Henry Mintzberg Strategic Planning

[Jennifer Curtis]

Mintzberghas long been a critic of formulae and analysis-driven strategic planning. In The Rise and Fall of Strategic Planning, he remorselessly destroys much conventional wisdom and proposes his own interpretations.

First, the assumption that discontinuities can be predicated. Forecasting techniques are limited by the fact that they tend to assume that the future will resemble the past. This gives artificial reassurance and creates strategies which are liable to disintegrate as they are overtaken by events.

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Ian Wilson in the leadarticle argues convincingly that in this period of rapid change we should shift fromstrategic planning to strategic thinking and strategic management. Henry Mintzberg (1994),in an article appearing in the latest issue of the Harvard Business Review titled"The Fall and Rise of Strategic Planning," states that the label strategicplanning should be dropped because strategic planning has impeded strategic thinking.Mintzberg's argument is as follows:strategic planning is about analysis (i.e., breaking down a goal into steps, designing howthe steps may be implemented, and estimating the anticipated consequences of each step).Strategic thinking is about synthesis, about using intuition and creativity to formulatean integrated perspective, a vision, of where the organization should be heading. Theproblem is that strategic planning proponents believe that analysis encompasses synthesis;that in the best practice, strategic planning, strategic thinking, and strategy making aresynonymous. This belief, in turn, rests on the assumptions that prediction is possible andthat the strategy-making process can be formalized.Mintzberg argues, and Wilson wouldprobably agree, that predicting seasons of the year is simple, but predictingdiscontinuities, such as a technological innovation, is difficult, if not impossible.Moreover, Mintzberg maintains, formalizing a strategy implies a sequence from analysisthrough procedure to action. Certainly we do think in order to act; but also we sometimesact in order to think. We experiment; those experiments that work converge into patternsthat become strategies. To Mintzberg, the essence of strategy making is the process oflearning as we act. Formal systems can never internalize, comprehend, or synthesize hardinformation. Thus planning can not "learn." Mintzberg says, "Strategies candevelop inadvertently, without the conscious intention of senior management, often througha process of learning. . . . Learning inevitably plays a, if not the,crucial role in the development of novel strategies (p. 111)." Mintzberg sees strategic planning aspracticed, as strategic programming—articulating and elaborating strategies thatalready exist. When managers comprehend the difference between planning and strategicthinking, it is possible to return to what the strategy-making process should be:"capturing what the manager learns from all sources (both the soft insights from hisor her personal experiences and the experiences of others throughout the organization andthe hard data from market research and the like) and then synthesizing that learning intoa vision of the direction that the business should pursue (p. 107)." Mintzberg does not mean get rid of theplanners. Instead, those with planning responsibilities should make their contributionaround the strategy-making process rather than inside it. Planners should supply the datathat strategic thinking requires, should act as catalysts who support strategy-making byaiding and encouraging managers to think strategically, and should help specify theimplementation steps needed to carry out the strategic vision. Mintzberg distinguishes between plannersand managers. Planners do not have authority to make commitments, nor do they havemanagers' access to that "soft" information critical to strategy making.Managers are under time pressure to make decisions, to act, not reflect; they may overlookimportant analytical information. Planners have the time and the inclination to analyze.Their role should be to pose the right questions rather than to find the right answers,opening complex issues for thoughtful consideration. Planners should function as strategyfinders, analysts, and catalysts. Planners should encourage managers to think about thefuture in creative ways, to question conventional wisdom, to raise difficult questions, tochallenge conventional assumptions, and to help themselves out of conceptual ruts.Mintzberg cites Arie de Geus (1988), onetime head of planning at Royal Dutch Shell, in aclassic article titled "Planning as Learning," as arguing that the real purposeof planning is to change the mental models that decision makers carry in their heads.What are the implications of the Wilsonand Mintzberg arguments for college and university leaders? First, presidents,chancellors, provosts, and deans should focus on strategic thinking and strategicmanagement, on developing a shared vision for their school. Their colleagues with"planning" either in their title or in their assigned responsibilities shouldfunction in the role of planners as described by Mintzberg. They should not be told,"Draft the plan." Such commandments usually result in another document for thearchives.There are a number of tools available toplanners to assist them in helping senior administrators think strategically. Ian Wilsonpoints to visioning and scenarios. Perhaps Ian will present a seminar through the UNCInstitute for Academic and Professional Leadership on these topics. On the Horizon itself can serve asa tool. Our editorial board is charged with identifying signals of change in specificsectors of the macroenvironment (social, technological, economic, environmental, andpolitical) and suggesting their implications for higher education. Our lead articles focusmore broadly on what is on the horizon that can affect colleges and universities, as doour pieces in Commentary. The Situation Room focuses on emerging issues and on issuesmanagement techniques. We have begun a new section in this issue: The Internet. In thenext issue, we will began another section: Methods and Techniques. In the April issue forexample, Mark Champion and James Rieley will describe their experience with environmentalscanning and with Hoshin planning respectively as two approaches to effective planning. If you wish to contribute an article,please send me a 800-1200 word manuscript for our review. As always we welcome yourcomments and suggestions as to how we can make On the Horizon more useful to you.

Senior executives generally agree that crafting strategy is one of the most important parts of their job. As a result, most companies invest significant time and effort in a formal, annual strategic-planning process that typically culminates in a series of business unit and corporate strategy reviews with the CEO and the top management team. Yet the extraordinary reality is that few executives think this time-consuming process pays off, and many CEOs complain that their strategic-planning process yields few new ideas and is often fraught with politics.

We began our research by looking in depth at the strategic-planning processes of 30 companies, listed below. Some have highly regarded records of long-term strategic success, and some have made serious strategic blunders in recent years. The companies come from a variety of industries and represent a range of approaches to strategic planning. In some companies, we had extensive internal access, which included interviews with top managers. Other companies we analyzed "outside-in" using public information, interviews with former executives, earlier McKinsey research, and academic research.

We then tested the findings from these cases in workshops and discussions with people from approximately 50 additional companies around the world. Finally, McKinsey has worked quite intensively over the years with a number of companies to transform their strategic-planning processes, and in this article we have synthesized the lessons learned from that collective experience.

Why the mismatch between effort and result? Evidence we culled from research on the planning processes at 30 companies (see sidebar, "About the research") and work with more than 50 additional companies points to a common dispiriting explanation: the annual strategy review frequently amounts to little more than a stage on which business unit leaders present warmed-over updates of last year's presentations, take few risks in broaching new ideas, and strive above all to avoid embarrassment. Rather than preparing executives to face the strategic uncertainties ahead or serving as the focal point for creative thinking about a company's vision and direction, the planning process "is like some primitive tribal ritual," one executive told us. "There is a lot of dancing, waving of feathers, and beating of drums. No one is exactly sure why we do it, but there is an almost mystical hope that something good will come out of it."

But something good ought to come out of it. In a business environment of heightened risk and uncertainty, developing effective strategies is crucial. But how can companies reform the process in order to get the payoff they need?

The second goal is to increase the innovativeness of a company's strategies. No strategy process can guarantee brilliant flashes of creative insight, but much can be done to increase the odds that they will occur. In addition to formal planning at the business unit level, for example, Johnson & Johnson uses crosscutting initiatives on major issues such as biotechnology, the restructuring of the health care industry, and globalization in order to challenge assumptions and open up the organization to new thinking.

In our research, we didn't find a single company that was best at achieving both of these goals, although GE came closest. Instead, companies tended to be better either at the formal process of creating prepared minds or at the more informal process of driving strategic creativity. In addition, we found that some practices of companies in the sample were very specific to their industry or culture. What we will describe is thus not a single company's best-practice process but a composite picture, drawing ideas from a number of companies and focusing on what we have found to be the most transferable ideas.

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