Managing the Planning Process Chapter 5 Managing the Planning Process

Example of a “Manager” as Planner Blackhawk Down

Learning Objectives After reading this chapter, you should be able to: Identify the different elements of an effective plan. Analyze the advantages and disadvantages of planning, and identify how planning pitfalls can be avoided. Distinguish between formal and informal planning. Recognize the features of well-designed objectives. Identify the various types of action plans that managers can use to accomplish stated objectives.

Disney in Hong Kong: Bad luck or bad planning? Critical Thinking Questions focus on: What did it do right? Do wrong? Levels of planning applied? Planning horizon for its Asian operations? Advantages and disadvantages of establishing long term plans?

What is planning? The management function that: assesses the management environment to set future objectives; and maps out activities necessary to achieve those objectives. Planned actions require careful resource allocation. Plans must be accompanied by implementation guidelines.

Key Elements to a Plan Objectives Actions Resource Implementation

Benefits of Planning Assessment of external forces Develop a sense of direction and purpose Identifying the factors that affect the organization Encouraging participation Coordination of efforts Establishment of priorities Focusing attention on different time horizons

Benefits of planning (continued) Understanding circumstances contributing to past success or failure Ensuring the availability of adequate resources Establishing performance standards Supporting organizational control systems Developing “what if” scenarios Management development

The Pitfalls of Planning Poor forecasts of future conditions Plans imposed from above Planning as a self-contained activity Extensive bureaucratization Inflexible adherence to objectives and processes

Keys to Successful Planning Decentralizing the planning powers Using both numerical and judgmental methods Viewing planning as continuous and capable of adapting to change Avoiding paralysis of the analysis Concentrating on a manageable set of issues

Good and Bad Planning GOOD BAD Decentralize planning process Use numerical and judgmental methods Assess external forces Develop a sense of direction and purpose Identify factors that affect the organization Encourage participation Coordinate efforts Establish priorities BAD Poor forecast of future conditions Plans imposed from poor forecasts Planning as self-contained activity

Formal Planning and Opportunistic Planning Formal planning systems are designed to: Identify objectives; and to Structure the major tasks of the organization to accomplish them. Opportunistic planning involves: Programmatic actions triggered by unforeseen circumstances. It can coexist with formal planning and can help the formal plan function more smoothly.

The Formal Planning Process Involves Setting objectives Charting a course of action to meet the objectives Implementation

Setting Objectives Objectives are more general at the top and become more specific at the lower level Overall objectives of the organization reflect its mission Objectives should be specific and measurable. Objectives should be challenging and achievable Objectives should specify a timetable or deadline for accomplishment. Objectives should be prioritized.

Key Steps of the MBO Cycle 3. Formally Evaluate Extent to Which Objectives Were Met or Exceeded 1. Establish Mutually Agreed Objectives between Employee and Supervisor 4. Monitor Progress toward Achievement of Objectives (Ongoing) 2. Develop Action Plan to Accomplish Objectives

Charting a Course of Action Strategic Action Plans Tactical Action Plans Operational Action Plans

To be effective, a strategic action plan should meet the following criteria: Proactivity – The degree to which the strategic action plan takes a long-term view of the future. Congruency – The extent to which the strategic action plan fits with organizational characteristics and the external environment. Synergy – The integration of the efforts of various organizational subunits to better accomplish corporate-wide business objectives.

Two important aspects of tactical action plans: Division of Labor – The formal assignment of authority and responsibility to job holders. Helps ensure that tasks of jobholders are appropriate for accomplishing the department’s tactical action plan, which in turn should support the organization’s strategic action plan. Budgeting – Controlling and allocating funds. Variable budgeting Moving budgeting

A Typical Operating System Control Inputs Transformation Outcome Feedback Loop

Benefits of Operational Planning The opportunity to use feedback for continued incremental learning. The ability to visualize alternative types of operations – that is, alternative ways to use resources to create a product or service. The ability to predict the effects of modifications in operations on the efficiency of operations. The ability to evaluate the effectiveness of operations.

Project Planning Project: a set of tasks designed to achieve certain objectives Project planning: Identify tasks to be done Timeline (when tasks need to be done) Resources required Establish control process, e.g. document what has been accomplished so far.

Implementation A distinction Policy Rule Standing plans Single-use plans Policy General guide Rule

Implementation Means of implementation: Authority Persuasion Policy Feedback mechanism

A Six-Stage Approach to Facilitate Organizational Problem Solving Identify performance gaps. Identify tasks and work processes necessary for accomplishing the plan. Check for organizational congruence. If any in-congruencies or inconsistencies are found, intervene to create alignment in order to effectively implement the plan. Execute the plan. Learn from the consequences.

Mechanisms to Deal with Organizational Change Deal with power and politics Reduce individual anxiety and resistance Maintaining control during the transition period

As a Manager Engaged in Planning You Should: Keep a pulse for what customers want and be on the lookout for changing consumer desires. Ensure that planning in your area of responsibility is closely linked with the rest of the organization. Establish an effective goal-driven plan. Ensure that planning does not become a straightjacket. Engage others in plan design and implementation.

Disney in Hong Kong: Bad luck or bad planning? Responses to Critical Thinking Questions: They got some things right, others wrong Levels of planning – strategic decision to enter Asian market and Hong Kong as a first site, tactical decisions on design of the park, and operational plans such as hiring policies, discounting tickets, etc. Planning horizon includes expansion in Asia Long term plans require objectives, which establishes a criteria or benchmark (or success or failure); these objectives require review given emerging conditions

Focusing on the Future . . . P. 215 This is a useful synopsis of this chapter.

In-class exercises Bottom-up planning Contingency planning

Bottom-Up planning

Contingency planning: Minicase 5.2 (p. 219)

Venture Planning Joe to Go