The CEO of an specialty plastic producer was struggling to help her Board understand the long-term potential of the business in order to approve several longer-term investments. The CEO had already tried the conventional approach of the insights from their 5-year annual strategic planning exercise but found it ineffective in illuminating the implications of longer-term prospects on strategy. Unsatisfied with the outcome, the CEO sought external assistance to find a solution.
The traditional approach to strategic planning, such as the Annual Five Year plan, provides valuable insights for short to medium-term goals and focuses on meeting public commitments. However, these exercises often hinder the progress of game-changing opportunities that require early investments. This problem is due to both the methodology and the in-depth analysis. The methodology focuses on projecting what is already known, which biases the analysis towards familiar business and downplays uncertain opportunities. Furthermore, the detailed nature of the models used reinforces this bias by making it difficult to analyze uncertainty with good scenario planning. Consequently, growth opportunities can be pushed off, cycle after cycle, resulting in ineffective long-term planning.
Recognizing the limitations of the conventional approach, the CEO and leadership team adopted a planning method called "backcasting," facilitated by Growth Arc Advisors. This alternative approach involved projecting future businesses at maturity and working backward to identify the hypotheses underpinning these businesses and the early initiatives required to confirm and develop them. The identified initiatives were then incorporated into the near-term action planning, prioritizing them with emphasized weighting alongside existing business initiatives from the Annual Five Year plan.
Through the backcasting exercise, the leadership team assessed several large breakthrough opportunities that could radically transform the business and accelerate growth. They realized that previous work to confirm these opportunities had been consistently delayed due to a focus on near-term goals. Additionally, it became evident that the current innovation portfolio was inadequate in confirming all the necessary hypotheses for enabling these opportunities, rendering some ongoing investments ineffective.
Armed with these insights, the CEO crafted a strategy narrative for the board that depicted the possible long-term future for the business. They identified the near-term priorities that were crucial to realizing this future and could not be pushed off. Moreover, they initiated changes in the innovation portfolio to allocate resources to the right market segments required to support the identified breakthroughs.
By adopting a backcasting approach to long-term strategic planning, the CEO and leadership team successfully identified and prioritized breakthrough opportunities that would transform and accelerate growth in their specialty plastic production business. This alternative approach allowed them to overcome the limitations of traditional 5-year planning exercises and enabled them to strategically allocate resources to confirm and develop future opportunities. The insights gained from the backcasting exercise provided the CEO and leadership team with a clear roadmap for the future, allowing them to make informed decisions and take necessary actions.
The implementation of the backcasting approach required a shift in mindset within the organization. Instead of focusing solely on short-term goals and meeting immediate targets, the CEO and leadership team now had a broader perspective that considered the long-term potential of the business. This shift in thinking allowed them to move away from reactive decision-making and towards proactive planning and development.
The backcasting exercise also highlighted the importance of allocating resources to the right activities. By reassessing their innovation portfolio, the CEO and leadership team were able to identify gaps and make necessary adjustments. This ensured that the company's investments were aligned with the identified breakthrough opportunities and would ultimately contribute to the long-term success of the business.
Adopting a backcasting approach to long-term strategic planning proved to be a game-changer for the CEO and leadership team of the specialty plastic producer. It allowed them to overcome the limitations of traditional planning exercises and provided them with a clear roadmap for the future. By prioritizing breakthrough opportunities and making necessary adjustments to their innovation portfolio, the company was able to accelerate growth and position itself for long-term success.