Chapter 4 Planning

What Would You Do? Consortium created to compete with Boeing Slow progress, with potential How do you take more business away from Boeing What is your plan?

After discussing this section you should be able to: Learning Objectives Planning 1. discuss the costs and benefits of planning. 2. describe how to make a plan that works.

Costs and Benefits of Planning The Benefits The Pitfalls of Planning

The Benefits Intensified Effort Persistence Direction Creation of Task Strategies It Works!

Planning Pitfalls Impede Change & Prevent Adaptation Create a False Sense of Certainty Detachmen t of Planners

Blast From The Past Pericles and Planning Leaders must have a vision Planners must be close to events Plans must be flexible

How to Make a Plan That Works Set Goals Develop Commitment to Goals Develop Effective Action Plans Track Progress Toward Goal Achievement Maintain Flexibility in Planning Adapted from Exhibit 4.1

Setting Goals S pecific M easurable A ttainable R ealistic T imely

Goal Commitment The determination to achieve a goal Increased by: Setting goals through participation Making goals reasonable Making goals public Obtaining top management support

Developing Effective Action Plans For accomplishing a goal, these list the: specific steps people resources time period

Tracking Progress One method, setting: proximal goals - short-term distal goals - long-term Second method: gather and provide performance feedback make adjustments in: effort direction strategies

Maintaining Flexibility Option-based planning keep options open through simultaneous investment invest more in promising options Learning-based planning plans need to be continuously adjusted encourages frequent reassessment and revision of goals

After discussing this section you should be able to: Learning Objectives Kinds of Plans 3. discuss how companies can use plans at all management levels, from top to bottom, 4. describe the different kinds of special- purpose plans that companies use for change, contingencies, and product development.

Planning from Top to Bottom Vision Adapted from Exhibit 4.3

Planning from Top to Bottom (contd) Vision Mission Tactical Plans Management by Objectives Operational Plans Standing Plans Single-Use Plans Adapted from Exhibit 4.4 Top Managers Middle Managers First-Level Managers

Starting at the Top Vision statement of purpose enduring, inspirational, clear, and consistent with company beliefs and values Mission flows from vision more specific goal statements

Setting Missions Targeting set a clear, specific target Common-Enemy vow to defeat a rival Role-Model emulate a successful company Internal-Transformation strive to dramatically change the company

Bending in the Middle Tactical Plans specify how a company will use resources, budgets, and people to accomplish goals Management by Objectives develop and carry out tactical plans four steps discuss goals participatively select goals jointly develop tactical plans meet to review performance

What Really Works? Management by Objectives (MBO) MBO & Production 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Probability of success 97% 68% MBO is based on goals, participation and feedback. Companies that use MBO are 97% more likely to outproduce companies that dont!

Finishing at the Bottom Operational plans day-to-day plans Single-use plans cover one-time-only events Standing plans plans for recurring events three kinds policies procedures rules & regulations Budgeting

Special-Purpose Plans Planning for Change Planning for Contingencies Planning for Product Development

Planning for Change Stretch goals extremely ambitious goals initially employees dont know how to accomplish Benchmarking identify outstanding practices in other companies adapt them to your company

Been There, Done That Stretch goals are more than just demanding more from employees Give employees the tools to succeed Dont punish failure Steve Kerr on Stretch Goals at GE

Planning for Contingencies Scenario Planning Define the scope of the scenario Identify the major stakeholders Identify environmental trends Identify key uncertainties and outcomes of these trends Using steps 1-4, create initial scenarios Check each scenario for consistency and plausibility of facts Create contingency plans from each scenario

Planning for Product Development Aggregate product plans Four keys to faster product development cross-functional teams internal and external communication overlapping development phases frequent testing of product prototypes

Overlapping Product-Development Phases for a New Supercomputer Server January July January July January Block Diagram Evolution of System Specification Simulation ASIC and Board Design Hardware Mock-ups & Models Bring-up Full System Prototype Ship Date ConceptualizationSimulationImplementation Adapted from Figure 4.7

What Really Happened? Airbus set specific goals Built planes that were easier and cheaper to maintain, used the same cockpit, and were comfortable for passengers Used options-based planning Positioned itself through innovative new features, functionality, and lower costs.