The Fall and Rise of Strategic Planning
When strategic planning arrived on the scene in the mid-1960s, corporate leaders embraced it as “the one best way” to devise and implement strategies that would enhance the competitiveness of each business unit. True to the scientific management pioneered by Frederick Taylor, this one best way involved separating thinking from doing and creating a new function staffed by specialists: strategic planners. Planning systems were expected to produce the best strategies as well as step-by-step instructions for carrying out those strategies so that the doers, the managers of businesses, could not get them wrong. As we now know, planning has not exactly worked out that way. While certainly not dead, strategic planning has long since fallen from its pedestal. But even now,few people fully understand the reason: strategic planning is not strategic thinking. Indeed, strategic planning often spoils strategic thinking, causing managers to confuse real vision with the manipulation of numbers. And this confusion lies at the heart of the issue: the most successful strategies are
visions, not plans. Strategic planning, as it has been practiced, has really been strategic programming, the articulation and elaboration of strategies, or visions, that already exist. When companies understand the difference between planning and strategic thinking, they can get back to what the strategy-making process should be: capturing what the manager learns from all sources (both the soft insights from his or her personal experiences and the experiences of others throughout the organization and the hard data from market research and the like) and then synthesizing that learning into a vision of the direction that the business should pursue.
Organizations
disenchanted with strategic planning should not get rid of their planners or
conclude that there is no need for programming. Rather, organizations should
transform the conventional planning job. Planners should make their
contribution around the strategy-making process rather than inside
it. They should supply the formal analyses or hard data that strategic thinking
requires, as long as they do it to broaden the consideration of issues rather
than to discover the one right answer. They should act as catalysts who support
strategy making by aiding and encouraging managers to think strategically. And,
finally, they can be programmers of a strategy, helping to specify the series
of concrete steps needed to carry out the vision. By redefining the planner’s
job, companies will acknowledge the difference between planning and strategic
thinking. Planning has always been about analysis – about breaking down
a goal or set of intentions into steps, formalizing those steps so that they
can be implemented almost automatically, and articulating the anticipated
consequences or results of each step. “I favour a set of analytical techniques for
developing strategy,” Michael Porter, probably the most widely read writer on
strategy, wrote in the Economist.1 The label “strategic planning” has been applied
to all kinds of activities, such as going off to an informal retreat in the
mountains to talk about strategy. But call that activity “planning,” let
conventional planners organize it, and watch how quickly the event becomes
formalized (mission statements in the morning, assessment of corporate
strengths and weaknesses in the afternoon, strategies carefully articulated by
5 P.M.). Strategic thinking, in contrast, is about synthesis. It involves
intuition and creativity. The outcome of strategic thinking is an integrated
perspective of the enterprise, a not-too-precisely articulated vision of
direction, such as the vision of Jim Clark, the founder of Silicon Graphics,
that three-dimensional visual computing is the way to make computers easier to
use. Such strategies often cannot be developed on schedule and immaculately
conceived. They must be free to appear at any time and at any place in the organization,
typically through messy processes of informal learning that must necessarily be
carried out by people at various levels who are deeply involved with the
specific issues at hand.
Formal planning, by its very
analytical nature, has been and always will be dependent on the preservation
and rearrangement of established categories – the existing levels of strategy (corporate,
business, functional), the established types of products (defined as “strategic
business units”), overlaid on the current units of structure (divisions,
departments, etc.). But real strategic change requires not merely rearranging
the established categories, but inventing new ones. Search all those strategic
planning diagrams, all those interconnected boxes that supposedly give you
strategies, and nowhere will you find a single one that explains the creative
act of synthesizing experiences into a novel strategy. Take the example of the
Polaroid camera. One day in 1943, Edwin Land’s three-year-old daughter asked
why she could not immediately see the picture he had just taken of her. Within
an hour, this scientist conceived the camera that would transform his company.
In other
words, Land’s vision was the
synthesis of the insight evoked by his daughter’s question and his vast
technical knowledge. Strategy
making needs to function beyond the boxes, to encourage the informal learning
that produces new perspectives and new combinations. As the saying goes, life
is larger than our categories. Planning’s failure to transcend the categories
explains why it has discouraged serious organizational
change. This failure is why formal
planning has promoted strategies that are extrapolated from the past or copied from
others. Strategic planning has not only never amounted to strategic thinking
but has, in fact, often impeded it. Once managers understand this, they can
avoid other costly misadventures caused by applying formal technique, without
judgment and intuition, to problem solving.
The Pitfalls of Planning
If you ask conventional planners
what went wrong, they will inevitably point to a series of pitfalls for which
they, of course, are not responsible. Planners would have people believe that
planning fails when it does not receive the support it deserves from top management
or when it encounters resistance to change in the organization. But surely no
technique ever received more top management support than strategic planning did
in its heyday. Strategic planning itself has discouraged the commitment of top
managers and has tended to create the very climates its proponents have found
so uncongenial to its practice. The problem is that planning represents a calculating style of
management, not a committing style. Managers with a
committing
style engage people in a journey.
They lead in such a way that everyone on the journey helps shape its course. As
a result, enthusiasm inevitably builds along the way. Those with a calculating
style fix on a destination
and calculate what the group must
do to get there, with no concern for the members’ preferences. But calculated strategies
have no value in and of themselves; to paraphrase the words of sociologist
Philip Selznick, strategies take on value only as committed people infuse them
with energy.2 No matter
how much lip service has been paid to the contrary, the very purpose of those
who promote
conventional strategic planning
is to reduce the power of management over strategy making.
George Steiner declared, “If an
organization is managed by intuitive geniuses there is no need for formal
strategic planning. But how many
organizations are so blessed? And, if they are, how many times are intuitives
correct in their judgments?”3 Peter Lorange, who is equally prominent in the field,
stated, “The CEO should typically not be… deeply involved” in the process, but
rather be “the designer of [it] in a general sense.”4 How can weexpect top managers to be
committed to a process that depicts them in this way, especially when its
failures to deliver on its promises have become so evident? At lower levels in
the hierarchy, the problem becomes more severe because planning has often been used
to exercise blatant control over business managers. No wonder so many middle
managers have welcomed the overthrow of strategic planning. All they wanted was
a commitment to their own business strategies without having to fight the
planners to get it!
The Fallacies of Strategic Planning
An expert has been defined as
someone who avoids the many pitfalls on his or her way to the grand fallacy.
For strategic planning, the grand fallacy is this: because analysis encompasses
synthesis, strategic planning is strategy making. This fallacy itself rests on
three fallacious assumptions: that prediction is possible, that strategists can
be detached from the subjects of their strategies, and, above all, that the
strategy-making process can be formalized.
The Fallacy of Prediction. According to
the premises of strategic planning, the world is supposed to hold still while a
plan is being developed and then stay on the predicted course while that plan
is being implemented. How else to explain those lockstep schedules that have
strategies appearing on the first of June, to be approved by the board of
directors on the fifteenth? One can just picture competitors waiting for the
board’s approval, especially if they are Japanese and don’t believe in such
planning to begin with. In 1965, Igor Ansoff wrote in his influential book Corporate
Strategy, “We shall
refer to the period for which the firm is able to construct forecasts with an
accuracy of, say, plus or minus 20 percent as the planning horizon of the
firm.”5 What an extraordinary
statement! How in the world can any company know the period for which it can
forecast with a given accuracy? The evidence, in fact, points to the contrary. While
certain repetitive patterns, such as seasons, may be predictable, the forecasting
of discontinuities, such as a technological innovation or a price increase, is
virtually impossible. Of course, some people sometimes “see” such things
coming. That is why we call them “visionaries.” But they create their
strategies in much more personalized and intuitive
ways.
The Fallacy of Detachment. In her book Institutionalizing Innovation, Mariann
Jelinek developed the interesting point that strategic planning is to the
executive suite what Taylor’s work-study methods were to the factory floor – a
way to circumvent human idiosyncrasies in order to systematize behavior. “It is
through administrative systems that planning and policy are made possible,
because the systems capture knowledge about the task.” Thus
“true management by exception, and true policy direction are now possible,
solely because management is no longer wholly immersed in the details of the
task itself.”6 According
to this viewpoint, if the system does the thinking, then strategies must be
detached from operations (or “tactics”), formulation from implementation,
thinkers from doers, and so strategists from the objects of their strategies.
The trick, of course, is to get
the relevant information up there, so that senior managers on high can be
informed about the details down below without having to immerse themselves in
them. Planners’ favored solution has been “hard data,” quantitative aggregates
of the detailed “facts” about the organization and its context, neatly packaged
and regularly delivered. With such information, senior managers need never
leave their executive suites or planners their staff offices. Together they can
formulate – work with their heads – so that the hands can get on with
implementation. All of this is dangerously fallacious. Innovation has never
been institutionalized. Systems havenever been able to reproduce the synthesis created
by the genius entrepreneuror even the ordinary competent strategist, and they
likelynever will. Ironically, strategic planning has missed one of Taylor’s
most important messages: work processes must be fully understood before they their
strategies in much more personalized and intuitive
ways.
The Fallacy
of Detachment. In her book Institutionalizing Innovation,
Mariann Jelinek developed the interesting point that strategic planning
is to the executive suite what Taylor’s work-study methods were
to the factory floor – a way to circumvent human idiosyncrasies in order
to systematize behavior. “It is through administrative systems that
planning and policy are made possible, because the systems capture
knowledge about the task.” Thus “true management by exception,
and true policy direction are now possible, solely because
management
is no longer wholly immersed in the details of the task itself.”6 According to
this viewpoint, if the system does the thinking, then strategies must be
detached from operations (or “tactics”), formulation from implementation,
thinkers from doers, and so strategists from the objects of their strategies. The
trick, of course, is to get the relevant information up there, so that senior
managers on high can be informed about the details down below without having to
immerse themselves in them. Planners’ favored solution has been “hard data,” quantitative
aggregates of the detailed “facts” about the organization and its context,
neatly packaged and regularly delivered. With such information, senior managers
need never leave their executive suites or planners their staff offices.
Together they can formulate – work with their heads – so that the hands can get
on with implementation. All of this is dangerously fallacious. Innovation has
never been institutionalized. Systems have
never been able to reproduce the
synthesis created by the genius entrepreneur or even the ordinary competent strategist,
and they likely never will. Ironically, strategic planning has missed one of
Taylor’s most important messages: work processes must be fully understood
before they can be formally programmed. But where in the planning literature is
there a shred of evidence that anyone has ever bothered to find out how it is
that managers really do make strategies? Instead many practitioners and
theorists have wrongly assumed that strategic planning, strategic thinking, and
strategy making are all synonymous, at least in best practice. The problem with
the hard data that are supposed to inform the senior manager is they can have a
decidedly soft underbelly. Such data take time to harden, which often makes
them late. They tend to lack richness; for example, they often exclude the
qualitative. And they tend to be overly aggregated, missing important nuances.
These are the reasons managers who rely on formalized information, such as
market-research reports or accounting statements in business and opinion polls
in government, tend to be detached in more ways than one. Study after study has
shown that the most effective managers rely on some of the softest forms of
information, including gossip, hearsay, and various other intangible scraps of
information. My research and that of many others demonstrates that strategy
making is an immensely complex process, which involves the most sophisticated, subtle,
and, at times, subconscious elements of human thinking. A strategy can be
deliberate. It can realize the specific intentions of senior management, for
example, to attack and conquer a new market. But a strategy can also be emergent,
meaning that a convergent pattern has formed among the different actions taken
by the organization one at a time. In other words, strategies can develop
inadvertently, without the conscious intention of senior management, often through
a process of learning. A salesperson convinces a different kind of customer to
try a product. Other salespeople follow up with their customers, and the next
thing management knows, its products have penetrated a new market. When it
takes the form of fits and starts, discoveries based on serendipitous events,
and the recognition of unexpected patterns, learning inevitably plays a, if not the, crucial role
in the development of novel strategies. Contrary to what traditional planning
would have us believe, deliberate strategies are not necessarily good, nor are emergent
strategies necessarily bad. I believe that all viable strategies have emergent and
deliberate qualities, since all must combine some degree of flexible learning
with some degree of cerebral control.
Vision is unavailable to those
who cannot “see” with their own eyes. Real strategists get their hands dirty
digging for ideas, and real strategies are built from the occasional nuggets
they uncover. These are not people
who abstract themselves from the
daily details; they are the ones who immerse themselves in them while being
able to abstract the strategic messages from them. The big picture is painted with
little strokes.
The Fallacy of Formalization.
The failure of strategic planning
is the failure of systems to do better than, or even nearly as well as, human beings.
Formal systems, mechanical or otherwise, have offered no improved means of
dealing with the information overload of human brains; indeed, they have often
made matters worse. All the promises about artificial intelligence, expert
systems, and the like improving if not replacing human intuition never
materialized at the strategy level. Formal systems could certainly process more
information, at least hard information. But they could never internalize
it, comprehend it, synthesize it. In a
literal sense, planning could not learn. Formalization implies a rational
sequence, from analysis through administrative procedure to eventual action.
But strategy making as a learning process can proceed in the other direction
too. We think in order to act, to be sure, but we also act in order to think.
We try things, and those experiments that work converge gradually into viable
patterns that become strategies. This is the very essence of strategy making as
a learning process. Formal procedures will never be able to forecast discontinuities,
inform detached managers, or create novel strategies. Far from providing
strategies, planning could not proceed without their prior existence. All this
time, therefore, strategic planning has been misnamed. It should have been
called
strategic programming,
distinguished from other useful things that planners can do, and promoted as
a process to formalize, when
necessary, the conse quences of strategies that have already been developed.
In short, we should drop the
label “strategic
planning” altogether.
Planning, Plans, and Planners
Two important messages have been
conveyed through all the difficulties encountered by strategic planning. But
only one of them has been widely accepted in the planning community:
business-unit managers must take full and effective charge of the strategy-making
process. The lesson that has still not been accepted is that managers will
never beable to take charge through a formalized process. What then can be the
roles for planning, for plans,
and for planners in organizations? Planners and managers have different advantages.
Planners lack managers’ authority to make commitments, and, more important,
managers’ access to soft
information critical to strategy making. But because of their time pressures,
managers tend to favor action over reflection and the oral over the written,
which can cause them to
overlook important analytical
information. Strategies cannot be created by analysis, but their development
can be helped by it. Planners, on
the other hand, have the time and, most important, the inclination to analyze.
They have critical roles to play alongside line managers, but not as
conventionally conceived. They should work in the spirit of what I like to call
a “soft analyst,” whose intent is to pose the right questions rather than to
find the right answers. That way, complex issues get opened up to thoughtful
consideration instead of being closed down prematurely by snap decisions.
Planning as Strategic Programming.
Planning cannot generate
strategies. But given viable strategies, it can program them; it can make them
operational. For one supermarket chain that a colleague and I studied, planning
was the articulation, justification, and elaboration of the strategic vision
that the company’s leader already had. Planning was not deciding to expand into
shopping centers, but explicating to what extent and when, with how many
stores, and on what schedule. An appropriate image for the planner might be that
person left behind in a meeting, together with the chief executive, after
everyone else has departed. All of the strategic decisions that were made are symbolically
strewn about the table. The CEO turns to the planner and says, “There they all
are;
clean them up. Package them
neatly so that we can tell everyone about them and get things going.” In more
formal language, strategic programming involves three steps: codification,
elaboration, and conversion of strategies. Codification means clarifying and
expressing the strategies in terms sufficiently clear to render them formally
operational, so that their consequences can be worked out in detail. This
requires a good deal of interpretation and careful attention to what might be
lost in articulation: nuance, subtlety, qualification. A broad vision, like
capturing the market for a new technology, is one thing, but a specific plan –
35% market share, focusing on the high end – is quite another.
Elaboration means breaking down
the codified strategies into substrategies and ad hoc programs as well as
overall action plans specifying what must be done to realize each strategy:
build four new factories and hire 200 new workers, for example. And conversion
means considering the effects of the changes on the organization’s operations –
effects on budgets and performance controls, for example. Here a kind of great
divide must be crossed from the nonroutine world of strategies and programs to
the routine world of budgets and objectives. Objectives have to be restated and
budgets reworked, and policies and standard operating procedures reconsidered,
to take into account the consequences of the specific changes. One point must
be emphasized. Strategic programming is not “the one best way” or even
necessarily a good way. Managers don’t always need to program their strategies
formally. Sometimes they must leave their strategies flexible, as broad
visions, to adapt to a changing environment. Only when an organization is sure
of the relative stability
of its environment and is in need
of the tight coordination of a myriad of intricate operations (as is typically
the case of airlines with their needs for complicated scheduling), does such
strategic programming make sense.
Plans as Tools to Communicate and
Control.
Why program strategy? The most
obvious reason is for coordination, to ensure that everyone in the organization
pulls in the same direction. Plans in the form of programs – schedules,
budgets, and so on – can be prime media to communicate strategic intentions and
to control the individual pursuit of them, in so far, of course, as common
direction is considered to be more important than individual discretion. Plans
can also be used to gain the tangible as well as moral support of influential
outsiders. Written plans inform financiers, suppliers, government agencies, and
others about the intentions of the organization
so that these groups can help it
achieve its plans.
Planners as Strategy Finders.
As noted, some of the most important
strategies in organizations emerge without the intention or sometimes even the
awareness of top managers. Fully exploiting these strategies, though, often
requires that they be recognized and then broadened in their impact, like taking
a new use for a product accidentally discovered by a salesperson and turning it
into a major new business. It is obviously the responsibility of managers to
discover and anoint these strategies. But planners can assist managers in
finding these fledgling strategies in their organizations’ activities or in those
of competing organizations. Planners can snoop around places they might not normally
visit to find patterns amid the noise of failed experiments, seemingly random
activities, and messy learning. They can discover new ways of doing or
perceiving things, for example, spotting newly uncovered markets and
understanding their implied new products.
Planners as Analysts.
In-depth examinations of what
planners actually do suggests that the effective ones spend a good deal of time
not so much doing or even encouraging planning as carrying out analyses of
specific issues. Planners are obvious candidates for the job of studying the
hard data and ensuring that managers consider the results in the
strategy-making process. Much of this analysis will necessarily be quick and
dirty, that is, in the time frame and on the ad hoc basis required by managers.
It may include industry or competitive analyses as well as internal studies,
including the use of computer models to analyze trends in the organization.
But some of the best models that
planners can offer managers are simply alternative conceptual interpretations
of their world, such as a new way
to view the organization’s distribution system. As Arie de Geus, the one time
head of planning at Royal Dutch/Shell, wrote in his HBR article “Planning as
Learning” (March-April 1988), “The real purpose of effective planning is not to
make plans but to change the...mental models that...decision makers carry in
their heads.”
Planners as Catalysts.
The planning literature has long
promoted the role of catalyst for the planner,but not as I will describe it
here. It is not planning that planners should be urging on their organizations so
much as any form of behavior that can lead to effective performance in a given
situation. Sometimes that may even mean criticizing formal
planning itself. When they act as
catalysts, planners do not enter the black box of strategy making; they ensure
that the box is occupied with active line managers. In other words, they
encourage managers to think
about the future in creative
ways. Such planners see their job as getting others to question conventional
wisdom and especially helping people out of conceptual ruts (which managers with
long experience in stable strategies are apt to dig themselves into). To do
their jobs, they may have to use provocation or shock tactics like raising difficult
questions and challenging conventional assumptions.
Left- and Right-Handed Planners
Two very different kinds of
people populate the planning function. One is an analytic thinker, who is
closer to the conventional image of the planner. He or she is dedicated to bringing
order to the organization. Above all, this person programs intended strategies
and sees to it that they are communicated clearly. He or she also carries out
analytic studies to ensure consideration of the necessary hard data and
carefully scrutinizes strategies intended for implementation. We might label
him or her the right-handed planner.
The second is less conventional
but present nonetheless in many organizations. This planner is a creative
thinker who seeks to open up the strategy- making process. As a “soft analyst,”
this planner is prepared to conduct more quick and dirty studies. He or she likes
to find strategies in strange places and to encourage others to think
strategically. This person is somewhat more inclined toward the intuitive processes
identified with the brain’s right hemisphere. We might call him or her the lefthanded planner. Many
organizations need both types, and it is top management’s job to ensure that it
has them in appropriate proportions. Organizations need people to bring order
to the messy world of management as well as challenge the conventions that
managers and especially their organizations develop. Some organizations (those
big, machine-like bureaucracies concerned with mass production) may favor the
right-handed planners, while others (the loose, flexible “adhocracies,” or
project organizations) may favor the left-handed ones. But both kinds of organization
need both types of planners, if only to offset their natural tendencies. And,
of course, some organizations, like those highly professionalized hospitals and
educational systems that have been forced to waste so much time doing
ill-conceived strategic planning, may prefer to have very few of either!
The Formalization Edge
We human beings seem predisposed
to formalize our behavior. But we must be careful not to go over the
formalization edge. No doubt we must formalize to do many of the things we wish
to in modern society. That is why we have organizations. But the experiences of
what has been labeled strategic planning teach us that there are limits. These
limits must be understood, especially for complex and creative activities like
strategy making. Strategy making is not an isolated process. It does not happen
just because a meeting is held with that label. To the contrary, strategy making
is a process interwoven with all that it takes to manage an organization. Systems
do not think, and when they are used for more than the facilitation of human
thinking,
they can prevent thinking. Three
decades of experience with strategic planning have taught us about the need to
loosen up the process of strategy making rather than trying to seal it off by
arbitrary formalization. Through all the false starts and excessive rhetoric,
we have learned what planning is not and what it cannot do. But we have also
learned what planning is and what it can do, and perhaps of greater use, what
planners themselves can do beyond planning. We have also learned how the literature
of management can get carried away and, more important, about the appropriate place
for analysis in organizations. The story of strategic planning, in other words,
has taught us not only about formal technique itself but also about how
organizations function and how managers do and don’t cope with that
functioning. Most significant, it has told us something about how we think as
human beings, and that we sometimes stop thinking.
Tomado de