Wednesday 3 February 2010

Stefan Stern: The Death Of The Five Year Plan

You know you’re on to something when a respected columnist in the Financial Times echoes your thoughts on #Unplan. Stefan Stern argued in a recent column “Living strategy and death of the five-year plan” (FT, October 26 2009) that management teams are forgetting about grand visions and are instead focused just on survival. He argues the traditional approach to strategy – and ‘The Five Year Plan’ – seem to belong to another era.


“Is strategy dead? Chief strategy officers will deny it. Some strategy consultants may reject the idea, too. But, right now, markets are unpredictable. The economic outlook is uncertain. The world has changed. If old-style strategy formulation is not exactly dead, then it is hardly in the best of health”.

Stern cites research by Boston Consulting Group in a paper by senior partners Martin Reeves and Michael Deimler that advocates ‘adaptive advantage’ over traditional strategy. They write: “Organisations with adaptive advantage recognise the unpredictability of today’s environment and the limits of deductive analysis”.

Adaptive advantage means businesses have to react to constantly emerging problems and changing landscapes, rather than try and predict them. This view is shared by Lowell Bryan, a director at McKinsey who is quoted by Stern: “You have to give up the pretence that you can predict the future,” Bryan says. “This is about managing much more dynamically. It is a complex adaptive world, and leaders have to navigate their way through it rather than assuming away uncertainty, as people do in an annual budgeting process. How can you say today what the economy will be like even six months from now?...Strategy is really an evolving idea which develops over a long period, on a long and winding road. …And this new world calls for just-in-time decision-making.”

These extracts are copyright Financial Times.

2 comments:

  1. For the most part I strongly agree with your points here. It seems like you are moving to the concept of Complex Adaptive Systems however (perhaps not) and I find that concept often moves people to more sophisticated (they think) forms of planning with the assumption of control.

    You or your readers might find one of our blog posts from a while ago interesting - http://bit.ly/7V1MHG

    Thanks for the good post!

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  2. Thanks Tom, I'll be sure to check out the link

    ReplyDelete