Magazine article American Banker

Planning Fury Winds Down: Strategic Planning Loses Its Fizz in Maturation Process

Magazine article American Banker

Planning Fury Winds Down: Strategic Planning Loses Its Fizz in Maturation Process

Article excerpt

Once upon a time in the corporate world, planning was everything. Everybody knew what it was -- a relatively simple exercise that revolved around the annual budgeting process.

Then, about 20 years ago, strategy was everything. A few creative management consultants transformed the way corporate leaders faced competitive realities. Executives needed help changing the way they and their companies behaved, and that meant big business for Boston Consulting group, McKinsey & Co., Booz-allen & Hamilton, and other resourceful organizations that responded to the demand.

Eventually, the notions of business planning and corporate strategy were merged into something bigger than the sum of their parts. Strategic planning became everything, specially in transitional industries. A chief executive officer had to embrace its precepts if he wanted to appear a good corporate steward. If he considered it all a bunch of hogwash, he wouldn't admit it for fear of alienating share holders, directors, and ultimately himself -- from his job.

Now al this has changed. By the early 1980s, strategic planning had fallen from its predestal.

While top executives routinely extol their ability to think strategically and get subordinates to act strategically, no longer do they universally accept that strategic planning is everything. No longer is it taken on faith that all organizations need someone titled Director of Strategic Planning who has unlimited call on the CEO's time and attention.

In other words, strategic planning, like many of the business activities that came under its practitioners' scrutiny, has grown and changed through a product life cycle. Now entering maturity, strategic planning as it was once practiced -- as an integral corporate staff function -- has gone into decline.

The army of planning specialists who came out of business schools and into those centralized corporate think-tanks has suddenly stopped growing. Top managers are questioning the return on this personnel investment. Born In Manufacturing

Strategic planning was born in the manufacturing industries and these are the places where it is farthest slong in its life cycle. Those industries have reason to be disenchanted with what strategy did for them.

Critics of the corporate planning profession point out that planning did not prevent the American automobile or steel industries from losing their competitive edges to the Japanese. Now that firms like U.S. Steel are redeploying assets in far-removed sectors such as petroleum and chemicals, strategies are definitely being followed.

But they are being set differently, often by a small committee of top executives supervised by the CEO himself. (Of course, once the plans are in place they are carried out by many individuals in business units that are not in the CEO's direct span of control.)

F. Kenneth Iverson, who took the bankrupt Reo Motor CAr Company and transformed it into Nucor Corporation, imposed radical changes in production methods to turn Nucor, a major steel producer, to profitability. He was not the only corporate president to tell the recent convention of the North American Society for Corporate Planning that he is the chief strategic planner in his company. Such messages may not be too comforting to the 4,100 mostly middle-level strategic planners who belong to NASCP and who would like to think that their own positions are secure.

It stands to reason that the financial services industry, because it came late to strategic planning, is not yet so far along in the life cycle.

At banks that have it, strategic planning is centralized and often blessed with representation at the senior or executive vice president level. If banks follow the progression of industrial companies, more effort in the future will be focused on permeating the entire organization with a strategic mind-set or culture. …

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