The

Planning
School
STRATEGY FORMATION AS A FORMAL PROCESS
Henry Mintzberg, Bruce Ahlstrand, and Joseph Lampel (1998)
 Lecture :
Dr. Eng. Sumarsono, ST., MT., OCP.

Presented By :
Ismail Nur Ariyanto 55719010001 | Opyn Devinta Mauretta 55719010002
Endit Wardito 55719010005 | Melchir A Suarliak 55719010007
Mintzbergs Ten Schools of Thought
The Planning School
The Planning School History

The Basic Strategic Planning Model

Premises of the Planning School

Strategic Control

The Seven Deadly Sins Of Strategic Planning

The Fallacies of Strategic Planning

The Critique of the Planning School

 Mintzberg’s Ten Schools of Thought

The The The The The

Design Planning Positioning Entreprene Cognitive
School School School urial School School

The The The The The

Learning Power Cultural Environmental Configurati
School School School School on School
 The Planning School

What Mintzberg defined Planning Schools

Is as a formal process that
The encompasses a rigorous set of steps
Planning from the analysis situation to the
School execution of the strategy
?
 The Planning School History

The planning school originated at the same time as the design school; its
most influential book, Corporate Strategy, by H. Igor Ansoff, was, like
that of the Harvard group, published in 1965.

The 1970s saw the publication of literally thousands of articles, in

both the academic journals and the popular business press, that
extolled the virtues of formal "strategic planning."

Peter Lorange, who attempted to "survey empirically based research on

the long-term formal planning process for corporate strategy " (1979:
226),
 Planning, Plans, and Planners

Planners and managers have different advantages.

Planners lack managers’ authority to make commitments, and, more
important, managers’ access to soft information critical to strategy making.
But because of their time pressures, managers tend to favor action over
reflection and the oral over the written, which can cause them to overlook
important analytical information. Strategies cannot be created by analysis,
but their development can be helped by it.
Planners, on the other hand, have the time and, most important, the
inclination to analyze.
 Plans as Tools to Communicate and Control

Why program strategy?

The most obvious reason is for coordination, to ensure that everyone in
the organization pulls in the same direction. Plans in the form of programs
—schedules, budgets, and so on—can be prime media to communicate
strategic intentions and to control the individual pursuit of them, in so far,
of course, as common direction is considered to be more important than
individual discretion.
 Planners as Strategy Finders

As noted, some of the most important strategies in organizations

emerge without the intention or sometimes even the awareness of top
managers. Fully exploiting these strategies, though, often requires that
they be recognized and then broadened in their impact, like taking a
new use for a product accidentally discovered by a salesperson and
turning it into a major new business. It is obviously the responsibility
of managers to discover and anoint these strategies. But planners can
assist managers in finding these fledgling strategies in their
organizations’ activities or in those of competing organizations.
 Planners as Catalysts

The planning literature has long promoted the role of catalyst for the
planner, but not as I will describe it here. It is not planning that
planners should be urging on their organizations so much as any form
of behavior that can lead to effective performance in a given situation.
Sometimes that may even mean criticizing formal planning itself
The Basic Strategic Planning Model
 The Steiner Model Of Strategic Planning

Premises Planning Implement & Review

Planning Studies

Fundamental Organizational
Sodo-Economic Purpose Medium-Range
Strategic Planning Short-Range
Programming and
& Plans Planning & Plans
Program
Organization Review
For and
Value Of Top Managers
Implementation Evaluation
Company Missions Goals/Targets Of of
Long-Range Procedures Plans Plans
Evaluation Of External and Sub Objectives
Objectives Policies Tactical Plans
Internal Opportunities and Sub Policies Sub
Strength Programmed Plans
Problem; and Company Strategies
Strength & Weakness

Feasibility Testing
 The Basic Strategic Planning Model

1. The objective-setting stage

Goals and objectives by the planning flow
tend to be simplified as a quantitative form.

Therefore, in this flow, a goal and goal will

tend to be in the form of numbers.
 The Basic Strategic Planning Model

2. The external audit stage

One of the most important activities in strategic

planning is reviewing or auditing the external
environment that can affect the company's
operations. The biggest element of an external
environmental audit is predicting what trends will
occur in the future.
 The Basic Strategic Planning Model

3. The internal audit stage

Because distinctive competences are judgmental
(determined by the analyst himself), the use of
formal / standard techniques usually makes use of
various checklists and tables. Here, sharpness is
needed so as not to be trapped in "empty
formality" in assessing the strengths and
weaknesses of the company.
 The Basic Strategic Planning Model

4. The strategy evaluation stage

Considering that the process of developing a
strategy involves so many analytical tools;
usually each analysis tool has its own focus.
Therefore, at this stage it is hoped that several
alternative strategies that can be implemented
will emerge. It is the alternative which is then
analyzed for its competition value, risk, outcome
(usually financial) in order to get a picture of the
best strategy that can be applied.
 The Basic Strategic Planning Model

5. The strategy
operationalization stage
At this stage the strategy model is generally very
detailed and implementation-oriented which is
limited by constraints. Usually in strategy
formulation, activities are divergent and open, but
in the implementation stage activities turn into
closed and convergent.
 The Basic Strategic Planning Model

6. Scheduling the whole process

One of the most important elements in the strategy

is the determination of deadlines at each activity
stage to be integrated in the form of an activity
schedule (time table). This is also needed to fulfill
the SMART strategic planning concept (specific,
measurable, achievable, reasonable, and
time frame).
 Annual Planning Cycle at General Electric

Long-Term International Drfat Drfat

Econimic Integration Corporate Corporate
Corporate Plan Forecase Plan Plan Plan
Development
Jan 30 Nov 14 Des 6

GMC
Review Of Sector Short Corporate Sector Corporate
General
Corporate Strategy Term Resource Budget Budget
manager
Perspective Review Target Review Review Review
Meeting

Planning
Challenges
Jun 25 Jul 9-16 Aug 1 Okt 24 Nov 5-7 Des 3
Jan 3-5
Sector Plan
Development Strategy Resouce Alocation
Sector Development
Planning Final Budget
Challenges Strategy
SBU Plan Development Resouce Alocation/Budgetting
Development
 Premises of the Planning School

• Strategies result from a controlled, conscious process of formal

planning, decomposed into distinct steps, each delineated by checklists
and supported by techniques.
• Responsibility for that overall process rests with the chief executive in
principle; responsibility for its execution rests with staff planners in
practice.
• Strategies appear from this process full blown, to be made explicit so
that they can then be implemented through detailed attention to
objectives, budgets, program, and operating plans of various kinds.
[Mintzberg et al. 1998]
 Strategic Control

1. Strategic planning
Here headquarters is involved in many of the key strategic decisions of the
individual businesses (for the sake of the corporation as a whole).
2. Financial control
This style is defined by minimal involvement of the center or corporate
office in strategy formation. Responsibility is devolved to the individual
businesses within the corporation.
3. Strategic control
This is a hybrid style, which involves both business unit autonomy and
promotion of corporate interests. Responsibility for strategy rests with
the division, but strategies must ultimately be approved by headquarters.
 Strategic Control

BRODENING STRATEGIC CONTROL

Intended Strategy Realized?
Yes No
Strategies need not be deliberate to
Deliberate Emergent be effective. As suggested in the
Yes Success Success matrix
(Hurrah For (Hurrah For
Realized Rationality) Learning)
Strategy
emergent strategies can be effective
Successful?
Failure of Failure of too, while many deliberate
Deliberateness Everiting (Try strategies, successfully
No implemented, have proved to be
(Efficient but again)
not Effective) disasters
 The Seven Deadly Sins Of Strategic Planning

The Seven Deadly Sins Of Strategic Planning

1. The staff takes over the process:
2. The process dominated the staff:
3. Planning systems were virtually designed to produce no results:
4. Planning focused on the more exciting games of mergers, acquisitions,
and divestitures at the expense of core business development.
5. Planning processes failed to develop true strategic choices:
6. Planning neglected the organizational and cultural requirements of
strategy:
7. Single-point forecasting was an inappropriate basis for planning in an
era of restructuring and uncertainty.
 The Fallacies of Strategic Planning

Fallacy of Three main mistakes in strategic planning,

Predetermin namely:
ation

1. Fallacy of Predetermination
Fallacy of in his writings in Harvard Business Review,
Detachment
[January-February, 1994a] Mintzberg called it
the Fallacy of Prediction. Not everything is
Fallacy of predictable, except for things that have a
Formaliza
tion
repetitive pattern such as seasons.
 The Fallacies of Strategic Planning

Fallacy of 2. Fallacy of Detachment

Predetermin often managers are separated from detailed
ation
and operational matters, something they
should be familiar with. When managers are
Fallacy of removed from these basics, managers fail to
Detachment
understand the whole process and deny
Frederick Taylor's concept of management
Fallacy of that processes must be fully understood
Formaliza
tion
before they are programmed. [see Jelinek,
1979].
 The Fallacies of Strategic Planning

Fallacy of
3. Fallacy of Formalization
Predetermin failure of strategic planning is the failure of the
ation
system to work better than humans. Formal or
mechanical systems often fail to match the
Fallacy of information developing in the human brain. The
Detachment system is capable of managing more
information, but unable to internalize, digest,
Fallacy of and synthesize it. Formalization refers to a
Formaliza rational sequence, but strategy making is a
tion
learning process that is in constant motion.
 Critique Of Strategic Planning

1. The fallacy of predetermination:

Assumes that the organizations can predict the future or assumes that the
environment remains stable.
2. The fallacy of detachment:
Strategy planners are detached from the ground. Effective strategy making
connects acting to thinking which in turn connects implementation to
formulation - this is missing in this school.
3. The fallacy of formalization:
The formal systems could certainly process more information, cosolidate it,
aggregate it, move it about. But they could never internalize it, comprehend
it, synthesize it.
 Conclution

 Notice that the design school considers the whole strategy before putting it into
practice. It is this property that makes it a prescriptive strategy, i.e., one where the
plan defines the actions.
 The planning school is another prescriptive school. It aims to divide the SWOT-model
into neatly defined steps, from analysis of the situation (and the SWOT) to the actual
implementation of the strategy. It is most often seen in urban planning, system theory
and socialistic systems.
 Although the planning school is very clear in establishing its plan of action, it
sometimes struggles to pick the correct direction.
 As in the design school, planning school practitioners are sometimes guilty of
planning in isolation, away from the realities of the market or the rank-and-file within
their organization.
 What’s more, planning school strategies rely on forecasts and predictions about future
circumstances. But this approach is inherently flawed.
 Conclution

 First, a single incorrect prediction can send the entire strategy off course. Second,
these kinds of plans require lots of information gathering, synthesis and analysis, and
this can take forever! Planning, therefore, can be slow moving and less active or
dynamic than other strategies.
 The planning school operates from the assumption that innovation can be embedded
into institutions. Once goals and objectives are clearly defined, you can start working
toward a precise plan that can fulfill your aims. In essence, it works like this:
◦ first, conduct a thorough analysis of your situation;
◦ second, develop a plan to address the situation in order to reach your goals; and
◦ finally, work out the exact steps that people in the organization will take to enact the
plan.
 Reference

Henry Mintzberg, Ltd., Bruce Ahlstrand, and Joseph Lampel (1998). Strategy safari: a guided tour through the
wilds of strategic management. Choice Reviews Online, 36(06), 36-3419-36–3419.

Mustamu (2008). Sepuluh Aliran Formasi Strategi (2): The Planning School Of  Thought.
https://mustamu.wordpress.com/2008/08/19/sepuluh-aliran-formasi-strategi-2-the-planning-
school-of-thought/ Last Access Oct 16th 2020