A state of ‘permacrisis,’ with factors such as the Iran War, Trumpflation, diminishing pandemic era support, and widespread geopolitical instability driving rising costs are forcing businesses to remain in a reactive mindset, while many are investing in technology to help them remain agile. However, a new study from Menzies suggests this is coming at the expense of long-term planning; which may be leaving firms at risk of organisational drift, and a lack of operational focus.
Oliver Finch, partner at Menzies, comments, “In today’s environment, many firms are drifting towards short-term planning because it feels more practical. But without a longer-term strategic lens, businesses risk driving in the rear-view mirror – losing direction, growth and the very agility they need to build in to be able to adapt today. What businesses need is a hybrid approach – a clear long-term vision paired with the discipline to review, stress-test and adapt it far more frequently than they do today.”
The research was conducted by Censuswide, on behalf of Menzies – and took in the opinions of a sample of 500 senior business leaders in of 50-or-more employees. A 55% majority said their firm does not maintain a long-term strategy for more than five years in the future, which they review regularly. At the same time, 7% of senior business leaders are unsure when their last formal strategy session even took place.
The results are perhaps unsurprising, with the increased emphasis on agility and adaptation for business models in response to market pressures, as well as various technological hypes which have seen organisations repeatedly upend their structures to chase the latest productivity boost. As a result, some 15% admitted they relied solely on short-term reactivity over structured planning.
The results point to a nation of businesses where strategic planning remains patchy and often underdeveloped. Only 38% of firms regularly challenge their strategies using scenario modelling or ‘wargaming’, while 32% have plans reviewed by external advisors like investors, banks or non-executive directors. At the same time, business leaders are further relying on technology to boost this responsiveness – with 38% saying cloud-based financial modelling tools, and 36% saying real-time forecasting software would help boost agility.
Short-term mindset
Actually making the most of those advances still needs a view of the bigger picture though. Notably, 35% still highlighted the need for a clearer long-term vision or roadmap, highlighting the need for a bigger picture to guide shorter term tactical decision making.
In recent years, the technology of artificial intelligence in particular has often been framed as a panacea, which will simply resolve any and all problems for users. When asked if this might account for many firms’ neglect of planning, Phil Wright – outsourcing partner and technology expert at Menzies – adds that there is “a strong argument that widespread AI adoption is shifting people… towards more reactive operating”, with businesses treating technology as “an on-hand triage tool that simplifies complex matters without accounting for organisational or industry nuances.”
As genuine long-term planning is about achieving a vision, success requires “not just implementing short-term strategic steps but building the organisational foundations to sustain them”. This means businesses must align people around a common purpose, fostering the right culture and making judgement calls that are as much about leadership as they are about data. That is something AI cannot help with, Wright argues, nor can it “fully understand the human or emotional elements such as empowerment and motivation that are critical for a business to meet its objectives.”
He concludes, “AI is effective at helping people and organisations cope with today, but longer-term planning designed to deliver a specific outcome is a different challenge altogether. It depends on strong systems, resilience, risk reduction and engaging and motivating key people, none of which can be reduced to a prompt. Assessing financial and commercial performance against a range of scenarios adds further complexity. AI can model and forecast where the inputs are known and publicly available, but many of business scenarios rest on an individual or Board’s reading of the market and gut feel shaped by years of firsthand experience. That kind of personal judgement cannot be outsourced, and responsible decision-making at this level remains a distinctly human responsibility.”
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