Monday, January 29, 2018

Why Corporations Love Strategic Planning: The Illusion of Control

Roger Martin has been a long-time critic of traditional strategic planning processes in many companies.  Several years ago, he wrote:

Virtually every time the word “strategy” is used, it is paired with some form of the word “plan,” as in the process of “strategic planning” or the resulting “strategic plan.” The subtle slide from strategy to planning occurs because planning is a thoroughly doable and comfortable exercise...This exercise arguably makes for more thoughtful and thorough budgets. However, it must not be confused with strategy. Planning typically isn’t explicit about what the organization chooses not to do and why. It does not question assumptions. And its dominant logic is affordability; the plan consists of whichever initiatives fit the company’s resources.  Mistaking planning for strategy is a common trap.  

Others also have been critical of annual strategic planning exercises.  Russell Ackoff once wrote,  “Most corporate planning is like a ritual rain dance: It has no effect on the weather that follows, but it makes those who engage in it feel they are in control.”  Indeed, human beings have a powerful need to feel a sense of control.  A sense of control actually has many positive benefits for people.  Some studies show that a strong sense of control fosters better mental and physical health.   Corporate planning exercises feed that need.  Of course, human beings are susceptible to what Ellen Langer calls the illusion of control, i.e. when we think we have much more ability to control outcomes than we actually have.  That illusion, as Ackoff suggests, drives a lot of the energy and effort poured into strategic planning.  


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