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The perils of planning

Michael Forster

A 1997 comment by Bernie Ebbers, CEO of telecommunications giant WorldCom, struck a chord of management heresy.  Interviewed in the aftermath of the announcement that WorldCom and MCI Communications Corporation would merge in a $37 billion deal – the largest corporate merger in history to that point – Ebbers said, “I don’t have a particular vision.  We’re going to ... execute on the fundamentals that we have.”  (Clarion-Ledger, November 16, 1997, C1).

Hold on a minute.  Could that be right?  The chief executive officer of a global corporate titan has “no particular vision” and was content to “execute on fundamentals”?  Cutting-edge WorldCom was not pursuing a comprehensive strategic plan?  Something seemed radically wrong here.  Either Ebbers was holding back or it is time to revisit Management 101. After all, everybody knows that strategic planning is essential stuff these days.  Planning in general is a major function of management in all its forms.  Strategic planning, with its long-range, comprehensive, and major directive quality, is in many ways the most fundamental of planning species.

Certainly every organization I know – profit and nonprofit alike – claims to have some sort of strategic plan in place.  And judging by the proliferation of publications and seminars on the subject, long-range strategic planning is as popular as ever.  In fact, it may be more popular than ever, since the long-term planning impulse runs strongest during uncertain times.  And these are nothing if not uncertain times.

The impulse to look long-term is not a new one.  Twenty-five years ago management seer Peter Drucker (1973) was already preaching the virtue of strategic planning for facing the unknown future.  Intoning that “ten years is a rather short time span these days,” Drucker counseled that “management has no choice but to anticipate the future” and “to attempt to mold it.”  While only the misdirected executive might hope literally to control the future, forward-thinking (“entrepreneurial”) management requires, said Drucker, the continuous making of decisions “with the greatest knowledge of their futurity.”

More recently, Firstenberg (1996) played a variation on this now-familiar tune for nonprofit executives.  Strategic planning is of pivotal importance in “today’s world, where change occurs with unprecedented speed.”  Strategic vision compels us, says Firstenberg, to look beyond the present moment, to anticipate and control for changes that will impact our future.  This is good news for nonprofits in particular, he contends, since “too many nonprofits confine their vision to the current year ... and do not look down the road” as they ought to.

Though one can find as many versions of strategic planning as there are planners and consultants on planning, the core steps are familiar enough and usually look something like the following(Fenn, 1997):

1.    Revisit the organization’s purpose, or mission.  Why does this organization exist?  Does the historical mission still resonate today?  Has the mission changed over time in significant ways? Especially in the face of change, clarity about mission is the guiding star of the visionary organization.  It illuminates everything else.

2.    Conduct a “SWOT” analysis.  What are the organization’s current strengths?  Its weaknesses?  Where do the opportunities for the organization lie in today’s marketplace?  What threats or obstacles pose challenges to success/ survival? Every organization faces competition – most typically for clients and resources with which to serve them.  Strategic evaluation of rivals involves looking for an edge, for ways to deploy strengths for comparative advantage.

3.    Craft a vision statement.  Given the analysis findings, what are the long-range goals for the organization?  Where can it hope to go?  What can it hope to accomplish over the planning period, typically the next 3 to 5 years? In crafting the vision statement, the organization must be particularly alert to social, economic and technological changes that are likely to effect its work.

4.    Develop measurable objectives.  What are the specific indicators of organizational success?  What are the shorter-term milestones on the way to realizing the long-term goals?  Financial issues are critical here. Viewing the economic picture one year at a time is a recipe for disaster.  Strategic thinking requires reality-based, assumption-free forecasting of future financial trends.  The organization should establish its “financial bottom line,” for example, to operate deficit-free from year to year.  It should also state specifically what it will achieve programmatically.

5.    Devise strategies for realizing objectives.  What general approach or approaches will move the organization toward accomplishing its objectives?  In the area of financial objectives, for example, even smaller nonprofits in recent years have embraced automated accounting systems.  Programmatically, more and more are adopting eclectic, “brief treatment” service strategies.

6.    Create step-by-step action plans for each strategy.  At this point plans move into the domain of nitty-gritty detail. How will the general strategies play out specifically? Who will do exactly what, by when, in order to realize the objectives set out in the plan?  What resources will be required?  What obstacles will have to be overcome?

7.    Check progress.  Unfortunately, even the most carefully detailed plans don’t realize themselves.  How will the organization keep tabs on its adherence to the plan?  Who will be responsible for carrying out the monitoring process and providing performance feedback to various constituencies?  How can adjustments be made if necessary?

Whatever the particular model embraced, the consensus is clear:  Serious commitment to a strategic planning process today is a virtual necessity for all organizations.

But if success requires planning, does planning ensure success?  Hardly.  So say both common sense and organizational consultants Picken and Dess, who have tried to identify the main “traps” surrounding strategic planning.  Here are seven specific ways in which even “smart” companies fall down.

1.    Missing the significance of changing conditions.  Environmental scanning must be continuous, and not just a preliminary to creating the strategic plan.  The well-known “Cross” pen, for example, used to be the top of the line leader in the market for quality pens.  Then unplanned-for competition in the mid-’80’s severely eroded the dozing company’s market share, and left it defending a mid-ranged price position.

2.    Basing strategies on flawed assumptions. Operating below conscious awareness, assumptions can be hard to spot, but bad assumptions virtually guarantee bad plans.  Organizations need to remain on alert for signs that strategies rest on erroneous foundations. Greyhound nearly went belly-up in the early ‘90’s, for example, when new management assumed that running a bus company was the same as running an airline.  The idea didn’t fly, unfortunately, and the organization came out of its tailspin only when it replaced this false operating premise.

3.    Pursuing a one-dimensional strategy.  Ironically, an organization’s greatest strength can be a potent enemy.  The temptation is to stick with a proven strategy, even when it’s outlived its usefulness or extended into territory where it no longer applies well.  In recent years, for example, Japanese automakers, exceptionally strong on technological innovation, have actually hurt sales by sticking to a plan of continually adding pricey high-tech features to new models.  The problem is that cars are already so loaded with features that a lot of consumers don’t want the new ones at the high costs.

4.    Diversifying for the wrong reasons.  Diversification has achieved mantra status among strategic planners, and factors heavily into most long-term organizational plans.  But branching out for its own sake, or because the organization is looking for a place to move surplus cash, is bad logic.  It’s easy to get lost on unfamiliar terrain.  Dole Food Co., long a successful fruit grower and processor, hurt itself when its plan pushed diversification into real estate development.  If mixing apples and oranges is bad, mixing pineapples and luxury resorts can be worse.

5.    Failing to coordinate core processes and functions.  Strategic plans must address all dimensions of the organizational operation needed to deliver the product to the customer at a price that the market will bear.  High-tech company Frox had outstanding engineering know-how and plenty of money when it set out to sell $5000 “smart” TV’s.  But it neglected to coordinate market research, quality assurance, and sales effectively, and couldn’t move enough TV’s to stay in business.

6.    Setting arbitrary and inflexible goals.  Sheer growth-related goals (“10% growth per year for the next five years”), popular in strategic  plans, can spell real trouble, inviting compromises of quality and ethics.  Bausch & Lomb hotly pursued double-digit growth well past the point that market competition would permit it.  The company pulled back from the brink of approaching disaster only when the Securities and Exchange Commission questioned management practices aimed at sustaining unreasonably high growth levels.

7.    Providing poor implementation leadership.  Plans can falter fast when leaders fail to execute on fundamentals.  In their speaking and writing, leaders are responsible for making frequent references to the strategic vision, for modeling of the values consistent with this vision, for the empowerment of people to execute the details of the plan, for excellent communication throughout the organization, and for, generally, a steady hand on the tiller.

 The Picken and Dess message is important.  Executives need to be careful throughout the planning process.  There are lots of ways to go down the wrong road, many “traps” to avoid. Yet the perspective on strategic planning itself remains essentially positive and upbeat.  

More serious concerns are voiced from other quarters.  Two of the top grossing management gurus around today, Stephen Covey and Tom Peters, have each registered serious doubts about the utility of strategic planning.

Covey (1991) raps strategic planning for relying on “old paradigm” top-down leadership, and trying to serve as a long-term “road map” for workers to follow.  This won’t do, says Covey.  In today’s fast-paced market environment, workers don’t need a road map, but a “compass” to assist in their own decision-making.  The magnetic North of the Covey compass is a widely shared vision.  What others call the first step in the strategic planning process, Covey says is really the only step that matters.  “[I]f our planning is centered on an overall purpose or vision and on a commitment to a set of principles, then the people who are closest to the action in the wilderness can use that compass and their own expertise and judgment to make decisions and take actions.” (p. 98)   Executives should not, then, devote their energies to developing a strategic plan as much as a strategic “orientation” among everyone within the organization.

Peters (1987, 1992) takes a similarly critical stance toward the traditional planning function.  Paradoxically, the same relentless pace of change that provokes the planning urge to begin with is the reason that long-term strategic plans are doomed to fail.  There is no longer any such thing as a good plan, Peters says, but only the possibility of a good planning process.  That process must literally be continuous, and it must include everyone in the organization.  But, ironically, it has precious little to do with long-term stability or fixed vision.  On the contrary, the process must embrace change as a permanent reality.  The “new” planning must be “bottom up” and “perpetually fresh.”  Extending beyond the mere “flattened hierarchy,” the only acceptable planning style matches the image of the successful organization as a “floating crap games of project teams.”  Successful executives must learn to “thrive on chaos.”  Unplanned “disorganization” in the “nanosecond” age is a given, and even “necessary.”

The most trenchant critic of long-range vision, however, may be Henry Mintzberg, whose Rise and Fall of Strategic Planning (1994) aims to deliver a knock-out punch to champions of planning.  Mintzberg’s tome is not readily summarized in a nutshell, but consider just three major drawbacks of a planned approach to managing the future.

1.  Strategic planning stifles creativity.  Planners has a tough time getting at the intangibles of effective performance.  Things like “passion,” “culture,” “creativity” and “calculated risk-taking” are inherently elusive dimensions of organizational life.  Yet they, more than staid and careful planning, are responsible for breakthrough insights and innovations.  The intangibles are, paradoxically, the well-springs of the very “successes” planners aim for.  Strategic planners hope to “institutionalize innovation,” but the evidence is that planning stifles more inventiveness and risk-taking than it nurtures.  “Planning by its very nature,” claims Mintzberg, “defines and preserves categories.  Creativity, by its very nature, creates categories, or rearranges preexisting ones.”

2.  Strategic planning lives in the past.  This contention is  inherently counterintuitive, given planning’s relentless focus on the future.  Yet the data used by planners to plot future courses of action are inevitably yesterday’s data.  It’s only the past that can be quantified and effectively captured in neat and precise categories to produce the “hard data” favored by planners.  Even much-touted “megatrends” are typically just current developments amplified and extended into an uncertain future.  History teaches harsh – and again, paradoxical – lessons here.  The same uncertainty about the future that prompts the planning urge in the first place virtually assures that actual events will depart from our scripts, taking us by surprise.  Strategic planners are like generals fighting the last war.  The strategies that feel “correct” and comfortable to them are yesterday’s strategies, not the breathtaking innovations that shatter old paradigms of thought and behavior.

3.  Strategic planning undercuts adaptability.  Again, a paradox: Planning is by nature risk-aversive and seeks to secure success by placing some controls on the unknown future.  But the evidence suggests that organizations that invest heavily in their plans – and the more elaborate the plan, the heavier the investment and the more tenacious the sense of “ownership” – readily let the plan come between the organization and the reality.  As a result, risk increases rather than decreases, control is lost, not won, and adaptation is reduced instead of enhanced.  Flexibility is the only really rational response to changing times, yet – as early proponents of planning not only admitted but insisted – planning schemes in fact reduce the flexibility of organizations.  Response time in the face of threat goes up, not down.

So what to make of all this?  Certainly not, I think, that we should stop planning, stop envisioning futures or trying to make our visions real.  But rather that we should do so in full awareness of the limits that reality places on our best efforts to control it.  More often than not, the winds of change blow in a different direction than what we’d like, and we have no choice but to bend to their force, consulting our “compasses,” as Covey might say, to see which way we should try to move now.  Perhaps Bernie Ebbers has it exactly right after all – managers should forego the grand plan, and see where “executing on the fundamentals” takes them.  If they can land up anyplace close to WorldCom’s level of success, they’d be doing alright, I’d say.

(This article could probably use an ironic footnote, as I lead off with a quote from Bernie Ebbers, former CEO of WorldCom:  Ebbers is doing 25 years now for fraud and various shenanigans related to the meltdown of the company!)  


Covey, S.  (1991).  Principle-centered leadership.  New York: Summit Books.

Fenn, D.  (1997, November).  No more business as usual.  Inc., 19,16, pp. 114-119.

Firstenberg, P. B.  (1996).  The 21st century nonprofit.  The Foundation Center.

Mintzberg, H.  (1994).  The rise and fall of strategic planning.  New York: Free Press.

Peters, T.  (1987).  Thriving on chaos: Handbook for a management revolution.  New York: Harper & Row.

Peters, T.  (1992).  Liberation management: Necessary disorganization in the nanosecond nineties. New York: Alfred A. Knopf.

Picken, J. C. and Dess, G. G. (1996).  Mission critical: The 7 strategic traps that derail even the smartest companies.  Irwin Professional Publishing.