The rise of Strategic Planning …
In tracing the history of strategic planning its worthwhile looking at some of the problems that plagued its early development. In the wake of World War II financial and administrative difficulties began to plague corporations in the West, prompting the hiring of management experts who introduced fiscal and process systems with other disciplines to chart the course of business over the next 20 years.
Corporations began to base their strategic plans primarily on financial data with spreadsheets, forecasting and setting budgets. Planning became little more than a budgeting exercise conducted once a year.
The problem with this kind of planning remained hidden in Australia and America because their post war economies were dominant.
In the decade of U.S. industrial dominance and Australian protectionism the results yielded by strategic planning didn’t matter much. However, as the 1970’s dawned, the challenge of the Japanese and the power of the Arab oil states revealed the weakness of the current planning models.
Other problems arose with the old business models as they ignored human irrationality in decision making and the actions of other players in the great games of politics and commerce.
One of these problems involved predetermination. ‘We believe we can predict the future.’ This line of thinking led to the “predict and prepare” method of thinking.
We now know we can’t predict the future and basing plans on this single line of thought can be disastrous.
Second was the fallacy of detachment which refers to planners removing themselves from the scene of the action. This is strategic formulation detached from implementation.
Third is the fallacy of formalisation: This is the melding of strategy into a binder which sits on the shelf and becomes detached from reality. As time passes it represents less and less of what the company does.
When I first started work in the Printing Industry, the company I worked for became a victim of the three fallacies mentioned above. They slipped from becoming the leading firm in their industry to becoming non-existent in a period of 10 years.
Beginning in the late 1970’s business thinkers began to focus on strategy and how decisions were made, and they began to connect this process of thinking to the real world, where strategy is played out.
In part 10 of Strategic Thinking we conclude with a six-step process that serves as a useful framework for strategy development.
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