Apart from strategic planning, focus on good quality performance information is important through creation of alternatives as well as the means to implement them. Good quality information is needed for both strategic and operational decisions. Companies waste time trying to obtain and reconcile numbers from different systems, which means they lack integrated view about where the value is being created or destroyed in the business. This leads to speculation instead of coming up with strategic choices. Instead of having confidence in what is undoubtedly the determining factor of their success or failure, companies strategic planning as dogged by the uncertainty, this is the main reason many companies in FTSE, fail to achieve shareholder value. A great number of these companies have accepted that maximizing shareholder value as the principal objective in the market place. Strategic planning is there to replace wavering by many companies as they hope something good will comes out of it (wavering). Lloyds TSB being one of the companies in FTSE UK which adopted the Value-Based Management (VBM) agenda achieved greatly that it doubled its shareholder value in every 3 years.
Most organizations are rich in data and cluttered with incomparable systems. Some are succeeding in extracting the data they need, to make rapid decisions. However Majority are struggling. The information they have its incomplete, defective or too out of date to be useful in making rapid well informed decisions about the future. Often they are unable to interpret the data or its implications. At the same time a pace of change is accelerating.
The organization is becoming less predictable and more threatening. Lack of correct information, combined with rapid change makes effective decision-making even more critical. Smithkline Beecham is one out of many companies in UK FTSE which adopted VBM agenda. It incorporated strategic planning and good quality of information. It illustrated potential benefits that are as a result of structured approach to strategic planning and resource allocation. Smithkline Beecham being a large company with many different projects had struggled to establish clear priorities for funding. It had many different drugs in its pipeline. Its hard for a single person to completely overview every project or drug being developed. The company tried to evaluate individual projects, but there was no real transparency to the process. No one could be sure that the assumptions and the quality of thinking that went into evaluations were at least consistent.
Smithkline Beechams approach was to get project teams to create alternatives to current plans. “they had to consider what their strategy would be, it they had less or more or even same amount of funding, as well as if the project is abandoned but they had to preserve the value earned so far”(CIMA Technical Report). This was done; alternatives were presented to the review board, which tested assumptions of each scenario. Later teams revised them as appropriate. The alternatives were reviewed again by senior managers.
The strategic options were created and reviewed. Evaluation was.