The Grey Chronicles

2008.November.9

The Fall and Rise of Strategic Planning


While cataloguing the references I used in my master’s thesis, I came across an old issue of Harvard Business Review, January-February 1994 issue. I skimmed the contents and saw an article entitled: " The Fall and Rise of Strategic Planning" by Henry Mintzberg. I decided to stop and read it for a while.

Henry Mintzberg is a professor of management at McGill University in Montreal, Quebec, and visiting professor at INSEAD in Fontainebleau, France. The quoted article was adapted by HBR from his book, The Rise and Fall of Strategic Planning (Free Press and Prentice Hall International, 1994).

Several passages of this article are as applicable fourteen years ago (1994) as they are now. Thus, I am sharing some of these quotable quotes below:


Passage: Strategic planning is not strategic thinking. . . . Planning is analysis–about breaking down goal or set of intentions into steps, formalizing those steps so that they can be implemented almost immediately,and articulating the anticipated consequences or results of each step. . . . Strategic thinking is synthesis, involving intuition and creativity. The outcome of strategic thinking is an integrated perspective of the enterprise. [italics in the original].

Comments: At GSPI, strategic planning was once handled by a Business Strategy department, but in 2004 this department was dissolved and the head was reassigned to another department. The department then consisted of only one Analyst, who focused more on the evaluation of the external forces: the international steel market, the steel price fluctuations, the globalization of trade, among other things. Yet, a study of the internal factors reacting to the external factors were not discussed or simply ignored. At present, strategic planning is done on a daily basis based on an ever-evolving monthly plan, and there is no single visible or published strategic plan for a duration longer than a year.


Passage: There are three fallacies of strategic planning: (a) the fallacy of prediction, (b) the fallacy of detachment, and (c) the fallacy of formalization. . . . (a) While certain repetitive patterns, such as seasons, may be predictable, the forecasting of discontinuities, such as technological innovation or a price increase, is virtually impossible. . . . (b) Strategic making is an immensely complex process, which involves the most sophisticated, subtle, and, at times, subconscious elements of human thinking. . . (c) Formal systems could certainly process more information, at least hard information . . . but they could never internalize it, comprehend it, synthesize it. [italics in the original]

Comments: The company has a huge database of hard information—the production tonnages and other parameters met this year or the previous years—are made as increasing benchmarks, irrespective of whatever happens on the external environment for the succeeding periods. Some managers tend to rely on formalized information and detached themselves from some soft information, including gossip, hearsay, and various other intangible scraps of information. Most strategies are based on these formalized information only, denying the fact that study after study has shown that the most effective managers rely on some of the softest forms of information.


Passage: Planning cannot generate strategies. . . . Plans as tools to communicate and control. Planners as strategy finders, analysts and catalysts.

Comments: Lately, with the absence of a Business Strategy department, the management entrusted Operations Management to handle the SWOT analyses of the corporate business scenario. The company produces a myriad of plans—schedules, budgets, etc.— but there are no visible and viable strategies to carry out these plans. Thus, these plans are not programmed or operationalized. Even the Business Strategy then could not even distinguish the differences between an objective, a strategy and a policy. The notion then that all these three were synonymous. At present, objectives are sometimes called strategies, e.g., "Reduction of Overtime to a minimum." There are no codified strategies to achieve this reduction. Some innovative managers have, however, issued verbal strategies to achieve the objective of reducing overtime. Furthermore, production plans are so dynamic that the production personnel have to deal with the plan’s inefficiency and ineffectiveness. Ever heard of an awaiting boat at the pier to haul the finished products, even when the raw materials to produce the products have yet to arrive?


It is unfortunate that these passages were left out of my thesis. My adviser would not want me to delve much further on strategic planning or strategy making. She believed that my thesis would be too long had I discussed strategy formulation as a consequence of my study’s results and analyses.


Notes:

Mintzberg, Henry (1994), The Fall and Rise of Strategic Planning. Boston, MA: Harvard Business Review. 72:1, January-February 1994. pp. 107-114. back to text. Note: a PDF copy of the article is available here or get the whole book in paperback.

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1 Comment »

  1. Hey, I really enjoy your blog. I have a blog too in a totally unrelated field (Online Stock Trading) but I like to check in here on a regular basis, just to see what’s going on and it’s always interesting to say the least. It’s always entertaining what people have to say.

    Comment by HenleyL — 2009.October.12 @ 21:35 | Reply


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