Organizational Planning Tools
Organizational planning tools are the many theories, systems, programs, and processes available to an organization to facilitate the development of detailed plans for its structure, goals, and operations. The use of organizational planning tools is an important factor in the short- and long-term success of any organization, be it public or private, government or advocacy, profit or nonprofit. Because organizational planning requires both scientific analysis and human intuition, a number of tools have been developed in order to assist decision makers in determining which strategic, tactical, and operational possibilities are available to their organization, as well as which of these are the most likely to achieve the desired results. These include SWOT (strengths, weaknesses, opportunities, and threats) analysis and force-field analysis, which attempt to provide an overview of an organization's prospects for success in a given industry or market. Others, such as the fishbone diagram, decision tree, or Gantt chart, offer guidelines for making decisions or determining a course of action in the face of uncertainty.
The core purpose of any organizational planning tool is to facilitate the decision-making process and ensure that an organization's plan is appropriate to its size, structure, and capabilities. There are three primary areas of focus: strategic planning, tactical planning, and operational planning. Strategic planning refers to the determination of broad, long-term (beyond five years) organizational goals and objectives, such as the types of products or services to offer and the expected market for those products. Tactical planning refers to the development of structures and methods by which organizational goals are achieved in the medium term (typically three to five years), such as the types of machinery and materials that will be used in the production process or marketing strategies to maximize sales. Operational planning refers to the determination of day-to-day processes and procedures in the short term (one year or less), such as the number of workers and managers assigned to a specific department or project, and the determination of their roles and responsibilities.
Effective organizational planning requires leaders and managers to recognize and adapt to constantly changing external factors, such as market changes, increased competition, evolving technology, and government regulation. While advances in technology and computer software have allowed the development of increasingly complex and sophisticated planning tools, decision makers also face the inherent limitations of such tools and the basic need for human involvement, influence, and intuition in their application.
Historical BackgroundOrganizational Planning in the Ancient World
The setting of goals and objectives and the division of labor and responsibilities trace their origins to the very birth of human civilization. From the Near East to North America, ancient cultures developed rudimentary forms of planning to ensure the resources and defenses necessary for their survival. As populations grew and people began to live collectively in cities, the need for advanced planning became even more important in order to ensure supplies of food, water, and other resources and to protect resources and develop contingency plans in the event of a crisis. The spread of writing among ancient cultures soon led to the development of the calendar. One of the first organizational planning tools, the earliest known calendar was found in Aberdeenshire, Scotland, dating to approximately 8000 BCE. The calendar allowed people to more closely integrate goals and objectives with environmental and seasonal conditions.
The emergence of the first city-states in Mesopotamia in 3000 BCE and, later, Greece, required Page 240 | Top of Articlethe development of increasingly complex planning to integrate the requirements of the city (such as food and raw materials for trade goods) with the agricultural and gathering capacity of the adjacent countryside. In the same way, the tasks required of planners grew exponentially as city-states evolved into empires. Each territorial addition not only compounded new planning requirements but also changed the relationship between existing administrative and economic units, necessitating further refinement of planning. The Sassanian Persian Empire (224–651 CE), for example, developed complex institutions that allowed for the centralized control of a vast territory from the Levant (a region in southwestern Asia consisting of parts of modern-day Syria, Lebanon, Israel, and Jordan) to the borders of India, covering millions of inhabitants. These institutions were responsible for managing and directing agriculture and husbandry in the river valleys of Persia, integrating traditional trade routes from the Far East with markets in the West, and creating efficient systems for taxation. The Sassanid system of centralized planning and control influenced a number of succeeding empires and kingdoms, particularly that of the Romans.
The highly effective planning of the Roman Empire, which made possible the construction of technically advanced roads, buildings, and aqueducts, was considered by many client states to be the greatest advantage of Roman rule (although Roman forces were often content to allow territories under their control to manage their own day-to-day operations). In most cases, the engineering marvels attributed to the Roman Empire were built and maintained by the Roman army, whose own advanced organizational planning allowed for the construction of permanent roads that crossed the empire and fortified camps that eventually grew into many of the great cities of post–Roman Europe. While organizational planners in the Sassanian and Roman Empires often relied on mathematical calculations to determine their objectives and strategies, much of the planning performed during this period was based on the intuition and judgment of a handful of experienced leaders.
The end of Roman authority in the West after 476 CE led to an immediate decrease in the use and sophistication of planning tools. Suddenly bereft of the centralized planning and authority to which they had become accustomed over the previous centuries, most areas of Europe were suddenly required to improvise new methods of planning unique to their own specific geographic, economic, and demographic conditions. Mainland Europe, the areas that would one day evolve into modern European states such as France, Germany, and Spain, focused primarily on the organization of agricultural production, a vital component in the survival of any state. Areas at the periphery of the former empire, around the Mediterranean and the Levant, devised tools to support and encourage trade with the East, as well as develop permanent trade routes and institutions within Europe.
While the rise of trade and manufacturing guilds (association of works involved in the same trade) in Europe during the 11th and 12th centuries led to an increase in the sophistication of planning methods and tools, major advancements did not take place until the Industrial Revolution of the 18th and 19th centuries. This era saw a dramatic increase in the size and scope of industrial manufacturing and the demand for consumer goods. Existing theories and tools were incapable of encompassing the size and complexity of new production methods. As industrial production capacity grew through the late 19th century, improved methods for the scheduling of production, management of supply chains, and distribution of labor were developed to aid producers in increasing efficiency.
This process was given a major push forward by the work of several individuals, chief among them Frederick Winslow Taylor (1856–1915). Taylor was the first to apply scientific principles to organizational planning by observing the physical activities of both workers and managers and developing a number of theories and processes to aid both groups in increasing their efficiency and effectiveness. His colleagues and successors include Henry Gantt (1861–1919), who created the Gantt chart, a symbolic representation of production scheduling. Taylor, Gantt, and others helped develop the scholarly field of scientific management. Over the next decades, as producers continued to pursue ever-higher Page 241 | Top of Articlelevels of production efficiency, the field continued to grow in size and influence.
The pace, breadth, and complexity of organizational planning was greatly increased during World War II (1939–1945). The demand for war materials required industrial production to reach unprecedented levels of capacity and efficiency. The increased role of governments in securing and allocating resources, and determining the type and pace of production, led to a period of partnership between private industry and public leaders. This in turn led to exponential growth in industrial production, particularly in the United States, where production facilities and transportation infrastructure were unharmed by the war. This new level of capacity and efficiency continued after the war's end, allowing the United States to recover economically as well as aid other nations in physical and economic reconstruction.
Over the next three decades, the increase in global demand for manufactured goods and services and the growth of international competition fueled producers to continue to refine their operations and productions methods. They strove to cut costs, reduce waste, and increase capacity. This trend was initially supported by the growth of academic and professional disciplines for many elements of production, such as quality control, operations management, and organizational planning. A number of important figures emerged during this period, including German American psychologist Kurt Lewin (1890–1947), who developed a process known as force-field analysis, which enables close scrutiny of the various forces that assist or hinder the accomplishment of organizational goals. Another important figure was Japanese engineer and theorist Kaoru Ishikawa (1915–1989), who introduced the use of fishbone diagrams (named after their distinctive shape resembling the skeleton of a fish) in order to determine the possible causes of an undesirable event or product defect.
The advent of the digital age in the late 1980s fundamentally changed the landscape for organizational planning and planning tools. Faster, more efficient computers and the creation of sophisticated and specialized computer software helped improve the speed and efficiency of data collection, made possible the creation of complex graphics and presentation software, and helped develop a communications infrastructure that encouraged real-time communications and feedback. All of these innovations have aided both the efficiency and Page 242 | Top of Articleeffectiveness of planners and decision makers. Advancements have continued, as increased global interconnectivity and market interdependency have demanded more effective planning. In the early 21st century cloud computing and mobile technologies allow planners to access relevant information and communicate with team members at all hours and from any location.
Issues and ImpactsStrategic Planning Tools
The most basic type of organizational planning is strategic planning, the identification of an organization's long-term goals and objectives. A fundamental component to the creation of any organization, strategic planning defines the organization's purpose and develops the administrative structures and processes best suited to achieve its goals. Strategic planning is an ongoing process that continues throughout the life of an organization, refining and adjusting goals to reflect sudden or unforeseen changes in market or production conditions and adapting processes and guidelines to maintain efficiency and effectiveness in the face of changing conditions. Strategic planning tools can be either qualitative (intuitive; for example, gathering information in the form of staff members' subjective opinions and ideas) or quantitative (scientific; for example, assessing data sets based on probabilities of potential scenarios, their associated revenues, and costs).
SWOT analysis is a strategic planning tool that requires decision makers to chart the strengths, weaknesses, opportunities, and threats for a given organization or group. This asks decision makers to consider both the internal environment (the strengths and weaknesses of their organization) and the external environment (the opportunities and threats involved with pursuing a specific set of objectives). Another type of strategic planning tool, force-field analysis, encourages planners to identify and measure the various internal and external forces that either help or hinder the meeting of strategic goals. An important tool for understanding group dynamics and effectiveness, force-field analysis can also be a simple matrix for illustrating the positive and negative factors of any strategic decision, offering leaders and managers a visual representation of the balance between positive and negative forces and the likelihood of success. Because SWOT analysis and force-field analysis are typically based on the opinions of managers and business experts, they are considered qualitative planning tools.
Another strategic planning tool is the decision tree. It provides a map of all of the various courses of action that can stem from a specific strategy, the potential outcomes of those decisions, the likelihood of each event occurring, and the costs and revenues associated with those outcomes. For example, a company may want to consider whether it should produce mobile phones or tablets. A decision tree would then begin with a single point, or decision node, with two lines (or branches) stemming from it in different directions. The points at the end (known as “event nodes”) are labeled “mobile phone” and “tablet.” Each event node would then have two branches stemming from it labeled with the probability of success (profit) and failure (loss) Page 243 | Top of Articleand the amount of money associated with each outcome. The mobile phone option, for example, might have a 70 percent chance of success and a 30 percent chance of failure and yield a profit of US$10 million if it were to be successful and a loss of US$3 million if unsuccessful. The mobile phone option might have an 80 percent chance of success and a 20 percent chance of failure and yield a profit of US$9 million or a loss of US$2 million depending on its success or failure.
Because of its focus on concrete numbers and decision-making outcomes, the decision tree is considered a quantitative planning tool. In order to make an informed, scientific determination of the “expected value” of each option in a decision tree, an analyst would multiply each chance of success by the expected profits and add it to the chance of failure, multiplied by the estimated loss. In this example, pursuing the mobile phone option would yield an expected value of US$6.1 million: 70 percent of US$10 million (US$7 million) and 30 percent of US$3 million (–US$900,000). The sum of the two figures is US$6.1 million. The tablet option, on the other hand, would yield an expected value of US$6.8 million, the sum total of 80 percent of US$9 million (US$7.2 million) plus 20 percent of US$2 million (–US$400,000). Based on these numbers, the company is more likely to produce tablets due to the higher expected value of tablet production.
In order for the results of strategic planning to be implemented, strong tactical planning is necessary. Tactical planning tools are aimed at designing or refining an organization's actual processes to achieve long-term production goals. Tactical planning can encompass a wide array of areas and responsibilities throughout many divisions of an organization. For example, marketing divisions often make tactical plans for products, product “mix” (the number and types of products offered by an organization), and marketing; human resources divisions engage in workforce development planning; finance divisions create plans for the sourcing and use of loans, grants, and subsidies.
An important tactical planning tool that incorporates both qualitative and quantitative elements is the Ishikawa or fishbone diagram. A fishbone diagram is also known as a cause-and-effect diagram, as it attempts to chart the various causes that can lead to a given problem, or effect, in the production process. For example, a bakery concerned with inconsistency in the size and shape of the goods it produces might place “inconsistency” in a box on the right-hand side of the chart to represent the effect that is being addressed. It would then draw a line leading to “inconsistency,” with several offshoots (resembling the ribs of a fish skeleton), each describing a potential category of issues leading to the inconsistency. These might include “equipment” (which could have several of its own offshoots such as “operator error” or “maintenance required”), “ingredients” (with possible offshoots such as “recent changes to recipes” or “unreliable distributors”), and “environment” (with offshoots such as “fluctuations in factory temperature” or “excessive humidity”). Ishikawa's technique for graphically examining and defining the various people, methods, machinery, materials, and environment unique to a specific event allows planners to determine the specific factors that must be addressed in order to reduce the occurrence of undesired events.
Whereas tactical planning involves crafting medium-term processes to orient and prepare an organization to meet long-term strategic objectives, operations planning focuses on the day-to-day activities that collectively lead to the accomplishment of strategic and tactical objectives. In operations planning, a major objective is the simplification of day-to-day decision making so that lower-level employees are more likely to engage in activities that adhere to the strategic and tactical plans established by managers.
A traditional operations planning tool is the Gantt chart. Given new life by specialized computer software applications, Gantt charts offer managers a detailed and graphical representation of a project's timeline, highlighting the way in which one step in the process can affect the success of subsequent steps (known as “dependencies”), in an attempt to reduce duplication, repetition, and wasted effort. Another operational planning tool is the flowchart, which resembles the decision tree in that it attempts to map out a specific operational process and the desired responses to anticipated interruptions in the production process. Simple checklists are operational planning tools as well, providing employees with a list of steps that must be performed and verified in order for a given process to be considered complete.
A subset of the larger discipline of operations management, organizational planning can suffer from similar limitations and criticisms. These include the arguments put forth by critics such as Robert Clark and William Mc-Donough, who have both examined the long-term effects of organizational planning and its consequences for producers and consumers. Clark, in his book The Global Imperative (1997), asserts that, while modern planning techniques greatly increased efficiency, this was at the cost of increased consumption of resources and inputs. The resulting growth in industrial waste and pollution caused by this improvement in capacity, he argues, will eventually have permanently damaging consequences for the environment. In his 2002 book Cradle to Cradle, (written with Michael Braungart) McDonough seconds Clark's critique, stating that modern production methods over emphasize efficiency at the expense of effectiveness and innovation. He believes this condition is hampering the development of newer methods of production that reduce waste and make more sustainable methods of production possible.
The potential conflict between organizational planning and human intuition noted by McDonough has Page 244 | Top of Articlebecome an increasingly important criticism of modern organizational planning tools and their widespread use. It is particularly relevant as computers and technology have become more integral to the planning process, and their speed and complexity make them potentially less open to human input and influence. Critics have argued that a reliance on such tools can create an environment that stifles creativity and innovation and hinders organizational flexibility and adaptability, preventing groups from reacting effectively to changing conditions. Many believe that the growth in the complexity of organizations and production methods, coupled with the concurrent need for sophisticated planning tools to manage them, will vastly increase the likelihood of this scenario—as well as its negative impact on national and global economies.
Organizational planning in the early 21st century is dependent on the ability of leaders and planners to effectively use current, emerging, and future technologies. As companies increase in size and complexity, global marketing efforts expand, and capacity and efficiency grow, the use of technology such as computers and specialized planning software will also likely increase. While offering opportunities for increased efficiency in both planning and operations in the short term, technological tools may in the long term become so ingrained in an organization's decision-making processes that they force certain inflexible types of thinking and reaction.
Overreliance on a particular planning tool can lead to an organization being unable to operate beyond the confines of technology, potentially stifling creativity and innovation, reducing flexibility and adaptability, and degrading its ability to quickly and effectively react to sudden or unforeseen problems. This is particularly true of the use of qualitative planning techniques, which rely upon the knowledge and assumptions of experts that can quickly become outdated in the modern, fast-paced business environment. An organization that bases its strategic plans solely on a SWOT analysis, for example, may not be prepared for unanticipated threats (consider the emergence of online video streaming services, which virtually eliminated brick-and-mortar video rental stores). Organizational planning tools alone, then, do not offer plans or solutions to problems. They simply provide the data and context for decision making, an ultimately human endeavor.
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