STRATEGIC RATIONAL PLANNING

Strategic Rational Planning

Strategic Rational Planning

Thesis Statement

'Strategy should only ever develop from detailed rational planning'. It is indicated by newer research that strategic planning, under certain conditions is beneficial to higher performance. Across industries, strategic planning has constructive performance impacts, and exists jointly with self-directed actions, where responsive decisions are made by managers that improve performance under varying environmental circumstances.

Introduction

Strategic Planning is deciding about future decisions, either in the sense of defining what has to be decided or in the sense of deciding how to decide. However, the conventional wisdom of the 1980s converged on a proposition that the hard work of strategic planning was, essentially, a waste of time. The coup de grace was delivered by Mintzberg in his famous volume, The Rise and Fall of Strategic Planning (1994, p.321). Mintzberg declared that "strategic planning" was an oxymoron. Strategy and planning, he declared, were mutually exclusive.

Strategic planning is associated with a rational, direction-setting approach over the medium to long term. In particular, it assumes that an organization understands its strategic objectives (that is, it knows what it wants to do), it knows how to move towards those objectives (it knows the stages on the journey) and it has criteria to assess whether it has achieved those objectives (it has evaluation measures). Words that are associated with strategic planning are 'rational', 'linear' and 'predictable'. The Rational-Comprehensive Model implies these postulates: it is possible to analyze the costs and benefits of all the different courses of action and in order to identify a system of goals, intellectual abilities can be used.

However, these two aforementioned postulates have been widely criticized. It has been pointed out by critics how the idea that all alternatives and all their consequences are known is highly unrealistic. No decision maker (and no planner) has all the time, the information, and the cognitive abilities required by the rational model of decision making. The consequence is that the maximum that can be achieved is to strive for a limited form of rationality, organizing the decision through a sequential search of the different alternatives and choosing the solution that is considered “good enough”—that is, that meets the “satisficing” criterion. Often this implies the necessity of not taking into consideration the consequences of the preferred alternative for all the desirable goals, and therefore, it contravenes one of the basic requirements of rational planning—that is, the idea that everything should be coordinated. But even if the subjective aspect of the postulate is satisfied (i.e., the decision makers have all the relevant knowledge), one has to remember that because planning is about future decisions and behaviours, an inherent level of uncertainty exists, as external shocks can alter some basic elements and forecasts can prove radically wrong.

An even more radical critique of rational planning—albeit developed at a different and higher level of abstraction—is the one put forward by Niklas Luhmann (1995) in the context of his systems theory. Basically, says Luhmann, planning will never work as intended because “in planning the system ...