Strategic Planning: The Entrepreneurial Skill
PETER F. DRUCKER
"If we were not committed to this today, would we go into it?"
There has been a tremendous upsurge in long-range planning these last twenty years. The very idea was practically unknown a few decades ago. Now it is the rare large company (at least in the U.S. and in Japan) that does not have a long-range planning staff and elaborate long-range plans.
It is true that practically every basic management decision is a long-range decision— ten years is a rather short time span these days. Whether concerned with research or with building a new plant, designing a new marketing organization or a new product, every major management decision takes years before it is really effective. And it has to be productive for years thereafter to pay off the investment of men and money. Managers, therefore, need to be skilled in making decisions with long futurity on a systematic basis.
Management has no choice but to anticipate the future, to attempt to mold it, and to balance short-range and long-range goals. It is not given to mortals to do well any of these things. But lacking divine guidance, management must make sure that these difficult responsibilities are not overlooked or neglected but taken care of as well as is humanly possible.
The future will not just happen if one wishes hard enough. It requires decision—now. It imposes risk—now. It requires action—now. It demands allocation of resources, and above all, of human resources—now. It requires work—now.
The idea of long-range planning—and much of its reality—rests on a number of misunderstandings. The present and the immediate short range require strategic decisions fully as much as the long range. The long range is largely made by short-run decisions. Unless the long range is built into, and based on, short-range plans and decisions, the most elaborate long-range plan will be an exercise in futility. And conversely, unless the short-range plans, that is, the decisions on the here and now, are integrated into one unified plan of action, they will be expedient, guess, and misdirection.
“Short range” and “Long range” are not determined by any given time span. A decision is not short range because it takes only a few months to carry it out. What matters is the time span over which it is effective. A decision is not long range because in the early seventies we resolve on making it in l985; this is not a decision but an idle diversion. It has as much reality as the eight-year-old boy’s plan to be a fireman when he grows up.
The idea behind long-range planning is that “What should our business be?” can and should be worked on and decided by itself, independent of the thinking on “What is our business?” and “What will it be?” There is some sense to this. It is necessary in strategic planning to start separately with all three questions. What is the business? What will it be? What should it be? These are, and should be, separate conceptual approaches. With respect to “What should the business be?” the first assumption must be that it will be different.
Long-range planning should prevent managers from uncritically extending present trends into the future, from assuming that today’s products, services, markets, and technologies will be the products, services, markets, and technologies of tomorrow, and, above all, from dedicating their resources and energies to the defense of yesterday.
Planning what is our business, planning what will it be, and planning what should it be have to be integrated. What is short range and what is long range is then decided by the time span and futurity of the decision. Everything that is “planned” becomes immediate work and commitment.
The skill we need is not long-range planning. It is strategic decision-making, or perhaps strategic planning.
General Electric calls this work “strategic business planning.” The ultimate objective of the activity is to identify the new and different businesses, technologies, and markets which the company should try to create long range. But the work starts with the question, “What is our present business?” Indeed, it starts with the questions “Which of our present businesses should we abandon? Which should we play down? Which should we push and supply new resources to?”
This may sound like semantic quibbling—and, to a point, it is. But the confused semantics have led to confused thinking. They have tended to paralyze strategic decision-making rather than to mobilize for it. They are largely to blame for the failure of many large companies so far to obtain results from elaborate planning efforts.
Adapted from “Management: Tasks,Responsibilities,Practices”, P.89-94
