of reflection on long airplane flights. What then is the purpose, if any, of a formal planning process? Our research persuades us that