The Planning School of Strategy Formation
The Planning School of Strategy Formation is one of the ten schools of thought on strategy formation, as proposed by Henry Mintzberg, Bruce Ahlstrand, and Joseph Lampel in their book "Strategy Safari." This school focuses on the idea that strategy can be developed through a formal, rational, and systematic process of analysis, planning, and implementation. According to the Planning School, strategy formation involves a structured approach, often led by top management, that relies on rigorous analysis and carefully crafted plans.
Purpose: The main purpose of the Planning School of Strategy Formation is to emphasize the importance of formal planning and analysis in the development of strategy. This school promotes a structured and systematic approach to strategy formation, which can help organizations identify their objectives, assess their resources and capabilities, and make informed decisions about their future direction.
Role: The role of the Planning School is to provide a perspective on strategy formation that emphasizes the value of formal planning and analysis. It offers a contrasting view to other schools of thought, such as the Cultural School or the Entrepreneurial School, which focus on the influence of organizational culture or the role of individual leaders. The Planning School underscores the importance of a deliberate and structured process in creating a successful strategy.
Components: The Planning School of Strategy Formation comprises several key components:
- Formal planning process: A structured and systematic approach to strategy development, often involving a series of steps, such as setting objectives, analyzing internal and external factors, formulating strategic alternatives, and creating implementation plans.
- Analytical tools and techniques: A variety of tools and techniques, such as SWOT analysis, PEST analysis, and scenario planning, which can be used to support the planning process by providing insights into the organization's strengths, weaknesses, opportunities, and threats.
- Top-down approach: A focus on the role of top management in leading the planning process, ensuring that strategic decisions are based on a comprehensive understanding of the organization's overall goals, resources, and capabilities.
Importance: The Planning School of Strategy Formation is important because it highlights the value of a structured and systematic approach to strategy development. By emphasizing the need for formal planning and analysis, the Planning School can help organizations make more informed decisions about their future direction, improve their strategic alignment, and increase the likelihood of achieving their objectives.
History: The Planning School of Strategy Formation emerged in the 1960s and 1970s, as organizations increasingly recognized the need for formal planning and analysis in response to growing complexity and competition. It gained prominence with the rise of strategic planning as a key management practice and was later proposed as one of the ten schools of thought on strategy formation by Mintzberg, Ahlstrand, and Lampel in their book "Strategy Safari," published in 1998.
Benefits:
- Structured approach: The Planning School promotes a structured and systematic approach to strategy formation, helping organizations to identify their objectives, assess their resources and capabilities, and make informed decisions about their future direction.
- Analytical rigor: By encouraging the use of analytical tools and techniques, the Planning School can help organizations gain a deeper understanding of their internal and external environment, allowing for more informed and effective strategic decision-making.
- Strategic alignment: The Planning School's focus on a top-down approach can help ensure that strategic decisions are aligned with the organization's overall goals, resources, and capabilities, increasing the likelihood of achieving the desired outcomes.
Pros and cons:
Pros:
- Emphasizes the importance of a structured and systematic approach to strategy development.
- Encourages the use of analytical tools and techniques to support informed decision-making.
- Helps to ensure strategic alignment and the achievement of organizational objectives.
Cons:
- May overemphasize formal planning and analysis, potentially neglecting the importance of organizational culture, intuition, and adaptability.
- Can be time-consuming and resource-intensive, particularly for smaller organizations or those with limited resources.
- May not be flexible enough to accommodate rapid changes in the external environment or unexpected developments, which could lead to outdated or ineffective strategies.
Examples to illustrate key concepts:
- A large manufacturing company facing increased competition in its industry decides to engage in a comprehensive strategic planning process. By conducting a detailed SWOT analysis, setting clear objectives, and developing a structured implementation plan, the company is able to create a strategy that addresses its weaknesses, capitalizes on opportunities, and positions itself for future growth. This example illustrates the value of the Planning School's structured approach to strategy formation.
- A mid-sized technology firm embarks on a strategic planning process, using various analytical tools and techniques to assess its internal and external environment. However, the planning process takes longer than expected, and by the time the strategy is finalized, significant changes have occurred in the market, rendering the plan outdated and ineffective. In this case, the Planning School's emphasis on formal planning and analysis may have been a disadvantage, as it did not allow for the rapid adaptation of the strategy to the changing environment.
In conclusion, the Planning School of Strategy Formation is a perspective that emphasizes the importance of formal planning and analysis in the development of strategy. While this school provides a structured and systematic approach to strategy formation, it may not always be the most appropriate method for all organizations or situations. The Planning School's limitations, such as its potential overemphasis on formal planning and lack of flexibility, should be considered when applying this approach to strategy formation. However, for many organizations, the Planning School's focus on a structured process, analytical rigor, and strategic alignment can be valuable in creating effective strategies.
See Also