Wednesday, March 26, 2008

Bringing perpetual reality to strategic planning

I had the privilege of spending the past couple days participating in a strategic planning retreat for a large private/public organization. We were invited to bring some outside perspective to the process based on how our thinking about organizational structure and execution has evolved in the past couple years given the work we've been doing with other large organizations.

One of the exercises we went through as a group was defining critical success factors for achieving their strategic goals over the next 3 years. As was inevitable with any 3-year strategic planning exercise, the language people began throwing around was lofty and vague. Even when we performed a gap analysis to understand what capabilities the organization was missing to achieve the success factors, there was a level of abstraction that made the process feel unrealistic.

We've been focusing for a long time on identifying specific business processes where the use of Inkling has a tangible value proposition and it struck me that strategic planning is another such use case. The utilization of prediction markets as an ongoing part of strategic planning would bring some needed realism to the process. Prediction markets could ensure the success metrics are tracked post-planning with questions based on quantitative outcomes. This exercise in performance measurement gets plenty of lip service during the planning process itself but rarely happens once everyone leaves the meeting.

For example, one success factor we discussed for this particular organization was the need for an "empowered workforce." Translated from strategy-speak to normal-speak, this means a workforce whose morale and motivation levels are high and a workforce equipped with the appropriate tools, knowledge, and skills to be successful. How could this be measured in Inkling? We could ask questions predicting retention levels, internal applications for new positions (meaning people actually want to stay and develop themselves,) enabling technology permeation, participation levels in training programs, and many others. Further, these would not have to be markets whose outcome is only known after X years. They could be launched every quarter, semi-annually or annually.

Running prediction markets as an on-going activity would close the loop and help organizations understand earlier where they need to stay or change course to meet the success factors. And if it turns out those factors were indeed key to the success of the strategy, enabling organizations to forecast their progress in meeting them is quite valuable!