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Describes the fundamentals of a "planning as learning" approach to strategic planning based on action learning, and the near- and long-term experience of a mid-sized commercial Canadian company that has adopted this approach. Answers the question "How can a learning-based planning approach be embedded in the business processes of an organization so that learning and planning go hand in hand naturally, on a daily basis?".
For a company to succeed in the turbulence of our typical business markets, it must never stand still or allow employee mindsets to congeal; this has come to be associated with continuous learning and agile-adaptability at all levels of the organization. However, at the same time, the company must have some form of traditional constrictive strategic business plan to identify business imperatives and enable aligned action to be undertaken. This dilemma raises a critical practical question: "How can a learning-based planning approach be embedded in the business processes so that learning and planning go hand in hand naturally, on a daily basis?". This article illustrates the approach we have taken to answer this question. The approach is illustrated through the experience of a mid-sized commercial company with which we worked to successfully introduce "planning as learning" based on action learning principles.
The above dilemma is not new; more than a decade ago Michael Porter wrote "Strategic Planning in most companies has not contributed to strategic thinking. The answer, however, is not to abandon planning. The need for strategic planning has never been greater. Instead, strategic planning needs to be rethought and recast. While some companies have taken the first steps in doing so, few have transformed strategic planning into the vital management discipline it needs to be". (Porter, 1987).
So, at a time when agility and timeliness are critical to success in an ever more complex, turbulent and unpredictable marketplace, Porter's admonition has gone unheeded, and organizations are still mired in linear thinking and pedantic planning methodologies (Mintzberg, 1994; Leavy, 1998). Given the increasing criticality of knowledge to commercial success, the challenges facing strategic planning can only become more serious.
Currently there are essentially three major schools of thought with regard to strategic planning (Mintzberg, 1994). The Porter school declares that the key to success is to understand what drives markets and to choose market position accordingly; the Hamel and Prahalad school is at the opposite end of the planning spectrum, believing that an organization must understand its own strengths and build on these internal capabilities to be successful; and the Mintzberg school sees success founded upon an understanding of the underlying causes of market dynamics and on building relevant flexibility.
Whichever approach is chosen it is critical that implementation be "interactive" (Ackoff, 1977). Interactive planning focuses on "making it happen" by facilitating learning, and by exploring and exploiting situations as they eventuate in dynamic fashion. Interactive planning also addresses the everyday organizational realities such as culture, politics, and mindsets. This is important, because as De Geus has noted (De Geus, 1988) "... planning means changing minds not making plans".
Facilitating learning, and exploring and exploiting situations as they eventuate in dynamic fashion are topics whose importance has been boosted in recent years by concepts of among others, "The Learning Organization" (Senge, 1990); "The Knowledge Creating Company" (Nonaka & Takeuchi, 1995 ); and by De Geus' notions of planning as learning (De Geus, 1988). De Geus has had considerable support for his contention that "The ability to learn faster than your competitors is the only sustainable advantage".
Although notions of learning as planning are clearly not new (Ackoff, 1977; De Geus, 1988), the planning of strategy through explicitly learning-related contexts is still not at all commonplace (Mintzberg, 1994). Examples of organizations learning to change and adapt before a crisis impacts have been the subject of papers co-authored by one of us (Smith & Saint-Onge, 1996; Drew & Smith, 1995). A fine review by Leavy (1998) also sets out in detail both the benefits and issues associated with a learningful planning approach.
The work reported here is unusual in that it sets out a practical example of the implementation of "planning as learning", and also in that it deals with "planning as action learning".
A Corporate Challenge in Strategic Planning
The case of "planning as learning" we are about to describe began when we received a request from the President of a mid-sized Canadian company (Company X) to propose a fresh approach to that organization's strategic thinking and planning. Company X is responsible for the Canadian operations of an international organization with headquarters in USA. Company X concentrates on marketing and distribution, plus a small manufacturing operation. In addition to the President, the executive committee consisted of four senior functional-area executives and an executive assistant. The President wanted to transform the ability of this team to think strategically within certain boundaries (set largely by the organization's US-based headquarters). It was also critical that these executives be capable of transferring this capability to the managers that reported to them, and then down through the organization in a cascading manner.
Company X was not unfamiliar with strategic planning; in requesting our help in introducing a new effective strategic planning method, the President specifically forbade use of the more traditional approaches which they had tried and found wanting.
During our first meetings with the President of Company X and some of the staff at their office site, we remained sensitive to the potential barriers that the organization's culture might pose with regard to learning. Schein's Cultural Analysis (Schein, 1993) was used informally by us to identify any positive or negative factors. Only positive factors were evident. For example, we noted that the office space was set up with an eye to not only optimal business organization but also to facilitate collaborative x-functional exchanges of knowledge. Visible symbols and overall office atmosphere all pointed to pride in the company, and there was a relaxed informal atmosphere among management and staff. Large white-boards were mounted in corridors at various locations, showing on a daily basis how the company was doing with respect to different functional areas and their business targets. Based on such cultural indicators, we both agreed that this organization seemed to have an excellent chance of successfully adopting a "planning as learning" approach.
The outcome of our preliminary meetings with the President was that an off-site two-day workshop was proposed by us and was accepted. At this session we expected to assist executive committee members become familiar with :
o the philosophy of action learning
o a framework for "action learning as planning"
o an uncomplicated intuitive executive committee-meeting process
o some simple relevant "tools"
o a method for familiarizing their direct reports to the approach
o a process for cascading the approach down through the organization
These six workshop elements and participants experiences in applying them are discussed in the following sections.
Principle Elements of The "Learning as Planning" Workshop
1. Action Learning
The workshop began with some preliminary exploration of strategic planning and its objectives. Participants were then encouraged to share their own planning experiences. They quickly began to discuss how as individuals, and in teams, they are awash in assumptions, presuming validity at their peril in business contexts which are becoming increasingly complex, ambiguous, and competitive.
It was clear to these executives that if they wished to learn to successfully plan to address this multitude of issues, particularly in a strategic context, it was critical that they continually collaboratively explore and question their suppositions by surfacing their insights, and evolving fresh questions leading from their ignorance. There was agreement that the ability to think things through and de-brief experiences at non-trivial personal and contextual levels was essential to their effective learning, planning and performance. There was also consensus that the traditional strategic planning methods with which they were familiar did not satisfy these needs. To provide a sound setting for such inquiry, we recommended that the executive committee adopt an action learning approach.
It was explained to the executive committee that action learning is a well-proven individual, collective and organizational development methodology. Further, that it is generically a form of learning through experience, "by doing", where the task environment is the classroom, and the task the vehicle. We recommended that action learning be envisioned as a philosophy with programs typically based on the following tenets:
o Participants tackle real problems (no 'right' answer) in real time
o Participants meet in small stable learning communities ("Sets")
o Each "set" holds intermittent meetings over a fixed program cycle
o Problems are relevant to a participant's own workplace realities
o A supportive collaborative learning process is followed in the "set"
o Process is based on reflection, questioning, conjecture and refutation
o Participants take action between set meetings to resolve their problem
By introducing action learning to the executive committee as a philosophy rather than as a method, a much less formal and structured approach than that traditionally described in the literature (Pedler, 1991) could be adopted by the team, and we were able to quickly indicate to them how they could readily position their normal meeting processes on an action learning foundation.
We also helped the executives to appreciate the "elicitive" nature of action learning which is designed to draw out, capture and build on what is, rather than operate in a pure, detached, analytical and rational world of what should be. By forcing reflection and promoting insightful inquiry with perceptive partners such as those in the executive committee, in situations where solutions are not always obvious, and by putting responsibility for implementation of the plans in the participant-planners' hands, the executives could make sense of resulting experiences by conceptualizing them and generalizing the replicable points; their plans for further actions would then be based on the learnings gathered. In a sense action learning within the executive committee meetings would provide a "safe practice field" where the participants' mental models and future actions could be shaped and reshaped in continual learning/development/planning cycles.
2. A Framework For "Action Learning As Planning"
In this section we discuss only the framing process; in Section 4 we will identify tools the executive committee members found useful in helping them think through their strategic imperatives.
Our "action learning as planning" framework (ALPF) introduced at the 2-day workshop was taken from a structured approach to action learning called Performance Learning (Smith, 1997). Performance Learning provides a solid systemic and strategic foundation for strategic planning, since it seeks first to clearly define measurable high-level strategic outcomes, then to define lower-level outcomes and activities which ultimately link to and support the higher ones. This cascading process of planning, alignment and learning was one of the critical requirements called for by Company X for their new planning method; our ALPF satisfied this need as the following discussion will show.
It should be noted that the executive participants in the 2-day workshop were exposed to the ALPF in an indirect and informal manner, "by doing". Appropriate portions of the workshop process were structured to fit the framework, and provide the outcomes the framework was designed to elicit. The executive committee were shown the fundamentals of the ALPF, but at the same time as other tools and processes were explored, so that the ALPF itself did not become intrusive or theoretical. However, for the purposes of clarity in this article, the ALPF is described in some detail.
Our ALPF is founded in systems theory which tells us that systemic demands are placed by each containing system on the systems it contains in a cascading manner. This is applied in ALPF theory as illustrated in Figure 1: the customer system will demand certain service norms of the organizational system; the organizational system in its turn will demand behaviors of the organizations functional and team subsystems which satisfy these behavioural norms; the subsystems in their turn demand appropriate detailed behaviours of the individuals that comprise them. As Figure 2 illustrates, in this way a chain of coupled outcomes is defined in response to the demands placed on each sub-system. By achieving the low level outcomes, the higher level outcomes will be achieved. Outcomes can be defined for "soft" as well "hard" topics. For example, teamwork can be ensured by defining outcomes which will foster team behaviour.
At Company X, the ALPF was to be first applied by the executive committee, and then the same method was to be applied by reporting managers, functional teams and individuals in a cascading manner. By framing and driving the performance of the organization in this way, alignment and continuous improvement would be addressed without unduly restricting creativity and freedom to act; this would be because the various systems and subsystems would be planned to be harmonious.
More particularly, by requiring that experiential learning groups (cascading down through the organization) explore and develop outcomes-driven frameworks for their own local activities, we could provide an organizationally aligned context in which all of Bateson's Learning Levels (Bateson, 1972) would be nurtured, and the aims of action learning in general, would be adequately addressed.
3. An Uncomplicated Intuitive Meeting Process
The meeting process recommended to the executive committee was also based on Performance Learning (Smith, 1997). It was made as simple and intuitive as possible whilst still being based on up-to-date concepts and tools, and its simplicity was not achieved at the expense of learning or personal development. For example, attitudes, emotions,, mindsets etc. of both the executives and their reports are explicitly explored in PL with resulting developmental benefits. As will be detailed below, this exploration is consistent with Revans' view that action learning contributes to self-enlightenment rather than simple behavioural improvement (Revans, 1983b ).
It should be noted that, as with the ALPF, the executive participants in the 2-day workshop were exposed to the meeting process in an indirect and informal manner, "by doing". The executive committee were shown the fundamentals of the process described below, but at the same time as other tools and processes were explored, so that the process itself did not become intrusive or theoretical. However, for the purposes of clarity in this article, the process is described in some detail.
The PL process is based on the outcomes-driven performance model presented in Figure 3. The model has been utilized extensively since the mid-80's by one of us (Smith) in organizations as diverse as Exxon (Smith, 1993), Canadian Imperial Bank of Commerce (Smith and Saint-Onge, 1996), and IKEA (Drew and Smith, 1995 ).
According to this model, performance is envisaged as dependent on three elements - Focus, Will and Capability. These three elements form a dynamic system. The performance level achieved by the system depends on the interactions and interdependencies of these elements. Focus represents a clear definition and understanding of the performance proposed; Focus is associated with questions such as What ..?; How ..?; Who ..?; Where ..?; When ..?; Why ..? The element Will represents strength of intent to action the performance defined in Focus; Will is associated with attitudes, emotions, beliefs and mindsets. Capability represents the wherewithal to transform into reality the performance defined in Focus; Capability is associated with such diverse areas as skills, infrastructure, budgets, tools, physical assets etc. A change in any one of these elements may effect a change in the state of one or both of the other elements.
The most favorable set of conditions for optimal performance occurs when Focus, Will and Capability form a self-reinforcing system, with all elements in balance and harmony. As Figure 3 shows, current performance potential is represented by the degree of overlap of the circles; optimal performance being represented by complete congruence of all three circles. Imbalance and lack of congruence will typically lead to misdirected and wasted efforts as well as loss of performance. Areas shown in the Figure, where only two model elements overlap, are typical of real-life situations. The key to performance optimization is the continual dynamic tuning of the degree of overlap of the elements based on learning initiatives.
In the "planning as learning" context for Company X, the executives first defined the desired strategic outcomes, then worked back to examine whether the necessary "ideal" Focus, Will and Capability existed in the organization or whether the executives had to plan to provide them as necessary. As actual performance deviated from optimum and outcomes were not fully achieved, the executives would learn by comparing actual to anticipated results and linking to the states of Focus, Will and Capability, and/or by dynamic tuning of the three performance elements to try to improve performance. If it became necessary to articulate fresh outcomes to address changing conditions or for a new strategic cycle, planning and tuning would be facilitated using the same performance system.
As Figure 4 illustrates, the performance model is consistent across all levels of the organization; however, the meaning of Focus, Will and Capability changes to reflect the changing context. For example, for the executive committee at Company X, Focus might represent the firm's strategic plans to enter a new market; Will would reflect the organization cultural potential to support the new initiative; and Capability could relate to the firm's asset position on entering that market. For a functional team working on a linked but more local problem, Focus might represent dividing up a sales territory; Will would be associated with how the participants and members of the sales organization at large would feel about the proposed new segmentation; and Capability would address the skill requirements and infrastructure required for the newly segmented sales force to function adequately.
As noted above, the performance system receives feedback by comparing measured performance versus the outcomes defined in the ALPF stage, and dynamic tuning is undertaken by the executive committee and their reports to attempt to maintain harmony and balance based on this feedback; in other words through learning. However, as shown in Figure 5, this tuning and learning is greatly facilitated through the kind of collaborative learning central to action learning. It is then a logical step, as illustrated in Figure 6, to adopt collaborative learning initiatives which are highly relevant to the performance element being explored. For example, Focus may be tuned via methods for rational analysis as described by Senge (1990), Dixon (1997), Rosenhead (1989), and many others; Will may be tuned using methods described by Argyris (1993), and Schein (1993); and Capability could be tuned via audit methods described by Drew and Smith (1995). Company X has not taken this step as yet; however, in the interim the executive committee and the reporting teams have utilized the time to become adept at simple well-proven tools. These tools are described in the next section.
The executive committee were introduced to two very simple tools to facilitate their strategic dialog. The first was PEST (Political, Social, Economic, Technical) Analysis. This tool was intended to help develop x-functional systemic understanding of where the business as whole, and the various functional areas, were headed in the broad contextual sense. Also to draw attention to the implications for Company X. Although this approach is consistent with the industry and competitive analysis associated with the widely followed corporate strategy of Michael Porter, the action learning process of collaborative learning ensured that an interactive planning approach resulted.
Some of the issues that emerged and were explored as a result of this analysis were: government subsidies, impact of Canada's copyright act, university funding, emerging economic models, Canada-US transfer pricing, and impact of "warehousing" stores. It was evident that no clear solutions existed for many of these x-functional issues, and in fact many more strategic dilemmas emerged as the various functional areas expressed their own interests. However, the executives were surprised at how capable they were at identifying important contextual trends etc. when the PEST format was used in the spirit of action learning.
The next tool to be applied was a SWOT (Strength, Weakness, Opportunity, Threat) Analysis. Here the contextual information from the PEST Analysis was considered in more strategic terms, and with respect to the strategic framework that the US headquarters had already articulated. Again the sharing of views x-functionally was very helpful both in learning and in reaching consensus around where organizational effort should be concentrated. It was also realized that this kind of effort would be invaluable in the future with respect to a Canadian input to US headquarter's plans.
Consensus was reached from the results of the SWOT Analysis as to what to pull together on a Master Analysis grid. This was a matrix showing urgency and priority versus strategic issues. The cells in the matrix were used by the participants to begin to focus on those issues considered of high strategic importance, and to define measurable outcomes for them. Overall, this was similar to the process used in building a Balanced Scorecard (Kaplan & Norton, 1996).
5. Cascading the Approach Down Through the Organization
The workshop included some further personal development activities; however, in terms of strategic planning, the above agenda largely constitutes what was covered. After the workshop, the executive committee met a number of times to define clearly the strategic outcomes to be achieved by Company X in the following year. Once the executive committee had reached consensus on its strategic plans, functional meetings were held lead by each executive with his/her own reports. The same meeting process was followed by the executives in helping their reports to focus on functional matters in support of, and aligned with the executive committee's strategic agendas.
"Reflection" is a critical aspect of learning. Hammer and Stanton, in discussing reflection, are of the opinion that "Reflection must be deeply rooted in a company's day-to-day operations. In short, reflection must be institutionalized as a business process" (Hammer & Stanton, 1997). The above process was intended to achieve this end and ensure learning at all levels of the organization.
Executive Interviews: How Di It Turn Out?
It is now almost two years since the executive committee workshop was held. Interviews to elicit long-term feedback on the workshop and the "planning as learning" approach were held recently. Over that period, Company X has made the process its own, retaining some aspects and neglecting others.
Planning terms and language have been standardized so that they have common meaning to all the planning participants. Flow diagrams to clarify the process and scheduling of executive committee meetings have been developed. These include cascading planning to the functional managers and iteration between the executive committee and the functional teams.. The overall schedule is timed so that Canadian input to the US headquarters planning cycle is made on time.
It was critical in the President's opinion that the executive committee adhered to the new process stubbornly, and did not get discouraged or deviate. After the workshop some executives were confused by the broad scale involved when they still had everyday issues to deal with; the executive committee needed about six months to digest and feel comfortable in applying the new approach.
Cascading planning down to the reports was considered relatively easy by the executives, and worked best when the reports formed an action learning group and the appropriate executive facilitated. Having the executives take personal responsibility for rolling out the cascading process was a key factor in the success of this initiative. It was noted that where an executive had anxiety about the process the roll out did not go as smoothly. In particular, when questions arose in the roll-out that were unexpected, the process became labored. In such cases it was important that the executive "lasted the course", and in all such instances the managers and their executive worked through their problems and were able to finally fully participate in the process.
Benefits envisioned by the President from a sound strategic planning effort have been realized and there is excitement and satisfaction among the executives and their reporting managers. For years planning was a thorn in the side of executives and managers alike, and there was no connectivity between strategy and daily activities, or between executives and managers. Now, sessions are open, and executives and managers see them as learning opportunities. There is a feeling of being in control and of having increased clarity. Setting of priorities has been particularly helpful to support function efficiency, and the approach has now even lead to formation of x-functional teams concentrating on specific projects.
Executives universally regard the approach as extremely useful and the results as excellent. The whole cascading strategic planning process is now working very smoothly, and Company X's ability to contribute meaningfully to headquarters strategic plans has improved significantly.
We believe that the fundamentals and case reported here provide an answer to the question "How can a learning-based planning approach be embedded in the business processes of an organization so that learning and planning go hand in hand naturally, on a daily basis?".
We hope that this article will encourage other organizations to embrace a "planning as learning' approach to their strategic planning, and to consider action learning as a simple practical vehicle to facilitate their efforts.