The Fall And Rise Of Strategic Planning Business Essay

The Fall And Rise Of Strategic Planning Business Essay Henry Mintzberg is Cleghorn Professor of Management Studies, at the Desautels Faculty of Management, McGill University in Montreal. His work has focused on the work of the manager, and how managers are trained and developed. The author or co-author of 15 books, Mintzberg is, perhaps, best known for his work on organizational forms identifying five types of organization: simple structure; machine bureaucracy; professional bureaucracy; the divisionalized form; and the adhocracy. He is also credited with advancing the idea of emergent strategy the idea that effective strategy emerges from conversations within an organization rather than being imposed from on high. Mintzberg is a long time critic of traditional MBA programs. His first book,  The Nature of Managerial Work  (1973) challenged the established thinking about the role of the manager, and is one of the few books that actually examine what managers do, rather than discussing what they should do. Other highlights include  The Rise and Fall of Strategic Planning (1994); Managers Not MBAs  (2004), and  Managing  (2009).This report presents overview of his major works. Introduction An engineer by training, he received a PhD from MIT before joining McGills faculty of management in 1968. He was the first Fellow to be elected to the Royal Society of Canada from the field of Management. He designed and developed the IMPM, the International Masters Program in Practicing Management, and a degree-level program delivered in six countries Canada, England, France, India, Japan and Korea. It is a degree program that focuses directly on the development of managers in their jobs and organizations. Henry Mintzberg equates the process of strategy making to the process of making pottery. The strategist is similar to  a craftsman, or potter in this case. Mintzberg says, The crafting image better captures the process by which effective strategies come to be. First, the potter may create a product that follows in the tradition of her past work, but she may also create a work that breaks away from tradition in a new direction. Similarly, strategies are patterns that are put into action over time; but strategies may emerge in a different direction than tradition has previously held. Second, strategy making must be a deliberate process-thought must precede action. But strategies can form as well as be formulated. Third, strategists do not necessarily have to be top management running an organization but removed from the inner-workings of that organization. Instead, like the potter is intimately connected with her work, strategists may be those most intimately connected with the compa ny and those products/services it sells. Strategists may be those on the front lines, so to speak. Fourth, the potter may fail to make one piece, but the lump that remains may be formed into something completely different. In the same way, strategies can emerge any time and at any place; errors themselves may become chances for opportunity. The image of a craftsman is someone who is dedicated, passionate, intimately involved with the materials, has a personal touch, has mastered the detail of their art, and is experienced. The strategist must also be someone who is involved and connected with their industry and who is personally involved with the industrial processes. Finally, just as a craftsman may see things that other people miss, the strategist must be able to see emerging patterns and guide them into place as strategies. Mintzbergs major impact on the management world began with his book,  The nature of managerial work which was published in 1973 and also a seminal article in Harvard Business Review,  The managers job: folklore and fact  which was written two years after the book. These two works established Mintzbergs reputation which showed research work done on what managers did, to successfully carrying out their responsibilities, which were substantially different from the most of the theories learnt in MBA classrooms. Mintzbergs management thinking is against the concept of having one or two clever theories within some narrow discipline. His approach is merely broad enough to involve virtually the study of everything that managers do and how they do it. His appeal was further enhanced by a belief that management is about applying human skills to systems and not applying systems to people. In all the articles of Mintzberg this belief is explained. In his article  The managers job: folklore and fact,  Mintzberg has set out the reality of what managers do. A single theme runs through the article and that is the pressures of the job drive that the manager carry to take on too much work, respond quickly to each and every stimulus encourage interruption, seek the tangible, decisions in small increments, avoid the abstract, make, and do everything abruptly. Mintzberg, in this article has stressed the importance of the managers role and the need to understand it thoroughly before attempting to train and develop those engaged in carrying it out. No job is more vital to our society than that of the manager. It is the manager who determines whether our social institutions serve us well or whether they squander our talents and resources. It is time to strip away the folklore about managerial work, and time to study it realistically so that we can begin the difficult task of making significant improvements in its performance. In  The nature of managerial work, Mintzberg proposes six characteristics of management work and ten basic management roles. As per him, these characteristics and roles apply to all management jobs, from supervisor to chief executive. The six characteristics are: 1. The managers job is a mixture of regular, programmed jobs and unprogrammed tasks. 2. A manager is both a generalist and a specialist. 3. Managers rely on information from all sources but show a preference for that which is orally transmitted. 4. Managerial work is made up of activities that are characterized by brevity, variety and fragmentation. 5. Management work is more an art than a science and is reliant on intuitive processes and a feel for what is right. 6. Management work is becoming more complex. The ten roles that he believes make up the content of the managers job are divided into three categories: 1. Interpersonal a)  Figurehead   performing symbolic duties as a representative of the organization. b)  Leader   establishing the atmosphere and motivating the subordinates. c)  Liaiser   developing and maintaining webs of contacts outside the organization. 2. Information a)  Monitor   collecting all types of information that are relevant and useful to the organization. b)  Disseminator   transmitting information from outside the organization to those inside. c)  Spokesman   transmitting information from inside the organization to outsiders. 3. Decision-making a)  Entrepreneur   initiating change and adapting to the environment. b)  Disturbance Handler   dealing with unexpected events. c)  Resource Allocator   deciding on the use of organizational resources. d)  Negotiator   negotiating with individuals and dealing with other organizations. The Structure of Organizations In his book,  The structuring of organizations, Mintzberg has identified five types of `ideal organization structures. Following are the more detailed view of organization types drawn up: The entrepreneurial organization: Having small staff, loose division of labor, have small management hierarchy, being informal with power focused on the chief executive. The machine organization  : highly specialized, large operating units, routine operating tasks, formal communication, elaborate administrative systems, tasks grouped under functions, central decision making and a sharp distinction between line and staff. The diversified organization: a set of semi-autonomous units under a central administrative structure. These units are called divisions and are centrally administered called as headquarter. The professional organization: found in hospitals, universities, public agencies and firms producing standardized products or services and doing routine work, this structure relies on the skills and knowledge of professional staff in order to function. The innovative organization: Mintzbergs definition of modern organization, flexible, rejecting any form of bureaucracy and avoiding emphasis on planning and control systems. Innovation achieved by hiring experts, giving them power, training and developing them and employing them in multi-discipline teams that work in an atmosphere unbounded by conventional specialism and differentiation. The missionary organization: Here, mission is counted above everything else. The mission is clear, focused, distinctive and inspiring. Staff readily identifies with it and shares common values. They are motivated by their own zeal and enthusiasm. Mintzberg defines, the following mechanisms, regarding the coordination between different tasks: 1. Mutual adjustment, to achieve coordination by the simple process of informal communication. 2. Direct supervision, achieved by having one person issue orders or instructions to several others whose work interrelates (as when a boss tells others what is to be done) 3. Standardization of work processes, achieves coordination by specifying the work processes of people carrying out interrelated tasks (standards developed in the techno-structure to be carried out in the operating core, as in the case of the work instructions that come out of time and motion studies) 4. Standardization of outputs, which achieves coordination by specifying the results of different work (developed in the techno-structure, as in a financial plan that specifies subunit performance targets or specifications that outline the dimensions of a product to be produced) 5. Standardization of skills and knowledge, in which different work is coordinated by virtue of the related training given to the workers (as in medical specialists, a surgeon and an anesthetist in an operating room, responding almost automatically to each others standardized procedures) 6. Standardization of norms, in which the norms infusing the work that are controlled, usually for the entire organization, so that everyone functions according to the same set of beliefs. According to the organizational configurations model of Mintzberg each organization can consist of a maximum of six basic parts: 1. Strategic Apex (top management) 2. Middle Line (middle management) 3. Operating Core (operations, operational processes) 4. Techno-structure (analysts that design systems, processes, etc.) 5. Support Staff (support outside of operating workflow) 6. Ideology (halo of beliefs and traditions; norms, values, culture) Strategy and planning The relationship between strategy and planning is a constant theme in Mintzbergs writing and his views on the subject are considered to be of contributed significantly to the current management thinking. In his 1994 book, The rise and fall of Strategic Planning, Mintzberg produces a criticism on conventional theory. He believes that there are some failures in traditional understanding of planning procedure. Processes the elaborate processes use to create bureaucracy and suppress innovation and originality. Data `hard data (the raw material of all strategists) provides information, but `soft data, provides wisdom: Hard information can be no better and is often at times far worse than soft information. Detachment Mintzberg dismisses the process of producing strategies in ivory towers i.e. he believes that effective strategists cant be made by people who are at a distance from the detail of a business. They should be the ones who have immersed themselves in it, while being able to abstract the strategic messages from it. He sees strategy not as the consequence of planning but the opposite: Strategies  illustrate the concept of the delicate, painstaking process of developing strategy a process of emergence that is far away from the classical picture of strategists grouped around a table predicting the future. He argues that while an organization needs a strategy, strategic plans are generally useless as one cannot predict two to three years ahead. 5 Ps of Strategy To develop understanding of strategy Mintzberg developed what is known as the 5 Ps of Strategy. These are: Strategy as  Plan Strategy as Intended Pattern Strategy as Emergent/Unintended Pattern Strategy as Position Strategy as Perspective Strategy as  Plan: Mintzberg defined it as some  sort of consciously intended course of action, a guideline (or set of guidelines) to deal with a situation.  The  example of Game Theory, where  Strategy is nothing but a complete plan: a plan that specifies what choices [the player] will make in every possible situation. Rebuilding Companies as Communities Community means caring about our work, our colleagues, and our place in the world, geographic and otherwise, and in turn being inspired by this caring. Tellingly, some of the companies we admire most-Toyota, Semco (Brazil), Mondragon (a Basque federation of cooperatives), Pixar, and so on-typically have this strong sense of community. Young, successful companies usually have this sense of community. They are growing, energized, committed to their people, almost a family. But sustaining it with the onset of maturity can be another matter: Things slow down, politics builds up, and the world is no longer their oyster. Community is sometimes easier to preserve in the social sector-with NGOs, not-for-profits, and cooperatives. The mission may be more engaging, and the people more engaged. But somehow, in our hectic, individualist world, the sense of community has been lost in too many companies and other organizations. In the United States in particular, many great enterprises, along with the countrys legendary sense of enterprise, have been collapsing as a consequence. The Fall and Rise of Strategic Planning When strategic planning was defined the mid-1960s, corporate leaders embraced it as the one best way to devise and implement strategies that would enhance the competitiveness of each business unit. For the scientific management pioneered by Frederick Taylor, this involved separating thinking from doing and creating a new function by having specialists like strategic planners. Planning systems were expected to produce the best strategies as well as step-by-step instructions for carrying out these strategies so that the managers could not get them wrong. Strategic planning has long since fallen from its pedestal. But even now followed by people as very few understand that strategic planning  is not  strategic thinking. Strategic planning often spoils strategic thinking, by causing managers to confuse real vision with the manipulation of numbers. This confusion lies at the heart of the issue i.e. the most successful strategies are visions and not plans. Strategic planning has actually been  strategic programming,  the articulation and elaboration of strategies, or visions, that already exist. Mintzberg says after understanding the difference between planning and strategic thinking, companies can get back to what the strategy-making process should be i.e. capturing what the manager learns from all sources (both the soft insights from his or her personal experiences and the experiences of others throughout the organization and the hard data from market research and the like) and then synthesizing that learning into a vision of the direction that the business should pursue. This doesnt imply that organizations, which have disenchanted with strategic planning, are needed to get rid of their planners or conclude that there is no need for programming. In fact, organizations should transform the conventional planning jobs. Planners should perform the role of providing the formal analyses or hard data required by the strategic thinkers and hence should make their contribution in strategy making process. Hence, planners should act as catalysts supporting strategy making by aiding and encouraging managers to think strategically. Thus, they can be programmers of a strategy, helping to specify concrete steps needed to carry out the vision. By redefining the planners job, companies will acknowledge the difference between planning and strategic thinking. Planning has always been about  analysis about breaking down a goal or set of intentions into steps, formalizing those steps so that they can be implemented almost automatically, and articulating the anticipated consequences or results of each step. This has been accepted by Michael Porter, who is known as the most widely read writer on strategy. Strategic thinking, is about  synthesis. It involves intuition and creativity. The outcome of strategic thinking is an integrated perspective of the enterprise, a not-too-precisely articulated vision of direction, such as the vision of Jim Clark, the founder of Silicon Graphics, that three-dimensional visual computing is the way to make computers easier to use. Such strategies cant be developed on schedule basis and cant be immaculately conceived. They should be free to appear at any time and at any place in the organization through the processes of informal learning that must necessarily be carried out by people at various levels who are deeply involved with the specific issues at hand. Crafting Strategy Imagine someone planning strategy. What likely springs to mind is an image of orderly thinking: a senior manager, or a group of them, sitting in an office formulating courses of action that everyone else will implement on schedule. The keynote is reason-rational control, the systematic analysis of competitors and markets, of company strengths and weaknesses, the combination of these analyses producing clear, explicit, full-blown strategies. Now imagine someone  crafting  strategy. A wholly different image likely results, as different from planning as craft is from mechanization. Craft evokes traditional skill, dedication, perfection through the mastery of detail. What springs to mind is not so much thinking and reason as involvement, a feeling of intimacy and harmony with the materials at hand, developed through long experience and commitment. Formulation and implementation merge into a fluid process of learning through which creative strategies evolve. My thesis is simple: the crafting image better captures the process by which effective strategies come to be. The planning image, long popular in the literature, distorts these processes and thereby misguides organizations that embrace it unreservedly. In developing this thesis, I shall draw on the experiences of a single craftsman, a potter, and compare them with the results of a research project that tracked the strategies of a number of corporations across several decades. Because the two contexts are so obviously different, my metaphor, like my assertion, may seem farfetched at first. Yet if we think of a craftsman as an organization of one, we can see that he or she must also resolve one of the great challenges the corporate strategist faces: knowing the organizations capabilities well enough to think deeply enough about its strategic direction. By considering strategy making from the perspective of one person, free of all the paraphernalia of what has been called the strategy industry, we can learn something about the formation of strategy in the corporation. For much as our potter has to manage her craft, so too managers have to craft their strategy. At work, the potter sits before a lump of clay on the wheel. Her mind is on the clay, but she is also aware of sitting between her past experiences and her future prospects. She knows exactly what has and has not worked for her in the past. She has an intimate knowledge of her work, her capabilities, and her markets. As a craftsman, she senses rather than analyzes these things; her knowledge is tacit. All these things are working in her mind as her hands are working the clay. The product that emerges on the wheel is likely to be in the tradition of her past work, but she may break away and embark on a new direction. Even so, the past is no less present, projecting itself into the future. In my metaphor, managers are craftsmen and strategy is their clay. Like the potter, they sit between a past of corporate capabilities and a future of market opportunities. And if they are truly craftsmen, they bring to their work an equally intimate knowledge of the materials at hand. That is the essence of crafting strategy. In this article, we will explore this metaphor by looking at how strategies get made as opposed to how they are supposed to get made. Throughout, I will be drawing on the two sets of experiences Ive mentioned. One, described in the sidebar, is a research project on patterns in strategy formation that has been going on at McGill University under my direction since 1971. The second is the stream of work of a successful potter, my wife, who began her craft in 1967. The Five Minds of a Manager The CEO of a Canadian company has recently complained that he was not able to get his engineers to think like managers. Such a complaint is common in nature, but behind it lays an uncommon important question: What does it mean to think like a manager? We dont see much attention paid to answer that question in later years. Many of us have become enamored of leadership so much that management has been pushed into the background. Now days, we dont see anybody aspiring to become a good manager; in fact everybody, wants to be known as a great leader. But we ignore that the separation of management from leadership is harmful. As we know that management without leadership encourages an uninspired style, which deadens activities. In contrast, Leadership without management encourages a disconnected style, which promotes hubris. Knowing the destructive power of hubris in organizations we should get back to old management. The only problem is that the plain old management is comparatively more complicated and hence, confusing. Managers are asked to be global and also to be local to collaborate and to compete in the market. Show change, perpetually to maintain order. Make the numbers even while nurturing your people. Now the question is how anyone is supposed to reconcile all this? The reality is that no one can actually do it. For becoming effective, managers have to face the juxtapositions so that they can arrive at a deep integration of these seemingly contradictory concerns. This means that managers must focus not only on what exactly they have to accomplish but also on how they have to think. Basically, managers need to have different mind-sets. Helping managers to appreciate this was the challenge they had set for themselves in the mid-1990s the time, when they had began to develop a new masters program for the managers for practicing. They had guessed that they cant rely on the usual format of the MBA education, which actually divides the management world into field like function of marketing, accounting, finance, and so on. Their intention was basically to educate managers who were coming out of such narrow mindsets. They wanted to have a new structure which would encourage synthesis than separation. They came up with a framework based on the five aspects of the managerial mindset, which has proved not only powerful in the classroom but also of utter importance in practice. Below, they have explained how they came up with the five managerial mind-sets. The Managers Job:  Folklore and Fact If you ask managers what they do, they will most likely tell you that they plan, organize, coordinate, and control. Then watch what they do. Dont be surprised if you cant relate what you see to these words. When a manager is told that a factory has just burned down and then advises the caller to see whether temporary arrangements can be made to supply customers through a foreign subsidiary, is that manager planning, organizing, coordinating, or controlling? How about when he or she presents a gold watch to a retiring employee? Or attends a conference to meet people in the trade and returns with an interesting new product idea for employees to consider? These four words, which have dominated management vocabulary since the French industrialist Henri Fayol first introduced them in 1916, tell us little about what managers actually do. At best, they indicate some vague objectives managers have when they work. The field of management, so devoted to progress and change, has for more than half a century not seriously addressed  the  basic question: What do managers do? Without a proper answer, how can we teach management? How can we design planning or information systems for managers? How can we improve the practice of management at all? Our ignorance of the nature of managerial work shows up in various ways in the modern organization-in boasts by successful managers who never spent a single day in a management training program; in the turnover of corporate planners who never quite understood what it was the manager wanted; in the computer consoles gathering dust in the back room because the managers never used the fancy on-line MIS some analyst thought they needed. Perhaps most important, our ignorance shows up in the inability of our large public organizations to come to grips with some of their most serious policy problems. Somehow, in the rush to automate production, to use management science in the functional areas of marketing and finance, and to apply the skills of the behavioral scientist to the problem of worker motivation, the manager-the person in charge of the organization or one of its subunits-has been forgotten. I intend to break the reader away from Fayols words and introduce a more supportable and useful description of managerial work. This description derives from my review and synthesis of research on how various managers have spent their time. In some studies, managers were observed intensively; in a number of others, they kept detailed diaries; in a few studies, their records were analyzed. All kinds of managers were studied-foremen, factory supervisors, staff managers, field sales managers, hospital administrators, presidents of companies and nations, and even street gang leaders. These managers worked in the United States, Canada, Sweden, and Great Britain. Strategy as Pattern Mintzberg defines strategy as  consistency in behavior, whether or not intended.  Strategy can emerge as patterns, which may be seen as the resulting actions. To prove this point, he gives example of Henry Ford who originally developed the Model T, which was the strategy to offer the car in the  black color, but by strategy as a pattern, this was an intended strategy. An unintended strategy, as a pattern can be seen with an example of IKEA who began to flat pack their furniture, where as the original idea for this was to borne of one of the companies designers which are trying to load a table into their car and when they realized that it wouldnt fit and hence, they would have to detach the legs of the table. At that time, they realized that customers would be facing the similar issue while purchasing their product, and as such a vital aspect of Ileas strategy it emerged unintentionally.http://louisdietvorst.files.wordpress.com/2011/10/emergent-strategy.jpg?w=481h=372 Strategy as Position Strategy as a position refers to the environment in which the organization operates in and the mediating force between the internal and external context. An example to justify this concept can be of organizations strategy towards dealing with critical environmental factors such as extreme heat, disposal of waste, use of green IT. Strategy as Perspective This aspect of strategy is concerned with how the organization itself sees the business  environment. For example, an organization will have an option of being the pacesetters, who is always seen at the bleeding edge of technology and who, sell their products based on advances of technology. Whereas another option would be to be followers, where organizations learn from the mistakes of the pace setter and hence, they adopt only proven technologies and are more  concerned  with the quality and reliability of products rather than bleeding technological edge. Examples to prove this is of the automotive industry, where it can be seen, how Ford has began the new Ford Focus market to be the technological leader in this product category. With the use of economies of scale Ford has managed to cheaply introduce technologies like Self-Parking, it is a technology associated with premium brands rather than Ford who is traditionally known for targeting blue-collar workers. Key works by Henry Mintzberg Books Managing.  FT Prentice-Hall, 2009 Management: its not what you think.  (With Bruce Ahlstrand and Josepeh Lampel). FT Prentice-Hall, 2010 Strategy bites back.  (With Bruce Ahlstrand and Joseph Lampel). Pearson, 2005 Managers not MBAs.  Berrett-Koehler, 2004 Strategy safari.  (With Bruce Ahlstrand and Joseph Lample) London: Prentice-Hall, 1998 The strategy process: concepts, contexts, cases (3rd ed).London: Prentice-Hall International, 1996 The rise and fall of strategic planning.  Hemel Hempstead: Prentice-Hall International, 1994 Mintzberg on management: inside our strange world of organizations.  New York: Free Press, 1989 Power in and around organizations.  Englewood Cliffs, NJ: Prentice-Hall, 1983 Structures in fives: designing effective organizations. Englewood Cliffs, NJ: Prentice-Hall, 1983 The structuring of organizations: a synthesis of the research. Englewood Cliffs, NJ: Prentice-Hall, 1979 The nature of managerial work.  New York: Harper and Row, 1973 Journal articles Key articles are given below, for a complete list from 1967 to date, with some links through to full text, please seehttp://www.mintzberg.org/articles The managers job: folklore and fact.  Harvard Business Review, 68 (2) Mar-Apr 1990, pp. 163-176. Originally published in 1975, the article includes a retrospective commentary by the author. Crafting strategy.  Harvard Business Review, 65 (4) Jul-Aug 1987, pp. 66-75 The fall and rise of strategic planning.  Harvard Business Review, 72 (1) Jan-Feb 1994, pp. 107-114 Rounding out the managers job.  Sloan Management Review, 36 (1) Autumn 1994, pp. 11-26 Musings on management.  Harvard Business Review, 74 (4) Jul-Aug 1996, pp. 61-67 Managing on the edge.  International Journal of Public Sector Management, 10 (3) 1997, pp. 131-153 The yin and yang of managing.  Organizational Dynamics, 29 (4) 2001, pp. 306-312