Imagine an executive named Victor walking into the annual planning cycle with 137 project requests and enough money to fund five.
Every request is critical. Every request is urgent. Several are transformational. An impressive number are “AI-enabled.” Nearly all claim to be strategic.
The people proposing them are not being dishonest. Each leader can see a genuine problem. Each has customers, employees, risks or aging systems demanding attention. From where that leader sits, the proposed project really does look essential.
Victor’s problem is that he does not manage one department’s priorities. He must make a coherent decision for the enterprise.
So the organization creates a scoring spreadsheet. It assigns points for strategic alignment, financial value, risk, urgency and executive sponsorship. Teams refine their business cases and learn how to maximize their scores. After weeks of analysis, the spreadsheet provides a mathematically respectable explanation for selecting the projects that already had the most organizational support.
That is not strategy. It is a contest among proposals. Loud voices drown out actual strategic needs.
Bottom-up planning is usually proposal-up planning
Most organizations describe their planning process as a combination of top-down direction and bottom-up participation.
Executives announce strategic priorities: improve the customer experience, reduce operating costs, use data more effectively, increase resilience and perhaps “embrace AI.” Business and technology leaders then respond with proposed projects. Those proposals rise through committees until someone assembles them into a portfolio.
This sounds inclusive and pragmatic. It also creates a structural problem.
The organization begins the planning process with solutions, not goals.
Each proposal arrives with a sponsor, a preferred scope and an argument for why it supports the strategy. The planning conversation becomes a comparison of predetermined answers rather than an investigation of what the enterprise most needs to change.
Richard Rumelt has observed that “most corporate strategic plans have little to do with strategy.” In his McKinsey interview on strategy, he distinguishes strategy from long-range resource planning and argues that management must turn ambiguity into challenges people can address.
A list of aspirations followed by 137 funding requests does not accomplish that. It pushes the ambiguity downward and asks every department to interpret the strategy independently.
The resulting portfolio may contain individually defensible projects while remaining collectively incoherent.
Why the scoring spreadsheet cannot rescue it
The scoring spreadsheet is meant to bring discipline to the contest. It rarely does.
Every proposal scores its own alignment. A sponsor who wants funding will find a strategy the project supports, and a broad enough strategy will support almost anything. When every submission claims to be strategic, the alignment column stops distinguishing between them.
Each proposal is also scored alone. The spreadsheet cannot see that two requests solve the same underlying problem, that one depends on a change nobody has proposed, or that a dull piece of shared infrastructure is what three of the “transformational” projects quietly assume will exist.
And the people writing the proposals learn. Within a cycle or two, the organization is no longer measuring which work matters most. It is measuring which teams are best at filling in the template.
The result looks rigorous. The arithmetic is correct. But the question it answers is “which proposals are strongest?”—not “what must the enterprise change to execute its strategy?”
Misalignment has a measurable cost
This is not just an aesthetic complaint about planning. Research on strategy execution keeps returning to the same finding: when work is not connected to strategy, less of it delivers.
The Project Management Institute’s 2014 Pulse of the Profession: The High Cost of Low Performance, based on more than 2,500 project management leaders and practitioners, found that organizations reporting high alignment of their projects to organizational strategy averaged 65 percent of strategic initiatives meeting their original goals and business intent. For organizations with low alignment, the figure was 35 percent. Only 42 percent of organizations reported high alignment.
Read that the other way around. In the typical organization, alignment is the exception, and the gap between aligned and unaligned portfolios is the difference between most strategic initiatives succeeding and most of them falling short.
Michael Mankins and Richard Steele reached a similar conclusion from a different direction. In “Turning Great Strategy into Great Performance” (Harvard Business Review, 2005), they reported that most companies’ strategies deliver only 63 percent of their promised financial value.
Part of the reason is that the strategy is not as widely understood as its authors assume. Donald Sull, Rebecca Homkes and Charles Sull’s research, published in Harvard Business Review as “Why Strategy Execution Unravels—and What to Do About It,” found that only a third of senior managers could correctly list their firm’s top three priorities.
Now picture those same managers writing project proposals, each one scoring its own “strategic alignment.”
Last year’s budget, with adjustments
Proposal-driven planning has a second, quieter cost: it tends to fund the same things again.
When each department submits its own requests, each department’s share of the budget becomes the baseline for next year’s argument. Money follows the organization chart, and the organization chart does not change because the strategy did.
McKinsey’s Stephen Hall, Dan Lovallo and Reinier Musters examined more than 1,600 US companies between 1990 and 2005. In “How to Put Your Money Where Your Strategy Is” (McKinsey Quarterly, 2012), they reported that most companies allocate the same resources to the same business units year after year. For a third of the businesses studied, the correlation between one year’s capital allocation and the next was 0.99.
The companies that did move resources toward their opportunities did better. Those in the top third for reallocation earned, on average, 30 percent higher total returns to shareholders each year than those in the bottom third.
An annual planning process built around ranking incoming requests does little to make that kind of reallocation happen. It debates which proposals to fund, while the shape of the portfolio quietly stays the same.
The people are not the problem
None of this means bottom-up input is the enemy.
Executives do not see everything. The people closest to customers, processes and systems frequently notice problems and opportunities that central planning never anticipated.
Henry Mintzberg and James Waters placed deliberate and emergent strategy at opposite ends of a continuum. Their research argued that realized strategy is usually some combination of the two. Mintzberg later summarized the idea neatly: “strategies can form without being formulated.” The original argument is available in their paper, “Of Strategies, Deliberate and Emergent”.
The 137 requests on Victor’s desk contain real knowledge: risks that nobody at the top has seen, customer needs, operational constraints, good ideas. Throwing them away would be a mistake.
The problem is the form that knowledge takes. By the time it reaches Victor, every insight has been packaged as a fully formed solution competing for money. The problem it was meant to solve, the benefit it assumes, the changes it depends on and the strategy it claims to serve are all buried inside a proposal written to win.
Ranking those packages cannot recover what was buried in them.
What better planning has to do
The way out is not to stop listening to the organization, and it is not a better scoring formula.
Planning has to capture what people across the enterprise know without letting a collection of proposed solutions masquerade as strategy. It has to make the reasoning behind each request visible: what would change, what benefit that change should produce and which committed objective needs it. And it has to let the organization see the requests together, so duplicates, gaps and dependencies show up before money is committed rather than after.
That is a different kind of planning conversation, and it needs a method. I describe one, step by step, in “Bottom-Up Planning Without the Wishlist: A Benefit Dependency Network Method.”
Stop asking which five should win
The next time 137 project requests arrive for five available investments, notice the question the process is asking.
“Which five proposals should win?” is a question about the proposals.
“What must the enterprise change to execute its strategy, and which of this work actually gets us there?” is a question about the strategy.
Only the second one is worth a planning cycle.