Critically evaluate rational planning as an appropriate way of developing an organizations strategy

 

Rational planning plays a critical role in the organizational success. Through rational planning, it is possible for managers of a company to come up with a realistic and executable organizational strategy. Different schools of thought exist that explain the process of strategy formation in a business. For example, in the design school, strategy formation is viewed as a process of organizational conception. In the planning school, strategy formation is interpreted as a formal process. In contrast, the positioning school is based on the assumption that strategy formation is an analytical process. Nevertheless, these theoretical strands share one characteristic: they all emphasize the importance of a strategy for the success of an organization. Differences arise only in regards to the process of coming up with the ideal strategy.

According to Mankins (2008), strategic planning in most business organizations no longer seems to matter. Mankins (2008) adds that the process is normally time-consuming and produces reams of data, but it rarely drives the decisions of top management or the overall strategy of the company. Based on Mankins’ observation, it seems that many companies have failed to propagate a link between rational planning and the actual development of an organization’s strategy. This paper provides a critical evaluation of rational planning as an appropriate way of developing a strategy for an organization.

The planning school views strategy formation in an organization as a formal process. During the 1970s, numerous publications emphasizing the importance of planning emerged in both the academic world and in popular business press. They addressed issues relating to the need for managers to adopt a formal approach in planning the future of their organizations. In these discussions, it was widely assumed that if the planning process was undertaken in the right way, an organization could end up entrench the ideal strategy.

Such discussions begged the question of whether formalization was a prerequisite for success in the formation of an organizational strategy. Whether or not it was a prerequisite, business scholars, practitioners, and commentators were promoting a practice that fits in with the traditional management education as well as business practices in government institutions and large businesses operating as private entities. In all these settings, there is a strict requirement for people to adhere to formal training, procedures, and analysis. There is also a tendency for matters of strategy to be handled by highly educated professionals and specialized departments that have direct access to top management. In other words, rational planning continues to be promoted as a component of strategic management.

Since its establishment during the 1970s, strategic planning literature has growth dramatically in terms of quantitative aspects. However, qualitatively, it has not grown much. This shortcoming has created a phenomenon where planning enthusiasts spend too much time positioning planning as an imperative for business success without providing a valid cause-effect argument. In other situations, the enthusiasts argue that business operatives need to look out for certain “pitfalls” that may impede them from coming up with a viable strategy for their organizations.

A major shortcoming of the idea of planning in the context of organizational strategy is that it is often promoted as an end in itself and not as a means to an end. At the same time, lack of research on how planning can actually work in practice acts as a major hindrance to this theoretical strand. In other words, there is a mismatch between planning and practical aspects of organizational implementation. To address this shortcoming, proponents of rational planning should undertake empirical studies that evaluate its usefulness for organizations. If a cause-effect relationship that links rational planning to suitability of organizational strategy is found to exist, then a major achievement achieve will be said to have been made. The findings of such studies would also provide specific information on which aspects of rational planning to capitalize on to achieve the desired outcomes.

To promote the notion of formal rationality in planning, there is a tendency for scholars to contrast “systematic” approaches with “haphazard” approaches. In this regard, the planning process is said to have been successful if elements of factualness, objectiveness, and logicality have fully been incorporated into a fact-finding mission aimed at establishing objectives and devising the best means of meeting those objectives. Again, too much emphasis on the inherent nature of the planning process at the expense of the intended outcomes reinforces the view that formal rationality is being propagated with so much fervour as if it was indispensable.

In the formal settings outlined in the planning school, rationality is rooted in analysis as opposed to synthesis. This means that states and processes need to be decomposed, or rather, to be reduced to their component parts. This paints a portrait of a formal process that is reductionist in nature. This approach seems counterproductive, given that the whole idea of planning arises from the need to integrate decisions. It is also for this same reason that the process of implementing the activities and procedures identified during planning has also been found to be problematic.

During planning, the implicit assumption is that the analysis will yield synthesis. In this sense, synthesis is understood to be the decomposition of entire organizational processes of strategy development into a series of carefully articulated procedures. Ideally, the rational planning process should provide a procedure in the form of a sequence of steps that must be followed to product integrated strategies. To present this idea in simpler terms, the concept of the “machine”, which underlies the operational success of the traditional manufacturing assembly line, may be used. For a product of the right quality to appear at the end of the production line, every component being produced by the machine has to be specified and assembled in exactly the order prescribed.

Upon decomposition, the various components that were analyzed during rational planning must be taken through articulation. Plans are the products of the planning process. Once these plans have been decomposed into objectives, strategies, sub-strategies, budgets, and programs, they must be labelled clearly and explicitly on a sheet of paper, preferably using numbers. Everything must be rendered explicitly in terms of all the processes involved and the consequences of each of them.

Many companies that adopt the rational planning model often fall into the trap of casting the net too wide in terms of level of analysis. Consequently, some of the information that they gather is never utilized by these companies. This is a major indicator of operational inefficiency that needs to be addressed. Aspects of logicality, objectivity, and rationality should be adhered to even at the preliminary stages of strategy formulation to ensure minimal wastage of resources.

According to Mintzberg, Ahlstrand, & Lampel (1998), most rational planning models often recommend strict adherence to rules at the level of decomposition but give people a freer hand at the level of implementation. One would expect organizational strategists to be given a free hand at the beginning of rational planning. As the strategy takes shape at the level of implementation, tighter controls should be introduced as a way of steering processes and procedures towards the realization of specific organizational goals. In light of this weakness, one may understand the rationale for the worrying phenomenon described by Mankins (2008) at the beginning of this paper. Mankins (2008) is concerned about the rampant disregard for strategic planning despite investing heavily in a time-consuming process that produces reams of data. Most of this data is rarely used as a basis for driving decisions of top management or the overall strategy of the company.

The argument that Mintzberg, Ahlstrand, & Lampel (1998) raise about the tendency by companies spending too much time decomposing strategies into component parts rings true especially when applied to the observation raised by Mankins (2008). Such companies end up gathering data that is not even needed in the development of an effective organizational strategy. To deal with this problem, very tight controls need to be introduced to ensure that unnecessary analysis of is not undertaken. Stricter rules and controls could also ensure that companies are efficient in the way they conduct research aimed at developing appropriate organizational strategies.

Another way of explaining Mankin’s (2008) concerns is by looking at the numerous strategic planning models that have been developed. Their existence has influenced real-world organizational practice in very profound ways. The models are so many that developers of organizational strategy must always contend with the serious challenge of identifying the best model for specific circumstances. Although all the models are based on the same basic principles, they are prone to misinterpretation because of differences in modes of explanation.

The first step is usually SWOT (Strengths, Weaknesses, Opportunities and Threats) analysis. The second step entails dividing it into clearly delineated steps. This is often followed by the articulation of each of these steps with different techniques and checklists. Finally, the objectives set on the front end are linked to the operating plans and budgets highlighted on the back end. In this process, misinterpretation may also occur because of the tendency by the strategist to undertake SWOT analysis in a subjective manner or to omit critical items on the checklist.

Lack of objectivity poses a serious problem in rational planning. According to Lynch (2009), conventional planners tend to be exhibit bias about objectivity, at least in terms of the way they understand this term. In many instances, it has become very common for planners to dismiss processes that are verifiably subjective such as intuition; in contrast, they tend to embrace processes that appear formally rational. An excellent example of this phenomenon is the planning process itself. This lack of objectivity reinforces the notion that any company that uses other methods of developing an organizational strategy such as intuition is “immature”. It also reinforces the perception that rational planning is most suited to large companies with a clearly defined management system that is understood at every management level. Such arguments lack objectivity because they are likely to favor large business organizations that are inclined to employ formal planning.

To promote objectivity, scholars need to defend rational planning not because it symbolizes rationality but because of what it accomplishes. In literature, planning is viewed as the ideal way in which practitioners can apply intelligence to social problems. The same concepts tend to be presented repeatedly; planners are required to be systematic as opposed to random, efficient as opposed to wasteful, and coordinated as opposed to disorganized (Henry, 2011). This is a warped conception particularly when viewed in the context of contemporary organizational realities. It lends credence to the scholarly observation that many strategists promote planning as an end in itself and not as a means to an end.

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