Rise and Fall of Strategic Planning
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Mintzberg traces the origins and history of strategic planning through its prominence and subsequent fall. He argues that we must reconceive the process by which strategies are created -- by emphasizing informal learning and personal vision -- and the roles that can be played by planners. Mintzberg proposes new and unusual definitions of planning and strategy, and examines in novel and insightful ways the various models of strategic planning and the evidence of why they failed. Reviewing the so-called "pitfalls" of planning, he shows how the process itself can destroy commitment, narrow a company's vision, discourage change, and breed an atmosphere of politics. In a harsh critique of many sacred cows, he describes three basic fallacies of the process -- that discontinuities can be predicted, that strategists can be detached from the operations of the organization, and that the process of strategy-making itself can be formalized.
Mintzberg devotes a substantial section to the new role for planning, plans, and planners, not inside the strategy-making process, but in support of it, providing some of its inputs and sometimes programming its outputs as well as encouraging strategic thinking in general. This book is required reading for anyone in an organization who is influenced by the planning or the strategy-making processes.
Henry Mintzberg
Henry Mintzberg is the author of several seminal books, including The Nature of Managerial Work, The Rise and Fall of Strategic Planning, and Managers Not MBAs. He is Cleghorn Professor of Management Studies at McGill University.
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Rise and Fall of Strategic Planning - Henry Mintzberg
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The Rise and Fall of Strategic Planning
Copyright © 1994 by Henry Mintzberg
All rights reserved. No part of this book may be reproduced or transmitted in any form or by any means, electronic or mechanical, including photocopying, recording, or by any information storage and retrieval system, without permission in writing from the Publisher.
The Free Press
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New York, N.Y. 10020
www.SimonandSchuster.com
Printed in the United States of America
printing number
20 19 18 17 16 15 14 13
Library of Congress Cataloging-in-Publication Data
Mintzberg, Henry.
The rise and fall of strategic planning: reconceiving roles for planning, plans, planners / Henry Mintzberg.
p. cm.
Includes bibliographical references and index.
ISBN-13: 978-0-029-21605-7
eISBN-13: 978-1-439-10735-5
1. Strategic planning. I. Title.
HD30.28.M56 1994
658.4′012—dc20 93-27323
CIP
Credits
The author and publisher of this volume wish to acknowledge the following sources for material:
From H. I. Ansoff, Corporate Strategy (McGraw-Hill, 1965). Excerpts and diagrams used with permission of the author.
From H. I. Ansoff, Implanting Strategic Management, © 1984. Reprinted by permission of Prentice Hall, Englewood Cliffs, New Jersey.
Reproduced from The Politics of Expertise by A. Benveniste (Glendessary Press, 1972) with the permission of South-Western Publishing Co. Copyright 1972 by South-Western Publishing Co. All rights reserved.
From Joseph L. Bower, Managing the Resource Allocation Process: A Study of Corporate Planning and Investment. Boston: Division of Research, Harvard Business School, 1970. Reprinted as a Harvard Business School Classic. Boston: Harvard Business School Press, 1986.
From A Behavioral Theory of the Firm by R. M. Cyert and J. G. March (Prentice Hall, 1963; revised edition, 1992). Reprinted with permission of R. M. Cyert.
From Planning in Practice: Essays in Aircraft Planning in War-Time by E. Devons (Cambridge University Press, 1950). Reprinted with permission from Cambridge University Press.
Diagram from Strategic Management: A Stakeholder Approach by R. E. Freeman (Pitman Publishing, 1984). Reprinted with the permission of author.
From Organizing Competitor Analysis Systems
by S. Ghoshal and D. E. Westney (Strategic Management Journal, 1991, 12:17-31). Reprinted with permission.
From Institutionalizing Innovation by M. Jelinek, pp. 136-141. © 1979 by Marian Jelinek. Published 1979 by Praeger Publishers, an imprint of Greenwood Publishing Group, Inc., Westport, CT. Reprinted with permission.
Reprinted from Long Range Planning, vol. 21, no. 3. A. Langley, The Roles of Formal Strategic Planning,
pp. 40-50. Copyright 1988 with permission from Pergamon Press Ltd., Headington Hill Hall, Oxford OX3 0BW, UK.
Quotations reprinted with the permission of The Free Press, a Division of Macmillan, Inc. from Forecasting, Planning, and Strategy for the 21st Century by Spyros G. Makridakis. Copyright © 1990 by Spyros G. Makridakis.
Figure from A Note on Intuitive vs. Analytic Thinking
by J. T. Peters, K. R. Hammond, and D. A. Summers. Organizational Behavior and Human Performance, 1974:12:125-131. Reprinted with permission from the Academic Press.
From We Are Left-Brained or Right-Brained
by Maya Pines. The New York Times, Sept. 9, 1973. Copyright © 1973 by The New York Times Company. Reprinted by permission.
Figure reprinted with the permission of The Free Press, a Division of Macmillan, Inc. from Competitive Strategy: Techniques for Analyzing Industries and Competitors by Michael E. Porter. Copyright © 1980 by The Free Press.
From Strategies for Change: Logical Incrementalism by J. B. Quinn (Irwin, 1980). Reproduced with permission of the author.
From Strengthening the Strategic Planning Process
by J. D. C. Roach and M. G. Allen. In K. J. Albert, ed., The Strategic Management Handbook (McGraw-Hill, 1983), Chapter 7. Reproduced with permission of McGraw-Hill.
Figure from How to Ensure the Continued Growth of Strategic Planning,
by W. E. Rothschild. © 1980 Journal of Business Strategy, Faulkner & Gray Publishers, New York, NY. Reprinted with permission.
Figure reprinted with the permission of The Free Press, a Division of Macmillan, Inc. from Top Management Planning by George A. Steiner. Copyright © 1969 by the Trustees of Columbia University in the City of New York. Reprinted also with permission from Kaiser Aluminum.
Figure reprinted with the permission of The Free Press, a Division of Macmillan, Inc. from Strategic Planning: What Every Manager Must Know by George A. Steiner. Copyright © 1979 by The Free Press.
Figure from A Framework for Business Planning by R. F. Stewart (Stanford Research Institute, 1963). Reprinted with permission of SRI International.
From If Planning Is Everything Maybe It’s Nothing
by A. Wildavsky. Policy Sciences, 4 (Kluwer Academic Publishers, 1973). Reprinted with permission from the author.
From Speaking Truth to Power: The Art and Craft of Policy Analysis by Aaron Wildavsky (Little, Brown & Co., 1979). Reprinted with permission.
Not to our fantasies—may they mostly fall as fast as they rise—but to the wonders of reality
Contents
Acknowledgments
A Note to the Reader
Introduction: The Planning School
in Context
1 • Planning and Strategy
What Is Planning Anyway?
Why Plan (According to Planners)?
Jelinek’s Case for Planning
And What Is Strategy?
Planners, Plans, and Planning
A Plan for This Book
2 • Models of the Strategic Planning Process
The Basic Planning Model
The Core Design School
Model
Premises of the Design School
Premises of the Planning Literature
The Initial Ansoff Model
The Mainline Steiner Model
Decomposing the Basic Model
The Objectives-Setting Stage
The External Audit Stage
The Internal Audit Stage
The Strategy Evaluation Stage
The Strategy Operationalization Stage
Scheduling the Whole Process
A Missing Detail
Sorting Out the Four Hierarchies: Objectives, Budgets, Strategies, Programs
Hierarchy of Objectives
Hierarchy of Budgets
Hierarchy of Strategies
Hierarchy of Programs
The Great Divide
of Planning
Forms of Strategic Planning
A. Conventional Strategic Planning
B. Strategic Planning
as a Numbers Game
C. Capital Budgeting as Ad Hoc Control
3 • Evidence on Planning
Survey Evidence on Does Planning Pay?
Anecdotal Evidence
The General Electric FIFO Experience
Some Deeper Evidence
Sarrazin’s Study of Exemplary Planning
Gomer’s Study of Planning Under Crisis
Quinn’s Findings on Planning Under Logical Incrementalism
The McGill Research on Tracking Strategies
Koch’s Study of the Facade
of French Government Planning
Some Evidence on the PPBS Experience
Some Evidence on Capital Budgeting
Concluding the Deeper Evidence
Planners’ Responses to the Evidence
Faith: There is no problem
Salvation: It’s the process that counts
Elaboration: Just you wait
Reversion: Back to basics
Pitfalls: Them not us
4 • Some Real Pitfalls of Planning
Planning and Commitment
Commitment at the Top
Commitment Lower Down
Decentralized
Planning
Planning and Freedom
Commitment Versus Calculation
Planning and Change
The Inflexibility of Plans
The Inflexibility of Planning
Planned Change as Incremental
Planned Change as Generic
Planned Change as Short Term
Flexible Planning: Wanting Things Both Ways
Planning and Politics
The Biases of Objectivity
The Goals Implicit in Planning
The Politics of Planning
Politics over Planning
Planning and Control
Obsession with Control
Our age is turbulent, Chicken Little
Strategic Vision and Strategic Learning
Illusion of Control?
Planning as Public Relations
5 • Fundamental Fallacies of Strategic Planning
Some Basic Assumptions Behind Strategic Planning
Missing Taylor’s Message
The Fallacy of Predetermination
The Performance of Forecasting
The Forecasting of Discontinuities
Forecasting as Magic
Forecasting as Extrapolation
Forecasting and Turbulence
The Dynamics of Strategy Formation
Forecasting as Control (and Planning as Enactment)
Scenarios Instead of Forecasts
Contingency Planning Instead of Deterministic Planning
The Fallacy of Detachment
Seeing the Forest And the Trees
The Soft Underbelly of Hard Data
The Detachment of Planners from Strategy Making
The Detachment of Managers Who Rely on Planning from Strategy Making
Learning About Strengths and Weaknesses
Marketing Myopia
Myopia
Attaching Formulation to Implementation
Connecting Thinking and Acting
The Fallacy of Formalization
The Failure of Formalization 294
Was Formalization Ever Even Tried?
The Analytical Nature of Planning
Intuition Distinguished
Do the Hemispheres Have Minds of Their Own?
Simon’s Analytical View of Intuition
Flipping Intuition Across to Analysis
Planning on the Left Side and Managing on the Right
The Image of Managing
The Grand Fallacy
6 • Planning, Plan, Planners
Coupling Analysis and Intuition
The Planning Dilemma
Comparing Analysis and Intuition
Analysis and Intuition in Strategy Making
A Strategy for Planning
Soft
Analysis
Role of Planning: Strategic Programming
Step 1: Codifying the Strategy
Step 2: Elaborating the Strategy
Step 3: Converting the Elaborated Strategy
Conditions of Strategic Programming
First Role of Plans: Communication Media
Second Role of Plans: Control Devices
Strategic Control
First Role of Planners: Finders of Strategy
Logic in Action
Desperately Seeking Strategies
Unconventional Planners
Second Role of Planners: Analysts
Strategic Analysis for Managers
External Strategic Analysis
Internal Strategic Analysis and the Role of Simulation
Scrutinization of Strategies
Third Role of Planners: Catalysts
Opening Up Strategic Thinking
Role for Formalization
The Formalization Edge
Simons’s Interactive Control
Playing the Catalyst Role
The Planner as Strategist
A Plan for Planners
A Planner for Each Side of the Brain
Planners in Context
Forms of Organizations
Strategic Programming in the Machine Organization
Right- and Left-Handed Planners in the Machine Organization
Strategic Programming Under Other Conditions
Strategic Analysis in the Professional Organization
Planning and Analysis in the Adhocracy Organization
Minimal Roles in the Entrepreneurial Organization
Performance Control in the Diversified Organization
Planning Under Politics and Culture
Planning in Different Cultures
References
Index
About the Author
Acknowledgments
I always get irked when authors finish this piece with: despite all this wonderful help and advice, everything that is wrong is really my fault. I should hope so! For there is almost no mass-produced product in society so personal as a book. Of course, the content does depend critically on the work and good-will of other people—the authors who came before as well as the advisors who appeared during. In production, however, the author is wholly dependent on others (and can, in fact, blame them, although, happily, I have no need to do that here).
I must thank a few special people who did try to set me straight on the content. I did listen, I assure you, even if sometimes I either disagreed or else was just too pig-headed. Ann Langley read the entire manuscript very carefully and provided a great deal of sensible advice, some of it too sensible for the likes of me. But if you find the tone of parts of the discussion that follows a bit strident, just imagine how it read before Ann made her comments! Similarly helpful comments were made by Bob Simons, who like Ann, even throughout doctoral studies, has always been a wonderfully sympathetic and stimulating colleague.
George Sawyer not only provided helpful feedback but championed this book right from the start in a way that I found most encouraging, especially given his active role in the planning field and The Planning Forum in particular. We shall all miss him.
I did take every bit of advice—I wouldn’t dare not—from Kate Maguire-Devlin, who manages my professional life and managed the preparation of this manuscript, as well as from Jody Bessner and David Myles, who dealt with all the picky details of it, which at times became a minor nightmare. I know it was all an excuse to shmooze in the outer office, gang, but I am grateful nonetheless—I love it too!
At The Free Press in New York, one of those rare publishing houses that does things the old way—i.e., with commitment and care—it often seemed like I was the one giving the advice. But I did win one—look at this design and compare it with their old way! Of course, I had Cathy Peck on my side, who was part of a similar publishing activity on the other side of the Atlantic, at Prentice-Hall International, which is doing the book overseas. I thank her and Bob Wallace as well as Celia Knight and Lisa Cuff at The Free Press for their considerate support.
McGill continues to support me wonderfully well, and I write this while at INSEAD, which is most kind to let me hang out
when the urge to be back in France overwhelms me once again.
Finally, I dedicated my first book to Susie and Lisa who manage me
and who well know that [their father] writes books in the basement and that he is not to be disturbed. Shhh …
Well, little did they know that exactly two decades later, it was I who would be disturbing them from France, sending them repeatedly down into the basement to dig out all kinds of obscure references and quotes, which they did most goodnaturedly. Believe me kids, that wasn’t the plan.
Fontainebleau, France
May 1993
A Note to the Reader
I would be delighted to know that everybody read everything. And dismayed to find that nobody read anything. My suspicion, however, is that most of you will read something. So let me at least try to encourage you to read as much of direct relevance to yourself as possible.
This book consists mostly of rather long chapters. I know I should have had sixteen chapters instead of six—we all feel a sense of accomplishment at having finished a chapter, and so this book could have provided a lot more accomplishment. But, frankly, that would not have made it any shorter, or better, and there was just no logical way to slice it differently. (No thirty-minute planners here, let alone one-minute managers.) There are six basic themes represented in the chapters of this book that build up to the fifth, and then consider the consequences in the sixth: an introduction to the concepts (chapter 1), a review of what strategic planning has been (2), evidence on its performance (3), two sets of criticisms of the process, one of its more evident pitfalls
(4), the other of its deeper fallacies
(5), and, finally, what planners might do about all this (6).
The real heart of the argument is contained in Chapter 5, on the fallacies. I like to think there are a number of important points here, that go well beyond the practice of planning, in fact. And so, if you have bothered to buy this book, or even to have borrowed it, I urge you to read this chapter, more or less completely. There are a few sections of it that could be skipped, such as Forecasting as Magic
and Forecasting and Turbulence’
(both actually quite fun, I believe), Scenarios Instead of Forecasts,
Contingency Planning Instead of Deterministic Planning,
and ‘Marketing Myopia’ Myopia
(also good fun).
But, please, no matter what else you read, skip neither the Introduction to the book nor Chapter 1. These are not very long, and should be read carefully. Otherwise you will be scratching your head throughout and wondering what in the world I mean by planning or by strategy or by the positioning school, etc.
Beyond this, you can pick and choose according to your own needs. Chapter 2 reviews the basic structure and models of the process known as strategic planning, as depicted in the literature. If you know this, you might want to skip or at least scan much of this chapter. But I do urge you to read the tiny subsection called A Missing Detail,
and to look at the following section called Sorting Out the Four Hierarchies,
which presents these processes in a different way. Read especially the introduction to this section, and its final subsection called The ‘Great Divide’ of Planning.
You might also consider the following section that presents Forms of ‘Strategic Planning’
in this new perspective.
Chapter 3 goes through some evidence on planning, followed by the response of planners to this evidence. The Survey Evidence on ‘Does Planning Pay?’
concludes that it does not necessarily. It may be of interest if you wish to know how academics can tie themselves into knots. The Anecdotal Evidence
is brief and fun to read, but by this time you will know what I have in mind. The Deeper Evidence
is just that, and should be of greater interest, especially Some Evidence on Capital Budgeting,
which I suspect contains important points. The last section, on Planners’ Responses to the Evidence,
shows how some of them can be just as bad as academics. (See especially the subsections called Planned Politics
and Calculating Culture.
) Mostly this material is light and easy to read (unless, of course, you are the target). The subsection on Ansoff’s Elaborations
was necessary to include and is necessarily long, but might be of special interest to readers who know well the work of this important author.
Chapter 4 reconceives the classic pitfalls
of planning. (You will have to read the last subsection of Chapter 3 on the Pitfalls: ‘Them not us’
to understand this.) It shows how some of the planners’ favorite arguments can be turned around to demonstrate how planning can discourage commitment, impede serious change, and encourage politics. This could all be skipped and Chapter 5 would still make sense, but I think there are a number of points worthy of careful consideration here. This chapter is a bit of a portfolio of problems with planning, so feel free to pick and choose. The subsections I like best include Commitment at the Top
and Commitment Lower Down,
Commitment Versus Calculation,
Flexible Planning: Wanting Things Both Ways,
The Biases of Objectivity,
Obsession with Control,
Our age is turbulent, Chicken Little
(don’t skip this one!), and Illusion of Control?
Chapter 6 is written especially for planners and for people who work closely with them. It presents a kind of reconceived model of the roles for planning, plans, and planners, summarized in the short section about two-thirds of the way through called A Plan for Planners.
I would also urge you to read the brief section that follows it called A Planner for Each Side of the Brain.
Aside from this, the introductory section on Coupling Analysis and Intuition
is short and sets up what follows. The discussion of the various roles, quite detailed, will be of greatest interest to practitioners and can otherwise be easily skimmed (with the help of the various diagrams). The subsection on Strategic Control
presents a different perspective of this process, while the proposed First Role of Planners: Finders of Strategy
is unusual. I believe the discussion of the Third Role of Planners: Catalysts
should be noted, as it is nuanced somewhat differently from the usual discussion of this subject. I also believe that the subsections here on the Role of Formalization
and The Formalization Edge
are of particular importance. In the last section, on Planners in Context,
read the brief introductory Forms of Organizations,
and then choose your own context(s) for reading accordingly.
Beyond this, don’t plan excessively. Just read!
Introduction: The Planning School
in Context
I was in a warm bed, and suddenly I’m part of a plan.
Woody Alien in Shadows and Fog
This is a history book of sorts about so-called strategic planning. Through its literature we trace the story of that concept, from its origins around 1965 through its rise to prominence and its subsequent fall. In so doing, we seek to learn about planning, about strategy, and about the relationship between the two. We also seek to understand, more narrowly, about how the literature of management can sometimes get so carried away; more broadly, about the appropriate place for analysis in organizations; and more practically, about the useful roles that can be played in today’s organizations by planners and plans as well as by planning. The story of the rise and fall of strategic planning, in other words, teaches us not only about formal technique itself but also about how organizations function and how managers do and don’t cope with that functioning, also about how we, as human beings, think and sometimes stop thinking.
This book began as one piece of a larger work. In 1968, I set out to write a text called The Theory of Management Policy, to draw together the research-based literature that helps to describe the processes of general management. There were to be chapters on managerial work, organization structure, and organization power among others, as well as a chapter on the process of strategy formation. But after each of those first three individual chapters became a book in itself (Mintzberg, 1973, 1979a, 1983), it stood to reason that the remaining one would also constitute a book. But it did not. In outline it proved too long for one book, so it was split into two volumes, one to be called Strategy Formation: Schools of Thought, the other, Strategy Formation: Toward a General Theory. The first volume went well until I did the third chapter, on the planning school.
That too ran rather long. Hence the present publication, a book within a book within a book within a book.
Setting this book into its context may help to explain its specific focus, which some readers may find narrow, especially with regard to its view of planning. But while I do restrict the bounds of planning here, I believe the narrow definition I ascribe to the process is appropriate. One problem, as we shall see, has been an unwillingness by the proponents of planning to bound the concept at all. Indeed, in another respect this book tries to be rather broad, by addressing tentatively that most fundamental issue of all: the place of analysis, not only in our organizations but also in our cognitive makeup as human beings. Confounding analysis with rationality
—calling it systematic,
objective,
logical,
and other good things—has narrowed our view of the world, sometimes with disastrous consequences. The narrowness I prefer to be accused of here is in seeking to push analytical processes that slight our abilities to synthesize back to the side of human cognition (the left hemisphere of the brain?) where they belong.
A word on all ten schools of thought on strategy formation is in order before we begin (see Table 1, also Mintzberg, 1990b). Three are prescriptive, seeking to explain the proper
ways of going about the making of strategy. The first I call the design school,
which considers strategy making as an informal process of conception, typically in a leader’s conscious mind. The design school model, sometimes called SWOT (for internal strengths and weaknesses to be compared with external opportunities and threats), also underlies the second, which I call the planning school
and which accepts the premises of the former, save two (to be discussed in Chapter 1)—that the process be informal and the chief executive be the key actor. These differences may seem subtle, but we shall see that they are fundamental. The third, which I call the positioning school,
focuses on the content of strategies (differentiation, diversification, etc.) more than on the processes by which they are prescribed to be made (which are generally assumed, often implicitly, to be those of the planning school). In other words, the positioning school simply extrapolates the messages of the planning school into the domain of actual strategy content. As I shall save my comments on that school for a later volume, I ask the reader to please forgive the paucity of references here to Boston Consulting Group (BCG) dogs, PIMS homilies about market share, etc., and Michael Porter’s more substantive ideas. I shall get to them in due course.
I shall not write a great deal at this point about the seven other schools of strategy formation, schools more descriptive than prescriptive in nature, because that might give away a theme that underlies the conclusions of this book (which is—cover your eyes—that there must be other ways besides planning to make strategy). But let me just note them: the cognitive school
considers what happens in a human head that tries to cope with strategy; the entrepreneurial school
depicts strategy making as the visionary process of a strong leader; the learning school
finds strategy to emerge in a process of collective learning; the political school
focuses on conflict and the exploitation of power in the process; the cultural school
considers the collective, cooperative dimension of the process; the environmental school
sees strategy making as a passive response to external forces; and the configurational school
seeks to put all the other schools into the contexts of specific episodes in the process. This book will refer to some of these schools occasionally, will also occasionally refer to their concepts of culture and politics, among others, and will especially make pointed comparisons between strategy making as a process of planning and one of vision and especially of learning. In this history of the rise and fall of the process known as strategic planning, told through its literature, we seek the lessons that can be drawn from these experiences.
Table I : Schools of Thought on Strategy Formation(from Mintzberg, 1990b)
The mid-1990s is perhaps the right time to publish such a book. It might have been dismissed before 1973, when planning could do no wrong, and after that submerged in the wave of anti-planning sentiment that continued for a decade or more. Following the buffeting that planning received, perhaps now people are more inclined to consider it in a more reasonable way, as neither a panacea nor the pits but a process with particular benefit in particular contexts. I believe, in other words, that we are now ready to extract the planning baby from all that strategic planning bathwater. It makes no more sense to fire all the planners in great bloodbaths than it does to expect their systems to make strategy for everyone else. It is time to settle on a set of balanced roles for planning, plans, and planners in organizations.
One final point: A certain cynicism of tone pervades much of this book. Perhaps the reader will forgive it when bearing in mind that he or she has to see only this final result of my work. I, in turn, had to read huge quantities of some awfully banal literature. In the midst of doing that, I heard an item on Canadian radio news about the opening of a new mine from which the owners expected to extract about three-quarters of an ounce of gold for every ton of ore. My immediate reaction was—if only I had been able to do as well with this literature! But I did find some gold, which has enabled me to close this book on a positive note. There are indeed ways to couple the skills and inclinations of the planners with the authority and flexibility of the managers to assure a strategy making process that is informed, integrative, and responsive to changes in an organization’s environment.
1
Planning and Strategy
What is the relationship between planning and strategy? Is strategy making simply a process of planning, as the proponents of planning have so vigorously insisted? Or, at the other extreme, is strategic planning simply another oxymoron, like progressive conservative or jumbo shrimp (or civil engineer?). In other words, should strategy always be planned, never be planned, or sometimes be planned? Or should it relate to planning in some other way?
Barely anything written about planning or strategy provides considered answers to these questions. This book seeks to do so. We begin in this chapter by addressing some other basic questions. First we ask, What is planning anyway?
After considering a variety of popular answers, we narrow them down to a definition of our own. Next we ask, Why plan?
and provide the answers according to planners. (Our own answers come later.) Finally we ask, And what is strategy?
and answer in a way that is opposite to planning by insisting on the need for several definitions. Then, after considering briefly planning, plans, and planners, we conclude this opening chapter with the plan for the rest of the book.
What Is Planning Anyway?
This may seem like a strange question to ask as the twentieth century draws to a close, given the long popularity of planning, especially (ironically) in both Corporate America and Communist Europe. Largely a budget exercise in the America of the 1950s, it began to spread quickly, having become firmly installed in most large corporations by the mid-1960s (Gilmore, 1970:16; Chamberlain, 1968:151). At that point the notion of strategic planning took hold, to become within a decade a virtual obsession among American corporations (and in American government, in the form of the Planning-Programming-Budgeting System, or PPBS).
In fact, however, the concept dates much farther back. There is even a reference to a Director of Strategic Planning
in Sun Tzu’s The Art of War (1971:146), originally written about 2,400 years ago (although a Chinese student of mine considers this title too loose a translation from the Chinese). But there is no doubt about the translation of Henri Fayol’s work. Writing of his experiences as a French mining chief executive in the last century, he noted the existence of ten-yearly forecasts… revised every five years
(1949:47). Despite all this attention, the fact remains that the question, What is planning anyway?
, has never been properly answered—indeed, seldom seriously addressed—in planning’s own literature.
In 1967, in what remains one of the few carefully reasoned articles on the subject, Loasby wrote that the word ‘planning’ is currently used in so many and various senses that it is in some danger of degenerating into an emotive noise
(1967:300). At about the same time, one of the more impressive assemblages of planning people took place at Bellagio, Italy, (Jantsch, 1969) under the auspices of the OECD. Jay Forrester’s reflection
on the conference included the comment that efforts to define the terms [planning and long-range forecasting] failed
(1969a:503). They have failed ever since.
Aaron Wildavsky, a political scientist well-known for his criticisms of planning, concluded that in trying to be everything, planning became nothing:
Planning protrudes in so many directions, the planner can no longer discern its shape. He may be economist, political scientist, sociologist, architect or scientist. Yet the essence of his calling—planning—escapes him. He finds it everywhere in general and nowhere in particular. Why is planning so elusive? (1973:127)
Planning
may be so elusive because its proponents have been more concerned with promoting vague ideals than achieving viable positions, more concerned with what planning might be than what it actually became. As a result, planning has lacked a clear definition of its own place in organizations and in the state. Yet it is our belief that planning has, nevertheless, carved out a viable niche for itself, through its own successes and failures. The need, therefore, is not to create a place for planning so much as to recognize the place it already does occupy.
This book seeks to describe that place with regard to strategy—in effect, to develop an operational definition of planning in the context of strategy making. But we do not begin with the assumption that planning is whatever people called planners happen to do, or that planning is any process that generates formal plans. People called planners can sometimes do strange things, just as strategies can sometimes result from strange processes. We need to delineate the word carefully if it is not to be eventually dropped from the management literature as hopelessly contaminated. We begin here by considering formal definitions of planning; the rest of this book is about the operational definition.
To some people (1) planning is future thinking, simply taking the future into account. Planning denotes thinking about the future,
wrote Bolan (1974:15). Or in the more poetic words of Sawyer, Planning is action laid out in advance
(1983:1).
The problem with this definition is that it cannot be bounded. What organizational activity, no matter how short-term or reactive, does not take the future into account? Newman acknowledged the problem back in 1951 when he quoted Dennison that Almost all work, in order to be done at all, must be planned, at the least informally and a few minutes ahead
(1951:56). By this definition, planning includes ordering a sandwich for lunch as much as establishing a division to flood the market with sandwiches. In fact, Fayol understood this breadth of the term back in 1916 when he wrote that:
The maxim, managing means looking ahead,
gives some idea of the importance attached to planning in the business world, and it is true that if foresight is not the whole of management at least it is an essential part of it. (1949:43, published in French in 1916)
But if this is true—if, as Dror put it more baldly, planning, in a word, is management
(1971:105)—why bother to use the word planning
when management
works just fine?
To others, (2) planning is controlling the future, not just thinking about it but acting on it, or as Weick (1979) is fond of saying, enacting it. Planning is the design of a desired future and of effective ways of bringing it about,
Ackoff wrote (1970:1). Others expressed the same thought when they defined the purpose of planning as to create controlled change in the environment
(Ozbekhan, 1969:152), or, more pointedly, the design of social systems
(Forrester, 1969b:237). In this regard, John Kenneth GaIbraith argued in his book, The New Industrial State, that big business engages in planning to replace the market,
to exercise control over what is sold … [and] what is supplied
(1967:24).
But this second definition of planning, really just the other side of the coin from the first, suffers from the same problem of excessive breadth. By associating planning with free will, it becomes synonymous again with popular uses of the word management and so loses distinctive meaning.
Since practically all actions with future consequences are planned actions, planning is everything, and nonplanning can hardly be said to exist. Nonplanning only exists when people have no objectives, when their actions are random and not goal-directed. If everybody plans (well, almost) it is not possible to distinguish planned from unplanned actions. (Wildavsky, 1973:130)
Schumacher (1974) provides some conceptual help here. By distinguishing the past from the future, acts from events, and certainty from uncertainty, eight possible cases are constructed:
act-past-certain
act-future-certain
act-past-uncertain
act-future-uncertain
event-past-certain
event-future-certain
event-past-uncertain
event-future-uncertain (188-189)
This approach is used to clarify such words as plan,
forecast,
and estimate,
and we can use it here to help position planning. The first two definitions in the list appear to place planning in cases 2 and 4—how to act in the future, whether certain or uncertain, or how to make it certain by enacting it. Anything to do with events—things that simply happen
—is outside of the realm of planning: to apply the word ‘planning’ to matters outside the planner’s control is absurd,
although that can be a part of forecasting
(189). Thus planning is precluded, for example, from cases 5 and 8, the given past and the uncertain, uncontrollable future, although the author noted the frequency with which case 8 forecasts are presented as if they were plans
(189). Alternately, ‘estimates’ are put forward which upon inspection turn out to be plans
(190). As for the past (e.g., case 1), planning would hardly seem to have a role to play here, although, as we shall see near the end of this book, planners themselves may have roles in that studies of past behavior can influence future events (cases 2 and 4).
Still, we need a definition of planning that tells us not that we have to think about the future, not even that we should try to control it, but how these things are done. In other words, planning has to be defined by the process it represents. In this regard, a number of writers have proposed, sometimes inadvertently, that (3) planning is decision making. As far back as 1949, Goetz defined planning as fundamentally choosing
(in Steiner, 1979:346), and in 1958 Koontz defined it as the conscious determination of courses of action designed to accomplish purposes. Planning is, then, deciding
(1958:48). Likewise, Snyder and Glueck, without labeling it decision making, defined planning as those activities which are concerned specifically with determining in advance what actions and/or human and physical resources are required to reach a goal. It includes identifying alternatives, analyzing each one, and selecting the best ones
(1980:73). Similarly, in certain literature of the public sector (so-called public planning), the term planning has been used as a virtual synonym for decision making and project management (see, for example, the various writings of Nutt [e.g., 1983, 1984]). Others tried to nuance this definition: Drucker, for example, by discussing the futurity of present decisions
(1959:239), and Ozbekhan, by describing the future directed decision process
(1969:151).
But unless anyone can think of a decision process that is not future-directed, these nuances are of little help.¹ Assuming that decision means commitment to action (see Mintzberg, Raisinghani, and Théorêt, 1976), every decision takes the future into consideration by a vow to act, whether it be to market a product in ten years or ship one in ten minutes. Rice recognized this when he argued that all decisions are made with forethought,
that every decision maker has a reason for making his decision,
which amounts to a plan
(1983:60).²
Thus, this third definition really reduces to the first and, because commitment is an act of free will, to the second as well. Accordingly, planning again becomes synonymous with everything managers do, part of the intellectual process the policy maker employs to reach his decision,
even if informal, unstructured
(Cooper, 1975:229). In fact, to make their case that managers do indeed plan, Snyder and Glueck used the example of a school superintendent dealing with the efforts of a councilman to disrupt school board meetings and discredit him. But if planning is reacting to such pressures in the short term, then what isn’t planning? Indeed, these authors quoted George (1972) that:
Planning, of course, is not a separate, recognizable act.… Every managerial act, mental or physical is inexorably intertwined with planning. It is as much a part of every managerial act as breathing is to the living human. (1980:75, italics in original)
But if that is true, why describe what organizations do as planning, any more than describe what people do as breathing? In other words, who needs the planning label when decision making or even managing does the job? As Sayles noted, planning (presumably by any of these first definitions) and decision making are inextricably bound up in the warp and woof of the [manager’s] interaction pattern, and it is a false abstraction to separate them
(1964:2087).³
Let us, therefore, begin to consider more bounded definitions of planning as a process. (4) Planning is integrated decision making. To Schwendiman, it is an integrated decision structure
(1973:32). To van Gunsteren, it means fitting together of ongoing activities into a meaningful whole
(1976:2): Planning implies getting somewhat more organized.… It means making a feasible commitment around which already available courses of action get organized
(2-3).
The last definition may seem close to the preceding one. But because it is concerned not so much with the making of decisions as with the conscious attempt to integrate different ones, it is fundamentally different and begins to identify a position for planning. Consider the words of Ackoff:
Planning is required when the future state that we desire involves a set of interdependent decisions; that is, a system of decisions.… the principal complexity in planning derives from the interrelatedness of the decisions rather than from the decisions themselves.… (1970:2, 3)
This view of planning finally takes us into the realm of strategy making, since that process also deals with the interrelationships among decisions (important ones) in an organization. But because this normally has to take place over time, such coordination among decisions is rendered difficult. Planning as integrated decision making imposes a particularly stringent requirement, however: that the decisions in question be batched—be drawn together periodically into a single, tightly coupled process so that they can all be made (or at least approved) at a single point in time. As Ozbekhan noted of the result, ‘Plan’ refers to an integrative hierarchically organized action constraint in which various kinds of decisions are functionally ordered
(1969:153).
It is this requirement that may help to explain why planning is sometimes treated as synonymous with decision making. If different decisions have to be batched, they may come to resemble a single decision. Hence planning writers have tended to confuse decision making with strategy making by assuming that the latter necessarily involves the selection of a single course of action—the choice of an integrated strategy at one point in time. Normann, in fact, made this point about Igor Ansoff’s well-known writings on planning:
Ansoff regards the choice of strategy and the formulation of policy chiefly as a decision process: first, goals are established, after which (using a series of analytical techniques) alternatives are evolved and (still using analytical techniques) a choice made among them, possibly after some adjustments in the original goals. (1977:8-9)
But since, as we shall see, there are other ways in which to make strategy, notably dynamically over time, the process of integrating decisions at a point in time becomes, not strategy making, but simply planning’s approach to strategy making, the situation to which it restricts itself. Thus its position becomes clearer. However, it is still not clear enough. Visionary leaders likewise integrate decisions, in their cases informally, or, if you prefer, intuitively. Yet to encompass their behavior under the planning label would again seem to broaden it beyond reasonable (and current) usage. (Indeed, as we shall see, some of the most influential writers in this field pit planning process against managerial intuition.) Thus something more is needed to identify planning.
That something, in our view, is the key to understanding planning—formalization. (5) Planning is a formalized procedure to produce an articulated result, in the form of an integrated system of decisions. What to us captures the notion of planning above all—most clearly distinguishes its literature and differentiates its practice from other processes—is its emphasis on formalization, the systemization of the phenomenon to which planning is meant to apply. Thus Bryson referred to strategic planning as a disciplined effort,
in fact, simply a set of concepts, procedures and tests
(1988:512), while in some of the research literature the term FSP was substituted for strategic planning, with the f for formal (e.g., Pearce et al., 1987).
Formalization here would seem to mean three things, especially (a) to decompose, (b) to articulate, and especially (c) to rationalize the processes by which decisions are made and integrated in organizations.
An emphasis on formal rationality permeates the literature of planning. Denning contrasted the systematic
with the haphazard
(1973:26-27), while Steiner argued that Plans can and should be to the fullest possible extent objective, factual, logical, and realistic in establishing objectives and devising means to obtain them
(1969:20). Similarly, Dror claimed that in the public sector planning is at present the most structured and professionalized mode of policy making,
given its explicit attention to internal consistency
and its effort to supply structured rationality
(1971:93).
Rationality of this formal kind is, of course, rooted in analysis, not synthesis. Above all, planning is characterized by the decompositional nature of analysis—reducing states and processes to their component parts. Thus the process is formally reductionist in nature. This may seem curious, given that the intention of planning is to integrate decisions. But the performance of planning has been curious too and for this very reason, as we shall see. Here, in any event, we seek to characterize planning by the nature of its process, not by its intended results. In fact, the key, if implicit, assumption underlying strategic planning is that analysis will produce synthesis: decomposition of the process of strategy making into a series of articulated steps, each to be carried out as specified in sequence, will produce integrated strategies. This, in fact and not incidentally, is the old machine
assumption, the one that underlies the design of the manufacturing assembly line—itself a kind of machine of human steps. If every component is produced by the machine as specified and assembled in the order prescribed, an integrated product will appear at the end of the line. Indeed, as we shall see, this analogy underlies some of the most important thinking in the field of planning, and has proved to be patently false. Organizational strategies cannot be created by the logic used to assemble automobiles.
Along with rationality and decomposition, articulation is the third key component of formalization. The product of planning—the plans themselves—after being carefully decomposed into strategies and substrategies, programs, budgets, and objectives, must be clearly and explicitly labeled—by words and, preferably, numbers on sheets of paper. Thus Zan, in a carefully reasoned paper called What Is Left for Formal Planning?,
concluded that the common characteristic
of various planning systems is the process of rendering things explicit,
in terms of both processes and their consequences (1987:193). George Steiner, probably the most prolific of the business planning writers, noted that the word planning comes from the Latin planum, meaning flat surface
(1969:5). Leaving aside the prophetic powers of the Romans with regard to a literature that was to follow in two millennia, Steiner went on to note that the word entered the English language in the Seventeenth Century, referring principally to forms, such as maps or blueprints, that were drawn on flat surfaces
(1969:5-6). Thus, the word has long been associated with formalized documents.
So now we seem to have a more operational definition of planning, since the word can be identified with two observable phenomenon in organizations—the use of formalized procedure and the existence of articulated result, specifically concerning an integrated system of decisions.
This may seem to some people an unnecessarily restricted definition of the term. We think not. This book’s introduction suggested that planning is one proposed approach to strategy making among several that are possible. It certainly does not encompass the whole process. The theoreticians of planning may have intended a broader definition of the word, but the reality of planning—its actual practice, let alone its tangible accomplishments—tell a much different story. Our claim, which we believe to be demonstrated in the rest of this book, is that the definition proposed here is, by virtue of planners’ own behaviors, closest to the one that planning has created for itself, and, indeed, has chosen for itself, however implicitly. In other words, in this book planning is defined by what it is (and that, it should be noted parenthetically in a departure from Wildavsky, is something!).
To some people, when corporate executives go off to a mountain retreat to discuss strategy, that is planning. To others, adapting to external pressures informally over time is also planning. In principle, there is no problem with this. In practice, however, it creates all kinds of confusion. For example, the planners may not understand why the executives at the retreat did not structure their discussions more systematically. Had they simply called their retreat strategic thinking,
this would not happen. Because the word planning, implicitly when not explicitly, is associated with formalization, use of it presupposes the requisite decomposition, articulation, and rationalization. But for those readers who are still not persuaded by our use of the term, we suggest that every time we write planning, you read formal planning. Eventually you will probably drop the adjective, because, we hope, you begin to agree with us rather than out of just plain weariness.
Obviously, formalization is a relative, not an absolute, term. And obviously, planners carry out a range of activities, some more, some less formal. But as a process, we argue here that planning sits toward the formal