Rise and Fall of Strategic Planning

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9781476754765: Rise and Fall of Strategic Planning
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Chapter 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 Galbraith 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:

1. act-past-certain

2. act-future-certain

3. act-past-uncertain

4. act-future-uncertain

5. event-past-certain

6. event-future-certain

7. event-past-uncertain

8. 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. 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).

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).

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".

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 resem...

Quatrième de couverture :

In this definitive and revealing history, Henry Mintzberg unmasks the process that has mesmerized so many organisations since 1965: strategic planning.  One of the original management thinkers, Mintzberg concludes that strategy cannot be planned because planning is about analysis and strategy is about synthesis. That is why, he asserts, the process has failed so often and dramatically. Mintzberg traces the origin and history of strategic planning through its prominence and subsequent fall. He argues that we must reconcieve the process by which strategies are created by emphasizing informal learning and personal vision. Mintzberg proposes new definitions of planning and strategy, and examines in unusual 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 - in that discontinuities can be predicted, that strategists can be detached from the operations of the organisation, and that the process of strategy-making itself can be formalized. Mintzberg devotes a substantial section to the new role of planning, plans and planners, not inside the strategy-making process, but around it, 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 essential reading for anyone in an organization who is influenced by the planning or strategy-making process. It is also suitable for undergraduate and postgraduate students undertaking corporate strategy, strategic management and business policy courses.  Henry Mintzberg is Professor of Strategy and Organization and the John Cleghorn Professor of Management Studies at McGill University, Canada, and visiting Professor ar INSEAD, France. He is a two time winner of the prestigious McKinsey Award for best Harvard Business Review articles; a fellow of the Royal Society of Canada - the first elected from a management faculty - and past president of the Strategic Management Society, the worldwide association of practitioners and scholars in the field.  He is the author of several seminal books including The Strategy Process, Structure in Fives and The Structuring of Organisations.

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