The purpose of this paper is to assess the claim that plans and planning are no longer central to ensuring the success of strategies. Strategic management is a complex field, however strategic management as a substantial issue for organisations has only been around for the past 40 or 50 years.
The assessment of the above claim requires looking at certain components first in order to place plans and planning into the context of strategic management. While the first part of this paper examines the key terms strategy, plans and planning, the second part describes the history of plans and planning throughout the history of corporate businesses. The final and most important part will then address the question of whether plans and planning are still playing an important role in strategic management or if this was never the case.
Content:
Introduction
Part 1: Unsuccessfully Coping with the Natural Beauty of the Concept of
…Defining Strategy
…Defining Plans
…Defining Planning
Part 2: The Birth of Plans and Planning, the Child of a Stable World?
Can it Fly?
Part 3: Strategic Planning: Rising or falling? Or both? Or none?
Doing Things Differently / Planning and Learning
The Connection Between Planning and Organisational Learning
When East Meets West – Planning and the Issue of Culture
Conclusion
Appendix A: How Strategies evolve
Appendix B: Strategy and Planning in a Multinational Company
Appendix C: Bibliography
Introduction
The purpose of this paper is to assess the claim that plans and planning are no longer central to ensuring the success of strategies. Strategic management is a complex field, however strategic management as a substantial issue for organisations has only been around for the past 40 or 50 years.
The assessment of the above claim requires looking at certain components first in order to place plans and planning into the context of strategic management. While the first part of this paper examines the key terms strategy, plans and planning, the second part describes the history of plans and planning throughout the history of corporate businesses. The final and most important part will then address the question of whether plans and planning are still playing an important role in strategic management or if this was never the case.
Due to the complexity of the subject certain issues might seem to be missing, however one has to acknowledge that they exist. Here they will be omitted purely because of constraints in terms of space available. For the following thesis a narrow focus is required and the interested reader may use it to get more involved into the debate. Throughout the thesis illustrations will be presented to support the arguments used and appendices illustrate a broader understanding of the topic.
Part 1: Unsuccessfully Coping with the Natural Beauty of the Concept of…
…Defining Strategy
Strategic management as we know it in the business context is a relatively new field of studies. Its roots lie in the military context and as such it can be traced back to times as early as 500 BC. Sun Tzu, now a world renowned philosopher, wrote the Bing-Fa, The Art of War. In this book guidelines were given how to engage in conflicts and ultimately win them. Today these principles have been translated into business contexts and can be applied to competition between organisations[1][2].
To define strategy as such is not an easy task. Several different definitions exist. Some of them are similar or equal, others differ completely.
Certain themes recur over time and are acknowledged by scholars. The following themes are common to a number of different definitions:
- Strategy is concerned with the external and internal environment of an organisation;
- Companies have to adapt to the changes occurring in their environment, strategies evolve over time (See also Appendix A). In doing so they need to be flexible and adaptive;
- Strategy addresses the questions of where to compete and how,
- Strategy can be seen as patterns of behaviour allowing
organisational learning;
- Strategy is about allocating resources[3].
Several other issues need to be taken into account. Strategies may differ according to the individual layers of an organisation e.g. on a business or divisional level and different cultures may have an impact on the strategy formulation. Most important is the fact that there is no such thing as the one best strategy which can be transferred from one company to another. The strategy chosen needs to be supported by the organisations structure and culture.[4]
In its purest and simplest form companies may compete on the basis of what can be called generic strategies, namely the cost leadership or differentiation strategy[5]. Viewing strategy in such a way would be a stark contrast to the complexity described above and might be worthwhile questioning.
…Defining Plans
In order to assess the question set out as the main topic of this paper is important to pose the question of whether there is a difference between a plan and planning. Again, there are a number of key themes that reflect the nature of a plan and can be found throughout the literature. In this context a plan is a means to an end. Plans not necessarily are written down; however they are intended to give the organisation orientation and can be used for different purposes.[6] In addition a plan can serve as the starting point for other interrelated activities. Deriving from a general plan, financial plans, personnel plans or career plans can be created.[7]
One plan that will be used exemplary herein is the company’s organisation chart (see illustration No.1). This simplified structure of an organisation gives all of its members orientation in terms of finding responsibilities and department that hold certain resources.[8] This can be vital, especially for multinational, highly diversified organisations.
illustration not visible in this excerpt
Illustration 1: An organisation chart as a sample of plans to give orientation
Source: Own illustration adopted from Boddy (2002)
It can be argued whether the plan is the starting point for planning or the result of it. To complicate matters even more, one could argue who is responsible for the creation of the plan: Is it an exclusive task of top management or the responsibility of every single member of the organisation. A business plan might be just one of the many plans an organisation has and they might be highly specialised and distinct such as financial plans or emergency plans for IT recovery.[9] Strategy and plans are tightly linked together and it is therefore important that both are aligned with each other. They need to support each other in order to become effective.[10]
Plans nowadays are also communicated outside the organisation. Especially joint stock companies publish their plans and it is possible for the various stakeholders to familiarise with the strategic plans of any such organisation. Obviously this reveals plans to competitors as well which in turn can take countermeasures.[11]
…Defining Planning
“To plan, v.: To bother about the best method of
accomplishing an accidental result[12]”
Planning played an important role in strategy in its original meaning. In the Bing-Fa the very first chapter is dedicated to planning. Throughout the Bing-Fa planning plays an important role. As a result an army (company) will acquire diverse knowledge and is able to advance into a superior position before engaging in a conflict. Leaders should use planning in order to get familiar with the terrain and to recognize patterns in the season, which nowadays we may call trends. According to the Bing-Fa there is a connection between planning and learning, an issue which will be addressed at a later stage in this paper.
Again there is a certain consensus among the different scholars what characterizes planning. Even though it is a highly analytical process nevertheless it is a creative one. This notion can be found in the Bing-Fa as well as in recent research. Another common ground is the idea that forward planning, as used in strategic management requires learning from the past. Projecting into the future requires drawing on past experiences.[13]
Planning is a methodical and directed method which is conducted in a sequential way. It can be used to break up complex situations and thus make them manageable. Strategy can then be deliberately planned and executed using as much information as possible. Strategic planning can then be best described as programming which leaves only limited room for contingency.
The following illustration number 2 will clearly demonstrate the relation between strategy and planning.
illustration not visible in this excerpt
Illustration 2: The context of strategy and planning
Source: Own illustration adopted from Gagliardi (2003)
This perspective however is being critiqued for being inflexible and unsustainable. Since planning is a time consuming activity how can companies cope with the rapid change that is happening in their environment? As stated above organisations depend on their environment and need to keep track of it. Furthermore it can be argued that such a programming is only possible if every single relation and element within a system is known and the outcomes of interference can be predicted with high accuracy. Planning is ultimately about commitment. Again, who is responsible for planning? One can pose the same question of whether it is the responsibility of everyone or just the top-management.
[...]
[1] See Steele (1991)
[2] see Brown (1998), see Gagliardi (2003), see Michaelson (2001), see Kim (2004), see Porter (1987)
[3] see Chaffee (1985), see Ansoff (1987), see Brown (1998), see Houlden (1993), see Mintzberg (1994b), see Porter (1996), see Malhotra (1996)
[4] see Houlden (1993), see Leontiades (1985), see Chaffee (1985), see Markides (2004)
[5] see Boddy (2002)
[6] see Kaplan et al. (1996), see Ansoff (1987), see Chaffee (1985), see Houlden (1993)
[7] see Leontiades (1985), see Boddy (2002)
[8] see Houlden (1993), see Terpstra et al.(2000)
[9] see Ward (2004), see Ansoff (1987), see Gagliardi (2003), see NN (2004),
see Mintzberg (1994a)
[10] see Brache et al. (1999)
[11] see Ward (2005)
[12] Ambrose Bierce as cited in de Wit et al. (1999), page 133
[13] see Leontiades (1985), see Chaffee (1985), see Mintzberg (1994a), see Gagliardi (2003), see De Wit et al. (1999)
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