Ventana Research recently completed an in-depth benchmark research project on long-range planning. As I define it, long-range planning is the formal quantification of the more conceptual strategic plan. It makes specific assumptions and expresses in numbers how a company expects its strategy will play out over time. Almost all (95%) of those participating in the research see a need to make improvements to their long-range planning process.
Ventana Research recently completed an in-depth benchmark research project on long-range planning. As I define it, long-range planning is the formal quantification of the more conceptual strategic plan. It makes specific assumptions and expresses in numbers how a company expects its strategy will play out over time. Almost all (95%) of those participating in the research see a need to make improvements to their long-range planning process. The research shows that one useful improvement is integrating long-range planning with the budgeting process. Today, many corporations confine their long-range planning to a high-level, less detailed extension of their current budget. Our research shows that companies that incorporate individual capital projects and major business initiatives as discrete elements of the long-range plan get better results. Marrying the high-level business outlook with the more significant bottom-up investment details produces better results.
Incorporating specific projects and initiatives into the long-range planning process has been common in companies in project-centric industries, including engineering and construction, aerospace and shipbuilding. Pharmaceutical and other long-cycle businesses that need to plan their major investments also have made specific projects and initiatives explicit parts of their forward-looking projections. Doing so allows drug companies, for example, to map out the transition from late-stage trials to post-approval so they can lay out the details needed for sales, production and distribution, and understand the financial consequences of these actions. The success of early-stage drugs is hit-and-miss, and because the actual timing of approval in various jurisdictions is difficult to forecast, pharmaceutical companies need to be able to revise near-term and long-range plans on an ongoing basis. Yet many other types of businesses can benefit from a more detailed approach to long-range planning that incorporates major initiatives and capital spending projects. Doing so offers a competitive advantage for shorter-cycle businesses that need to manage rapidly evolving products in dynamic markets. Asset-intensive businesses that must plan and execute capacity growth and heavy maintenance programs will also gain from greater integration of capital project details in their long-range plans.
Our research found that there are differences among companies in the degree to which they explicitly integrate planning for capital projects and major corporate initiatives into their long-range financial plans. Only one-fourth of organizations participating in the benchmark research report that their strategic plans are highly integrated with the management of individual projects. A majority – 61 percent – has some degree of integration of the two, and 10 percent say they’re not integrated at all. We cross-tabulated companies’ assessments of the quality of their long-term planning processes with the degree of integration of capital projects and major initiatives and found a positive correlation. That integration results in a better process: Nearly all (85%) of those with a highly integrated process say theirs works well or very well, compared to 63 percent that have a somewhat integrated process and just 22 percent that have not integrated these at all. The research demonstrates that there is a positive correlation between the degree of integration and the quality of alignment of long-range planning with a company’s strategy. The results were similar to the previous point: Nine out of 10 that have a highly integrated process also create long-range plans that are well-aligned with strategy, compared to seven out of 10 that have a somewhat integrated approach, and just one-third where there is no integration.
The research also found a correlation between the maturity of a 
Organizations – even those that think they’re doing an adequate job – should reexamine their long-range planning to identify where they need improvements. Companies, especially those with more than 100 employees, that don’t do formal long-range planning need to begin the process. Going through the motions of planning is better than nothing, but our research indicates a connection between more mature long-range planning practices and achieving superior results.