Saturday, August 09, 2008

Mechanistic Management - the sometimes fallacy of planning

As a strategic consultant, I remain a supporter of effective planning. However, one of the interesting conclusions from Jim Collins' Good to Great was that planning did not appear to be of significance in performance terms - both good and great companies used the same planning techniques.

This would fit with my own experience. A key reason for this is the existence of what I have come to call mechanistic management, management that focuses on the application of defined processes and steps. .

Mechanistic management can work well in a stable environment. Indeed, it was in just such an environment - the growth wave of the immediate post war period - that Peter Drucker popularised the concept of strategic planning. However, in doing so, Peter Ducker made two key points.

The first was that planning was concerned with the futurity of current decisions - ensuring that future needs and directions were taken into account in now decision processes. The second was that planning was a process - what was important was the structured planning process, not so much the plan itself.

Planning can in fact do only so much. Nobody would build a bridge, plant or building without a detailed plan. Here we are dealing with physical processes that can be defined and plotted.

The position changes when we move into the world of gray created by changing technology, markets and economic conditions. Planning is still important in setting objectives, marshaling resources and identifying risks to be overcome. However, and as I suggested in my last post The resilient organisation, beyond this it is the capacity of the organisation to respond to the unexpected that really determines success or failure.

By their nature, plans are biased towards the known. In the face of change they become less effective and may become an impediment to success, even a threat to survival. This holds especially where the plan rather than the planning process has become central.

In mechanistic management, the plan becomes enshrined in stone - this is what we have to do, this is what we will report on, this is how we will be measured. Monthly reports, quarterly reports, individual performance reports all span out from the overall plan to create a rigid organisational skeleton. Divergences from plan become major offences. People strive to deliver on plan even though they may know that the plan itself is flawed.

We all know that the rigid centrally planned command and control economies of the communist era failed to deliver. I am not quite sure why we think that similar techniques will now work in modern organisations despite the evidence of past failure.

This is not an attack on planning as such. I said at the outset that I remained a supporter of effective planning. But what does make make for effective planning?

To my mind, planning is most effective where it is a continuous process, where the real output is not the plan as such but the process itself. In this environment, plans sit more lightly and continually adjust to take changing circumstances into account. Divergence from plan ceases to be an offence, but instead becomes a signal that the world may be changing.

It may be that all the companies in Jim Collin's sample did use the same planning techniques. However, their application is clearly different.

In Collin's assessment, good to great companies had an open questioning culture. They engaged in dialogue and debate, not coercion, they conducted autopsies without blame, they sought to improve. This is very different from the way planning techniques are applied in the world of mechanistic management.

No comments: