Strategic Planning Isn’t Dead-

It Changed
Ian Wilson

F OK MORE THAN 20 YEARS, SINCE ITS INTRODUCTION Strategic planning has changed dramatically since its
onto the corporate management scene in the early inception in the early 1970s. Having survived its original
197Os, strategic planning has been on a rollercoaster design flaws, it has evolved into a viable system of
ride. It has been, successively, a fad, an anathema, strategic management (or strategic thinking), In an
and just another management tool. It has bounced effort to be more specific abaut the nature and extent
around the corporate hiearchy in search of a of these changes, the author surveyed nearly 50
legitimate role and an appropriate home. Its corporations in a variety of countries and industries to
obsession with a succession of planning methodolo- determine their current practices and the changes that
gies has caused it to oscillate between quantitative have occurred over the past 5-7 years.
and qualitative tools in its analyses, between Among the more notable and important changes are
external and internal emphasis in its situation a marked shift of planning responsibility from staff to
assessment, between long-term and short-term focus tine managers; decentralization of strategic planning to
in its goals and measurements. In all of this, strategic business units [though corporate-level components
planning might be said to have reflected the retain key responsibilities); and vastly increased
turbulence, change, and uncertainty of the times in attention to the changing market, competitive and
which it has been evolving. technological environment.
Planning systems have become more sophisticated
in their selection of planning techniques. There is far
The Continuing Search for Planning less reliance on a single technique {such as the
growth-share matrix or the experience curve), and a
Effectiveness
greater willingness to use techniques (such as scenario
That assessment, however, is too kind. The fact planning and total quality management) that are less
remains that, in its early stages, strategic planning mechanistic in their approach and more sensitive to the
suffered from serious design flaws; and these flaws critical uncertainty of many of the variables that
came close to bringing about its early demise (see planning must address.
Box A: What Went Wrong?). By the early 198Os, Perhaps the most provocative finding, however, is
there was widespread disenchantment with the the growing emphasis on organization and cu$ure as
planning initiatives of the previous decade. The critical ingredients in the execution of strategy. This
reasons varied from company to company-over- change represents a recognition that the values,
elaborate processes and bureaucratic ‘spread’, staff motivation, and behaviour of the organization’s
preemption of the executives’ role, an emphasis on members are critical determinants of corporate
quantification over strategic insight-but focused performance-and so of success or failure in
mainly on the failure to achieve results (the so-called implementing strategy.
‘implementation gap’).
What has saved strategic planning from oblivion,
and powered the continuing search for planning process of thinking and rethinking the rapidly chang-
effectiveness, is the manifest need for a continuous ing conditions for corporate success in the light of:

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BOX 7: STRATEGIC PLANNING: WHAT WENT WRONG?
Strategic planning enjoyed a heyday of almost unquestioning corporate popularity for nearly a decade-from the late 1960s to about
1978-during which period no self-respecting chief executive officer (CEO) would dare appear before the Board of Directors without a
strategic planning system either in place or under development. Yet by the early 1980s executive disenchantment was rampant, and
Foriune editor Walter Kiechel was delivering a series of slashing attacks on the process (e.g. his articles on ‘The Decline of the
Experience Curve’ and ‘The Real World Strikes Back: Corporate Strategists Under Fire’). Criticism focused on ‘the failed promise’ of
strategic planning: companies had set up elaborate planning systems and devised sophisticated strategies, but little or nothing had
changed in corporate performance.
Why this sudden turn-around I am convinced that a major cause was the large, and too often indiscriminant, ‘follow-the-leader’
movement triggered by General Electric’s much-heralded movement into strategic planning in 1970-1971. Having been with GE at
that time, I witnessed the steady stream of corporate visitors, notebooks in hand, intent on absorbing the design and details of the GE
model, with little thought for the model’s appropriateness to their situations or for the cultural differences involved. These oversights
later came back, all too often, to haunt them.
More broadly, however, the causes of this failure stem from what I have termed ‘the seven deadly sins of strategic planning’ (at
least as it was practised during the 1970s).
7. The staff took over the process. This situation arose partly because CEOs created new staff components to deal with a new
function, partly because the staff moved in to fill a vacuum created by middle management’s indifference to a new responsibility,
and partly because of arrogance and empire-building. As a result, planning staffs all too often cut executives out of the strategy
development process, turning them into little more than rubber stamps, and ignored the fact that strategic planning is, and must
always be, an executive-not a staff-responsibility.
2. The process dominated the staff The process’s methodologies became increasingly elaborate. Staff placed too much emphasis on
analysis, too little on true strategic insights. Analyses thus proliferated, impeding decision-making and creating the
‘paralysis-by-analysis’ syndrome. Strategic thinking became equated with strategic planning, while documentation became more
and more elaborate. Jack Welch, the chairman and CEO of GE, described the outcome graphically:

The books got thicker, the printing got more sophisticated, the covers got harder, and the drawings got better.

Such a triumph of form over substance is well known to any observer of corporate bureaucracy.
Paradoxically, however, although the planning process became overtly elaborate and bureaucratic, in many cases it relied
excessively on a single technique or methodology-the experience curve, for instance, or the growth/share matrix. Given the
range of issues and factors that strategic planning has to deal with, such reliance was manifestly misplaced: no single
methodology could fulfil all needs, and this approach was doomed to failure.
3. Planning systems were virtually designed to produce no results. Perverse though this idea may seem, it was true for many
corporate systems. The main design failure lay in denying, or diminishing, the planning role of the very executives whose mandate
was to execute the strategy. As one critic noted, the attitude of many was typified by the angry retort of one executive. ‘The
matrix picked the strategy-let the matrix implement it!’ The other design fault was the failure to integrate the strategic planning
system with the operations system, resulting in a strategy that did not drive action.
4. Planning focused on the more exciting game of mergers, acquisitions and divestitures at the expense of core business
development. This problem stemmed in part from the temper of the times. But it also resulted from the inappropriate use of
planning tools such as the growth/share matrix. Above all, it came from a radical misperception about ‘cash cows’. The biggest
problem with portfolio planning involved the treatment of these mature businesses. The matrix called for a ‘harvest’ strategy, so
companies raised profit goals, curtailed investments, and tightened controls. In due course, morale dropped, action plans
languished, and the business failed to deliver its required cash flow. The vice chairman of a major manufacturing company
summed up the problem as follows:

In the 1970s. we may not have invested enough in some of our mature businesses. We just assumed that if a business was
in a slowly growing market, it was not a very good business. Now we understand much better just how profitable such a
business can be, even though its industry is growing by only two per cent. We have redefined the cash cow conceptand
are investing a lot of money in SBUs we used to call cash cows. [emphasis added]

5. Planning processes failed to develop true strategic choices. In their anxiety to prove that they were action-oriented, too many
companies devised planning systems that fell into the ‘ready, fire, aim’ trap. Planners and executives rushed to adopt the first
strategy that ‘satisficed’ (i.e. met certain basic conditions in an acceptable manner). They made no real effort to search for, or
analyse, an array of strategy alternatives before making a decision. As a result, companies all too often adopted strategies by
default rather than by choice.
6. Planning neglected the organizational and cultural requirements of strategy. No better example of this exists than the SBU concept.
The concept is wonderful for identifying and organizing the corporate entities appropriate for doing business in defined market
segments against a defined set of competitors. This focus, however, overlooks or shortchanges the internal differences among
SBUs. Thus, the process focused, rightly, on the external environment, but it did so at the expense of the internal environment
that is critical in the implementation stages.
Z Single-point forecasting was an inappropriate basis for planning in an era of restructuring and uncertainty. Despite their emphasis
on the crucial externalities of the business, and despite the establishment of some sosphisticated corporate environmental analysis
systems, companies still tended to rely on single-point forecasting. Scenario-based planning was the exception rather than the
rule. Unfortunately, in an age of uncertainty, single-point forecasting was-and is-inherently inaccurate. Plans that relied on it
suffered increased vulnerability to surprises, which abounded in the 1970s and early 1980s. Indeed it was planning’s perceived
failure to foresee, and plan for, the sharp recession of 1982 that nearly administered the coup de g&e to strategic planning.
There was a further problem with single-point forecasting. Because planning assumptions spelled out a single future, one that was
almost always some slight variation of an extrapolation of past trends, there was an inherent bias in favour of continuing a
‘momentum strategy’, on the theory that what had worked in the past would probably work in the assumed future. Nothing,
unfortunately, could have been further from the truth.

Long Range Planning Vol. 27 August 1994

cl the continuing globalization of markets and particularly) to their successful implementation.
competition, And using scenario planning has helped many
companies to become more resilient, to generate a
cl economic and industry restructuring,
fuller range of strategy options, and to be better
cl the growing strategic importance of technology, prepared to deal with the inevitable surprises of
an uncertain environment.
0 heightened uncertainty in the political and
economic environment, and This continuing search for improvement has pro-
foundly changed the character of strategic planning
0 ‘time compression’ resulting from an acceleration
so that it is now more appropriate to refer to it as
of change.
strategic management or strategic thinking. Where
In industry after industry, restructuring has become this search has led thus far is the subject of the next
the norm. The driving forces vary, but the outcome section.
is the same: a change in the nature of the game, in
the number and type of players, in the arenas in
which-and the scale on which-the game is played. The Survey of Current Practices
Restructuring mandates the need for corporate
In an effort to put some dimensions on the current
repositioning; and repositioning mandates the need
scene, I recently (Spring, 1993) surveyed nearly 50
for strategic thinking.
corporations in a variety of countries and industries
The need for strategic thinking has never been
(see Appendix: Companies Surveyed) about their
greater. Michael Porter, the Harvard Business School
current practices and the changes that have occurred
professor, made this point in a London Economist
in their organizations over the past 5-7 years.
article on ‘The State of Strategic Thinking’ (May 23,
Although the survey makes no claim to be a statisti-
1987):
cally accurate sample, the diversity and stature of the
Strategic planning in most companies has not contributed respondents does reinforce the significance of the
to strategic thinking. The answer, however, is not to findings. Also these findings agree with lessons
abandon planning. Instead, strategic thinking needs to learned in the course of my own and SRI’s extensive
be rethought and recast. What has been under attack consulting experience in this arena.
[is] the techniques and organizational processes which
The survey focused on five key lines of inquiry:
companies used.
1. The major changes in companies’ approach to
The search for planning effectiveness thus con-
strategic planning and strategic management over
tinues, on two levels: content, and process.
the past 5-7 years.
2. The most critical external and internal challenges
The most important is the search for the strategic
to successful strategic management.
ideas that will shape the vision, generate the com-
3. The major potential benefits they hope to gain
mitment, and drive the action of the corporation.
from strategic management, and the extent to
This is the substance of strategy and varies from
which these benefits have, in fact, been realized.
company to company.
4. Corporate-level strategic planning groups, their
The improvement in the processes by which
roles and reporting relationships.
these ideas are generated, agreed upon, and
5. The principal techniques employed in their plan-
implemented. Although this might seem to be
ning processes
merely the supporting infrastructure of strategy, it
is, in fact, far more than this. In a very real sense,
process and content are intertwined. As com-
panies have discovered, improvements in the
Changes in Emphasis and Approach
planning process can enhance the effectiveness of The major shifts in strategic planning during the
strategy. For instance, rebalancing the roles of 1980s have been toward increasing emphasis on the
executives and staff in the planning process can, externalities of the business and changing the place
by itself, make a great deal of difference, both of planning responsibility within the company (see
to the quality of the strategic ideas and (most Table 1). These are clearly the corporate responses

Strategic Planning Isn’t Dead-It Changed

 TABLE I, Major changes in tirategic planning/strategic management,

What have been the major changes, in the past 5-7 years, in your company’s approach to strategic planning and strategic
management?

Little or no change Major change Ranking

1 2 3 4 5 6 7
Increased role of line managers 1 5
4.22
Reduced role of staff
3.j3
Decentralization of strategic planning 4
to business units 4.b6

Increased emphasis on:

Market orientation 3
4.;5
Competitive analysis 2
4.72
Financial analysis I
3.91
Technology strategy 6
4.1;
Core competencies 1
4.78
Shareholder value
3.84
Contingency planning
3.;3
Greater use of modelling
2.64
Diminished emphasis on documentation
3.85
Shift away from planning cycle
(to more flexible schedule) 3.20

to the criticisms that brought strategic planning into ties and technology strategy which are more recent
disrepute a decade earlier, namely that the planning arrivals on the strategic planning scene.
models of the 1970s tended to be (a) overly con-
cerned with the manipulation of internal financial
Heightening the External Emphasis
data, and (b) largely staff-driven exercises.
Not surprisingly, in view of the radical industry and
Japanese respondents differed from their North
American and European counterparts in reporting market restructuring of recent years, more sophisti-
more change in their emphasis on core competencies cated executive attention to changing market and
and technology strategy, and less change in their competitive conditions-and to identifying and
emphasis on competitive and market analyses and in strengthening core competencies to deal with these
redefining the planning roles of managers and staff. conditions-has become the key to successful
One interpretation of this difference is that, 5 years strategic positioning. The great majority of respond-
ago, Japanese companies were already well- ents indicated that these were the two prime areas in
advanced in their market orientation, and so have which there has been the greatest change in their
devoted relatively more attention to core competen- planning systems. In most cases it has been not

Long Range Planning Vol. 27 August 1994

merely a matter of more detailed analysis and shifted from staff to line managers, and from corpor-
monitoring, but even more a culture change. ate level to business unit level. Both moves have
Executives have clearly heeded the advice of been made to deal with the problem that nearly sank
Tom Peters [‘Stay close to your customer’) and strategic planning-the lack of implementation.
Michael Porter (rethink competitive analysis) in The source of this problem can be traced to the
redefining the primary tasks of strategic planning. way in which strategic planning originated in the
And this book learning has been strongly, sometimes early 1970s. Like most new methodologies, strategic
brutally, reinforced by the lessons they have had to planning was introduced at the corporate level, and
learn from a business environment changing rapidly assigned to a new staff component. And like most
under the hammer blows of globalized competition, staff components in those days, this one rapidly took
new technology, economic uncertainties, rapid shifts on the trappings of bureaucracy: staff multiplied,
in government regulations, and the new demo- procedures became standardized, methodologies pro-
graphics of consumer markets. Indeed, this new liferated, and documentation became virtually an end
emphasis in strategic planning is reflected in many in itself. In the process, not surprisingly, strategic
of the new methodologies that have been adopted thinking was short-circuited; and line managers,
and in respondents’ conviction that ‘improved largely excluded from the process, disassociated
understanding of the changing business environ- themselves from its conclusions-and its execution.
ment’ is one of the primary benefits to be gained It is encouraging, therefore-and one of the
from strategic planning. This new emphasis, it must reasons that strategic planning has taken on a new
be said, is far more than a change in planning lease of life in recent years-to see that prime
methodology. Corporations are recognizing that they responsibility for developing strategy is moving to
must change their thinking and behaviour-the very the executives and business unit managers charged
essence of corporate culture-to deal with this new with its implementation, where it should have
environment, and to become truly what they always resided in the first place. For this reason alone, the
said they were: market-oriented. term strategic management now more accurately
It is all the more surprising, therefore, that while describes current corporate practice.
acknowledging the inherent uncertainties in these While the survey is ambivalent on the role of
externalities, corporations have done so little to documentation-nearly equal numbers of respond-
expand their efforts in contingency planning. Only ents say there has been either major or little or no
one-quarter of the respondents said they had made change in this regard-SRI’s consulting experience
major changes in this regard: and there is no con- indicates that the bulk and formality of planning
vincing case for the proposition that corporate documents have been reduced and no longer
efforts in this area were already so well developed dominate the process. While few companies have
that little or no change was required. The frequency gone as far as Jack Welch and GE in stripping away
of ‘shocks’ and surprises in virtually every industry the overlay of planning volumes, most now place
during the 1980s has evidently done something to much greater emphasis on the thinking behind the
increase decision-makers’ use of scenarios (see words and on focused executive dialogue on the
below, under ‘Techniques’), but little to change critical issues facing the business.
their ingrained tendency to rely on a go-for-broke
approach to strategy. it remains to be seen whether
the predictable surprises of the next few years- The Challenges for Strategic
whether in environmental policies, geopolitical turn-
arounds, or trade and economic restructuring-will
Management
succeed in forcing a recognition of the need for Having evolved from its purely planning focus,
attention to ‘what-if’ thinking and preparation for strategic management faces both external challenges
contingencies. with which it must grapple and internal barriers to
its successful execution. The replies elicited by this
Changing the Internal Locus of Responsibility survey provided few surprises as to the external
The survey confirms what observers have long challenges, but some striking assertions with regard
suspected: responsibility for strategic planning has to the internal problems.

Strategic Planning Isn’t Dead-It Changed

 TABLE
2. The challenges to successful strtfategicmanagement.

What, in your opinion, are the three most critical external, and internal, challenges to successful strategic management in
your company?

External challenges No. of mentions Internal challenges No. of mentions

Market shifts 21 Corporate culture 38

Competition 18 Management skills, commitment 19
Economic forces/restructuring 18 Financial challenges 18
Political change and government policies 17 Innovation 16
Technological change 12 Operartional problems 15
Environmental factors 8 Strategic planning process 11
Other social forces 7

External Challenges earlier SRI report (Rewriting the Corporate Social

When one analyses the responses to the question in Charter), the ‘power shift’ in the relationship
Table 2, the reasoning behind the increased external between the public and private sectors in many
emphasis in strategic management is immediately countries can be profoundly unsettling to corpora-
apparent. The tumultuous uncertainty of social, tions since it entails, simultaneously, the possibility
economic, political, and technological forces have of relaxed economic regulation, increased competi-
changed the rules of the game for most industries, tion, and heightened public expectations of corpor-
and companies’ planning efforts have had to adapt to ate performance.
deal with these changes. Collectively, the impacts of Economic forces and restructuring (18
economic, political, and competitive restructuring mentions)-In addition to traditional concerns about
dominate corporate thinking, and the evidence that the state of the economy, the level of interest rates
respondents cite to support their statements covers a and the volatility of foreign exchange rates, respond-
wide, but largely predictable, range of specifics (see ents cited the challenges of anticipating and dealing
Table 2). Perhaps the only somewhat surprising find- with the impacts of globalization and its accompany-
ing-surprising, that is, when one considers the now ing economic and industry restructuring. In the
common corporate mantra-the 1990s will be the process of restructuring, there has been a clear shift
‘decade of the environment’-is the relatively low in strategic management’s focus, emphasis and
emphasis given to environmental issues. Possibly, methodologies to speed the process of corporate
however, this is a change in corporate emphasis that adaptation to these changes.
has yet to be played out. Technological change (12 mentions)-The chal-
Political change and government policies (17 lenge here, according to respondents, lies not only in
mentions)-Government regulations and inter- the place and diversity of change itself, but also in
vention have long been a traditional corporate the scale of the corporate response needed to keep
anathema, viewed with the same inevitability that abreast of these changes. Among other things, they
the public ascribes to ‘death and taxes’. What is new cite institutional resistance to change, the rapidly
here is the degree of uncertainty that corporations increasing scale of investment required, and the
say they are encountering on the political scene-- problems of acquiring and evaluating truly strategic
uncertainty as to the future balance between intelligence from the massive data flows of the
national and regional interests in newly emerging ‘information explosion’.
trading blocs; uncertainty as to the outcome of many Competition and market shifts [combined total of
countries’ experiments with deregulation and more 39 mentions)-Arising out of political, economic,
market-oriented policies; uncertainty in the geo- technological and social changes, structural shifts on
political arena following the disintegration of the both sides of the market-the changing needs and
former Soviet bloc. Indeed, it is the instability and mix of consumers; the sources, strategies and
unpredictability of the political scene that com- intensity of competition-have forced planners and
panies cite most often in this regard. As I noted in an executives alike to devote more meticulous and

Long Range Planning Vol. 27 August 1994

sophisticated attention to interpreting the signals Problems-In these cases, the focus is on un-
from their customers and their competitors. (As desirable traits that need to be removed for
noted above, this new emphasis is more pronounced strategic management to be able to operate
in North American and European companies than in smoothly. For instance, respondents cited such
Japan.1 personal traits as risk aversion, executives’ ‘turf’
Environmental factors (8 mentions)-Survey concerns, and internal politics, and organiza-
responses give some indication of just how far most tional problems such as bureaucracy, poor com-
companies are from integrating environmental munications, and size as a barrier to change.
strategy into their overall business planning. Only These problems are obstacles both to the
eight companies cited the environment as a strategic development, and most particularly, to the im-
concern (despite a heavy representation of energy, plementation of strategy. One interesting observa-
chemical, and automobile industries in the sample); tion-which many planners and executives will
and in most of these cases the issue was seen share-Iotas that seemingly an organization is able
predominantly in terms of added costs rather than as to change radically only when it confronts a
a challenge to developing a proactive strategy to genuine crisis. In the absence of a real emergency,
secure competitive advantage. it might be necessary to instill a sense of impend-
Other social forces (7 mentions)-These mentions ing crisis-even an imagined one-in order to
are a small reflection of the growing impact of social shake up corporate inertia.
pressures on corporate performance. Urban crime General attributes-Underlying respondents’
and litigiousness, increasing public expectations and references to the general traits or attributes that
relationships with multiple stakeholders, and the strategic management should seek to instill in a
problems of dealing with other cultures in a globaliz- corporation were change and willingness and
ing economy, all represent non-traditional planning ability to respond to it. At the most basic level, the
issues which now have to be factored into the corporate challenge was seen simply as the need
management calculus of decision-making. to generate a ‘willingness to respond, quickly and
effectively, to change’. At the same time, as
Internal Challenges another company pointed out, there has to be
The responses to this particular question are, enough stability within the organization to pro-
perhaps a sign of the times. It is difficult to imagine vide a firm base from which to deal with change.
that a similar survey conducted 10 years ago would Most individuals become ineffective in a state of
have elicited, as this one did, twice as many referen- total flux, so balancing stability and change
ces to cultural as to financial problems in the path of becomes a key challenge for any executive who is
strategic success. But in 1993, with the current focus intent on a programme of ‘organizational trans-
on empowerment, John Kotter’s linking corporate formation’.
culture to performance, and Peter Senge’s writings ‘Learning’ and ‘empowerment’ came in for
on the ‘learning corporation’, such a response is less several mentions in this regard. Given the pace
surprising. It is, however, highly significant, and and complexity of change in their business
possibly the most important finding to emerge from environments, more and more corporations are
this survey. coming to see that:
The ‘culture challenge’-With 38 mentions,
planning is more a matter of continuous
culture clearly heads the array of corporate concerns
organizational learning (scanning, interpret-
in the field of strategic management. Virtually every
ing, and adapting to environmental change)
respondent cited some aspect of this challenge,
than it is of control,
although the interpretation varied considerably from
company to company. (Indeed, if one were to include corporate response to change can only be suffi-
in this category a number of mentions about ciently rapid, flexible and pervasive if respon-
management culture, which are currently listed sibility is pushed down into and throughout
under ‘Management skills and commitment’, the the organization, maximizing employee in-
coverage would be nearly 100 per cent.) In broad volvement and empowering them to take
terms, the references fell into one of three categories: action.

Strategic Planning Isn’t Dead-It Changed

 A Japanese corporation used an interesting In a few cases, respondents were concerned about
analogy drawn from anthropology in describing the senior managers’ role in the strategic management
culture shift they saw as necessary. The Japanese process-their willingness to participate fully in
culture, they noted, is fundamentally an agricultural strategy development; and their ownership of, and
one: what is needed now, and what they are aiming commitment to, the strategies that evolve from this
for, is a ‘mind change to a hunting culture’. What- process. These two problems are, of course,
ever the merits of the interpretation of the Japanese connected: without full participation in the develop-
character, this analogy is an interesting and provoca- ment of a strategy, no executive is going to be other
tive one, particularly if one focuses on the attributes than lukewarm in commitment to its implementa-
of a hunting band: relatively small size, independ- tion. Fortunately, the evidence suggests that these
ence, mobility, and team-orientation. problems are diminishing in their incidence as
3. Specific attributes-Respondents cited speed, responsibility for stategic management shifts from
flexibility, and enthusiasm as more specific staff to line managers.
attributes that need to be developed if strategy is to Financial challenges (18 mentions)-In this age of
move from paper to the marketplace. Streamlining intensifying competition, traditional financial con-
the organization structure can achieve only so much cerns rank high on the corporate agenda. More than
to achieve these qualities: a change of attitudes-and a third of the companies in this survey, citing these
behaviour-must also take place for these attributes concerns as being among the most critical challen-
to characterize corporate performance. That is why ges they face, recognized the need to:
culture change itself becomes a primary goal of
P reduce and control costs (both direct and over-
strategic management. Revitalizing the corporate
head),
culture has been an essential in Jack Welch’s vision
for the GE: stage one, relatively quickly accom- P improve productivity and profitability,
plished (in 3-4 years), involved the flattening of the
structure and slimming of the organizational ‘flab’; P sharpen investment focus, and
but stage two-the Work-Out programme to achieve Cl improve portfolio management.
radical culture change-will be, as Welch himself
has noted, a decade-long crusade. There is nothing surprising in these responses.
However, the importance of financial acumen and
Improved market- and customer-orientation still
controls to a company’s strategy is well illustrated by
rates high as an area for further change, despite all
the careful attention given, both by company execu-
the pronouncements and programmes of the past
tives and by the financial community, to the recent
decade. This in itself is an indicator, and an
replacement of chief financial officers at IBM,
admission, of the real magnitude of the effort
Kodak, and Chrysler. And the manoeuvring between
required to break away from the ingrained internal General Motors and Volkswagen over hiring
bias that has characterized corporate bureaucracy for J. Ignacio Lopez de Arriortua was clearly a battle
so long. for competitive advantage.
Management skills and commitment (19 Operational problems (15 mentions)-The
mentions)-In nearly half the responses, the quality appearance of operational problems on a list of
and role of top management itself emerged as a strategic challenges serves as a solid reminder that
significant challenge. The problem evidently stems strategic management is, or should be, concerned
from the narrow focus and operational background with both strategy and tactics. Indeed, five respond-
of top management, which are seen as antithetical to ents expressed concern over the lack of co-ordina-
the broad strategic view required for success in tion between operations and strategy, indicating that
today’s competitive battles. In a surprisingly frank these two systems still operate separately rather than
appraisal of the limitations of today’s senior manage- as meshed cogs in an integrated system. Other
ment, there were frequent references to a lack of linkage problems that were mentioned were those
vision and leadership, unclear [or uncommunicated) between production and marketing, and between
sense of strategic direction, and reactive (rather than R & D and operations. Taken together, these
the desired proactive) responses to change. problems reveal a growing dissatisfaction with

Long Range Planning Vol. 27 August 1994

traditional functional organization (and the there are gains in organizational clarity, drive and
problems of interfunctional co-ordination) and a efficiency that a sound approach to strategic
slow movement toward organizing instead around management can achieve. Responses to this survey
processes-‘business process redesign’ (see Table 4). make clear that companies have high and diverse
The innovation challenge (16 mentions]-Along hopes for strategic management, but also recognize
with speed and flexibility, innovation is perhaps the that they have still far to go before realizing these
most desired quality in competitive performance benefits to the full (see Figure 1).
these days. Most of these responses were concerned The three most highly rated benefits are:
with technological innovation (although there is
widespread recognition of the need for creativity in A clearer sense of strategic vision for the organ-
all aspects of performance), and stress the need, ization.
given the pace and global reach of technological Sharper focus, in planning and implementation,
development, to: on what is strategically important.
0 improve the monitoring of R & D on a world-wide Improved understanding of a rapidly changing
basis, business environment.
0 increase external technology acquisition (recog-
nizing that not even the largest corporation can Close behind them comes the still elusive goal of
be world-class in every aspect of needed improved integration of strategy and operations.
technology], It is instructive to relate these views of the desired
goals of strategic management to the critical challen-
cl speed new product development, and ges that companies had earlier identified:
cl improve management of the R & D portfolio.
To deal Ltrith the external challenges, strategic
The importance of this need is reflected also in the management’s benefits are seen as a better
growing emphasis now being placed on technology understanding of the dynamics of change in the
strategy [see Table 1) as an integral part of total busi- business environment and, hopefully, reduced
ness strategy. vulnerability of being blindsided by surprises.
Strategic planning process (11 mentions)-There However, reduced vulnerability remains exactly
is no longer the same obsession with process and that-a hope: and, whether from resignation or
methodology that there was 20 (or even 10) years lack of effort, reducing vulnerability remains a
ago; but there is still lingering concern over some lower rated priority and also the area in which the
aspects of the process. Particular challenges include least progress has been made to realize its poten-
maintaining the credibility of planning staff; keeping tial. Improved understanding of the business’s
in bounds the commitment of management time externalities, on the other hand, is one of the
required for a quality job; clarifying the respective three critical benefits, and one which has been
roles of corporate and business unit strategy; more fully realized than most.
improving the scanning and monitoring systems,
To deal IGth internal challenges, the list of
especially in the domain of competitive intelligence:
potential benefits is longer. In addition to clearer
and-as always-tightening the linkage between
vision and sharper focus, respondents cited the
strategic and operational planning.
cultural benefits of a heightened willingness to
change, greater flexibility of response, a better
balance between long-term and short-term goals,
The Benefits of Strategic and closer linkage between strategy and opera-
tions. Interestingly, three of these benefits-
Management and Their Realization clearer vision, sharper focus, and improved inte-
Clearly, the ultimate measures of strategic manage- gration-exhibit the largest gaps between
ment’s effectiveness must be stake-holder satis- actuality and potential, possibly once again
faction, and corporate vitality, profitability and underscoring the inherent difficulties in promot-
competitive positioning. However, short of that, ing cultural and organizational change.

Strategic Planning Isn’t Dead-It Changed

 Scoring*

Clearer sense of ‘vision’

Sharper focus

Improved understanding of
changing business environment

Improved integration of strategy

and operations

Heightened willingness to change

Better balance between long-term

and short-term goals

Reduced vulnerability to surprises

Greater flexibility of response

*Scoring: Potential benefit Secondary Primary

1 2 3 4 5

Extent realized Slight Fully

FWJREI. The benefits of strategic management.

I

The Role of Corporate Planning maintained a strategic planning capability at the

corporate level. And the components’ positioning is
Units
indicative of the perceived importance of their role:
Despite the decentralization of strategic planning to in half the cases, the planning component reports to
business units, a valid role for corporate planning the CEO (in some Japanese companies, to a senior
components remains. Overwhelmingly (there were management committee); in most remaining com-
only four exceptions), companies said that they panies, to a senior [or executive) vice president.

Long Range Planning Vol. 27 August 1994

 The functions of corporate planning groups (see other reporting companies is just under 10.
Table 3) reflect a division of responsibilities between Although reductions are in part the result of the
the corporate centre and decentralized business general downsizing of corporate staff, strategic
units. Appropriately, the key central responsibilities planning components in particular have shed
are judged to be: responsibilities (and, some would say, power), both
upwards to senior management, and downwards to
Identification and analysis of company-wide
business units.
strategic issues, and the development of corpor-
ate responses to them.

Development of overall corporate strategy, e.g. The Use of Key Techniques

portfolio investment priorities.
Ten years ago, one of the main criticisms of strategic
Drafting guidelines (e.g. economic and other
planning was its preoccupation with methodologies
assumptions, likely capital resource availability)
and its tendency to build the whole planning process
for executive approval, to assist strategic business
around a single methodology. Despite a continuing
units in the development of their strategies.
tendency to be drawn toward the latest fad in
On the other hand, planning appears to have methodology, process or approach, most corporate
outgrown its origins in the financial function, if the strategic planning now avoids the trap of over-
low ranking of corporate budgeting is a reliable dependence on a single ‘silver bullet’. Indeed, the
indicator; and its role as ‘corporate inquisitor’ in results listed in Table 4 suggest that, on average,
reviewing business unit plans also seems to have most companies employ four methodologies in their
diminished. Business development is more the process. (This finding should not be interpreted too
responsibiiity of decentralized business units, literally; but it does provide encouraging evidence of
whereas market and competitive analysis and a more sophisticated and comprehensive approach
mergers/acquisitions analysis is a shared function of to what is perhaps the most difficult task confronting
both corporate and business unit planning. management.)
The size of corporate planning staffs has slimmed The most frequently mentioned methodologies are
in recent years-a fact that this survey reflects. core competencies analysis and scenario planning,
Setting aside two major Japanese companies, each of with benchmarking close behind. The use of
which reported a staff of 70, the average staff size for scenarios has been growing slowly since its
introduction into the Royal/Dutch Shell system
TABLE3. Responsibilities of the corporate-level during the 1970s. More recently, it has received an
planning group. added impetus from the prevalence of truly surpris-
ing ‘shocks’ in the business environment and
Number of
responses* TABLE4. Principal techniques employed in strategic
For which functions is this component planning processes.
responsible? Yes No

0 Strategic issues analysis 40 1 General Little or

l Corporate strategy development 33 6 Technique/approach usage usage
0 Strategy guidelines for business 31 8
units 0 Core competencies analysis 26 10
0 Market/competitive analysis 24 17 0 Scenario planning 25 11
0 Business unit plans review 23 16 l Benchmarking 20 16
l Economic forecasting 21 20 0 Total quality management 16 20
0 Mergers/acquisitions analysis 20 17 0 Shareholder value analysis 16 20
0 Business development 16 25 l Value chain analysis 16 20
0 Modelling 14 24 l Business process redesign 12 24
l Corporate budgeting 6 33 0 Time-based competition 9 27

*Totals do not add to 46 since not all companies responded on Note: Only 36 out of the 46 companies completed this section of
each point. the survey.

Strategic Planning Isn’t Dead-It Changed

companies’ growing admission of the need to come strategic planning systems. However, the transition
to grips with uncertainty in planning. Core com- has progressed sufficiently far to have earned execu-
petencies and benchmarking are relatively recent tive acceptance of the important benefits of strategic
arrivals on the planning scene, and are the product management. This acceptance stems in part from the
of the new feeling of urgency to develop ‘best increasingly pressing need to think strategically
practices’ and an organization’s innate capabilities about the external and internal challenges confront-
in order to ensure competitive survival. The ing corporations; in part, from the increased involve-
relevance of these three methodologies to dealing ment, and hence ‘ownership’, of line managers in the
with the critical external challenges mentioned process.
earlier should be obvious. Compared with its record 10 years ago, strategic
So far, the spread of time-based competition and management is now a far more effective instrument
business process redesign has been decidedly for shaping the course of a corporation or a business
limited. This fact may, however, be due to the unit. This increase in effectiveness starts with much
relative novelty of these approaches. Certainly, a more sophisticated and holistic thinking about the
reading of current management literature suggests truly strategic issues, gains power from a more
that they are both destined for much greater usage in thorough and patient examination of options, and
the near future. gathers further momentum from more careful link-
ing of strategy to operational implementation. All
told, the emphasis is now on results, on truly making
Concluding Observations a difference in corporate performance, rather than on
making an impression on boards of directors and
Despite the limitations of this survey, its results do
shareholders.
lead to a number of overall conclusions about the
One indicator of this greater sophistication is the
current state of strategic management in the Triad
greater selectivity in the choice of planning tech-
countries. and these conclusions jibe pretty well
niques. There is far less reliance than there was lo-
with those reached by Henry Mintzberg and other
15 years ago on a single methodology such as the
observers of the corporate scene (see for instance,
growth-share matrix or the experience curve: now
Henry Mintzberg’s articles on ‘Rethinking Strategic
the usual practice is to employ an appropriate mix of
Planning’, Long Range Planning, 27(3), 12-30).
methodologies, with ‘appropriateness’ being deter-
First, and most important, strategic planning is
mined by the needs and planning culture of the
clearly transforming into strategic management.
corporation. A pronounced shift is also occurring to
That is, it is moving:
methodologies-such as scenario planning and total
away from a largely staff-driven exercise, heavily quality management-that are less mechanistic in
dependent on analytical methodologies and their approach and more sensitive to the critical
elaborate documentation, and focused on the uncertainty of many of the variables that planning
development of strategies; must address.
Perhaps the most provocative conclusion, how-
toward an executive-driven activity, balancing
ever, is the one already noted: the growing emphasis
‘hard’ (quantitative) and ‘soft’ (judgmental) tools
on organization and culture as critical ingredients in
and approaches, and focused on the implementa-
the execution of strategy. This emphasis has not
tion of strategies.
come about at the expense of external analysis:
The whole strategic planning process has driven indeed, this survey indicates a broad awareness of
down into the organization, with much of the the external challenges of today’s business environ-
activity taking place in business units rather than at ment. Rather, the attention to culture represents
the corporate level (although corporate planning perhaps the greatest departure from the past, and is
components are still the norm, albeit with truncated all the more surprising for being an essentially ‘soft’
responsibilities). factor in a process prone to rely on ‘hard’ analyses.
The evidence suggests that this transition is far ‘Culture’ is, in effect, the internal equivalent of the
from complete: most companies indicate that they customer-orientation in the corporation’s outward-
are far from realizing the full potential of their facing posture: it represents a recognition that the

Long Range Planning Vol. 27 August 1994

values, motivation and behaviour of the organiza-
tion’s members are critical determinants of corporate
performance-and so of the success or failure in
implementing strategy.

Appendix: The Companies Surveyed

Although small. this sampling of c,urporatt: ospori(:nu: (47
responses) cowrs a broad cross-section of companies, b!; global
region, industry, and size. The thoughtfulness of the rt:spf,nses
and thf: fact that the majority of companies have globally kncl\vI1
namt:s lend weight to the lessons from the survey conclusions.
Few interregional dift’erenws c:xisted in vie\v-point and ian Wilson is Principal of
r:xpr:rif:nc:e. Wolf Enterprises in San
Rafael, California. Pre-
viously he has been on the
The majority of respondents arc locatctl in the key ‘Triad’
strategic planning staff of
region-15 are in North America (llSA, Canada): 12 in Europe
(Eklgiurn, Finland. Germanq. Italy. Netherlands, Sorxvag, Spain.
General Electric Company
and ,Sn~ilzc:rlanct); anti 17 ill Japan. Only three come from othci (US) and a senior manage-
arc!as (Australia. South Africa, Tai\van). ment consultant with SRI
International.
Industry cfistribulioll
A wide diversity of industries is represented in the sur\rtry popw
lation, including resources (oil and gas. papw, aluniinium),
chemicals, pharmaceuticals. machine tools. office equipment,
eiectmnics, utilities (electricity. gas. t~lec:omnillnic:atio~is).
transportation, automobiles, shipbuilding, financial services,
consumer products and tIefence.

Size distribution

Size Number of companies

Number of employees
(thousands)
< 25 30
25 to 50 5
50 to 100 6
> 100 5

Sales (billions of dollars)

<l 10
1 to 5 20
5to 10 5
> 10 9

Note; Sales figures do not apply to two

government-funded organizations.

Strategic Planning isn’t Dead-It Changed