Chapter 4

Planning

What Would You Do?

Consortium created to compete with Boeing

Slow progress, with potential How do you take more business away from

Boeing What is your plan?

After discussing this section you should be able to:

Learning ObjectivesPlanning

1. discuss the costs and benefits of planning.2. describe how to make a plan that works.

Costs and Benefits of Planning The Benefits The Pitfalls of Planning

The Benefits

Intensified Effort

Persistence

Direction

Creation of Task

Strategies

It Works!

Planning Pitfalls

Impede Change & Prevent

Adaptation

Create a False

Sense of Certainty

Detachment of

Planners

Blast From The PastPericles and Planning Leaders must have a vision Planners must be close to events Plans must be flexible

How to Make a Plan That Works

Set Goals

DevelopCommitment

to Goals

DevelopEffective Action

Plans

Track ProgressToward GoalAchievement

MaintainFlexibility in

Planning

Adapted from Exhibit 4.1

Setting Goals

Specific

Measurable

Attainable

Realistic

Timely

Goal Commitment

The determination to achieve a goal Increased by:

Setting goals through participation Making goals reasonable Making goals public Obtaining top management support

Developing Effective Action Plans For accomplishing a goal, these list the:

specific steps people resources time period

Tracking Progress

One method, setting: proximal goals - short-term distal goals - long-term

Second method: gather and provide performance feedback make adjustments in:

effort direction strategies

Maintaining Flexibility

Option-based planning keep options open through simultaneous

investment invest more in promising options

Learning-based planning plans need to be continuously adjusted encourages frequent reassessment and revision

of goals

After discussing this section you should be able to:

Learning ObjectivesKinds of Plans

3. discuss how companies can use plans at all management levels, from top to bottom,

4. describe the different kinds of special-purpose plans that companies use for change, contingencies, and product development.

Planning from Top to Bottom

Vision

Adapted from Exhibit 4.3

Planning from Top to Bottom (cont’d)

Vision

Mission

TacticalPlans

Managementby

Objectives

OperationalPlans

StandingPlans

Single-UsePlans

Adapted from Exhibit 4.4

TopManagers

MiddleManagers

First-LevelManagers

Starting at the Top

Vision statement of purpose enduring, inspirational, clear, and consistent with

company beliefs and values Mission

flows from vision more specific goal statements

Setting Missions

Targeting set a clear, specific target

Common-Enemy vow to defeat a rival

Role-Model emulate a successful company

Internal-Transformation strive to dramatically change the company

Bending in the Middle Tactical Plans

specify how a company will use resources, budgets, and people to accomplish goals

Management by Objectives develop and carry out tactical plans four steps

discuss goals participatively select goals jointly develop tactical plans meet to review performance

What Really Works?

Management by Objectives (MBO)

MBO & Production

10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Probability of success 97%

68%

MBO is based on goals, participation and feedback. Companies that use

MBO are 97% more likely to outproduce companies that don’t!

Finishing at the Bottom Operational plans

day-to-day plans Single-use plans

cover one-time-only events Standing plans

plans for recurring events three kinds

policies procedures rules & regulations

Budgeting

Special-Purpose Plans

Planningfor

Change

Planningfor

Contingencies

Planningfor

ProductDevelopment

Planning for Change

Stretch goals extremely ambitious goals initially employees don’t know how to accomplish

Benchmarking identify outstanding practices in other companies adapt them to your company

Been There, Done That

Stretch goals are more than just demanding more from employees

Give employees the tools to succeed Don’t punish failure

Steve Kerr on Stretch Goals at GE

Planning for ContingenciesScenario Planning Define the scope of the

scenario Identify the major

stakeholders Identify environmental

trends Identify key

uncertainties and outcomes of these trends

Using steps 1-4, create initial scenarios

Check each scenario for consistency and plausibility of facts

Create contingency plans from each scenario

Planning for Product Development Aggregate product plans Four keys to faster product development

cross-functional teams internal and external communication overlapping development phases frequent testing of product prototypes

Overlapping Product-Development Phases for a New “Supercomputer Server

January July January July JulyJanuary

Block Diagram

Evolution of System Specification

Simulation

ASIC and Board Design

Hardware Mock-ups & Models

“Bring-up”

FullSystem

Prototype

ShipDate

Conceptualization Simulation ImplementationAdapted from Figure 4.7

What Really Happened?

Airbus set specific goals Built planes that were easier and cheaper to

maintain, used the same cockpit, and were comfortable for passengers

Used options-based planning Positioned itself through innovative new

features, functionality, and lower costs.