Strategic Planning, Disguised Socialism?

Modern management operates according to The Plan. The Plan is, of course, created by human beings. Most planning models place the responsibility for planning squarely on the shoulders of the CEO. The CEO, in turn, consults with any number of experts to get advice on how to proceed...Nobel laureate economist F.A. Hayek, considered the problems which appeared in planned economies and concluded that we expect too much of our planners. We are asking them, in effect, to "order the unknown" for us. It is foolish of us to expect that any person or group of persons could ever do such a thing. And those presumptuous enough to believe that they can successfully carry out such an assignment are suffering from, according to Hayek, "The Fatal Conceit."...In a market economy knowledge is dispersed among millions of people, each acting interdependently. It is impossible for a single individual to know what all of these other people are doing, let alone know what they are planning to do. Yet, this information is vital if an accurate forecast is to be made, and an accurate forecast is the prerequisite for a valid plan. In a planned economy, whether the economy of a nation or a firm, the planner assumes that he can obtain this information through diligent research. In a free market the information about current conditions is automatically made available to everyone. Consider the following question: Is there a gasoline shortage in your town? You can answer this question with but a moments thought....New Research Casts Doubt On Strategic Planning, Thomas Pyzdek, QualityAmerica.com

Frederick Hayek in The Road To Serfdom spoke at length of the fact that the industrial democracies, despite having crushed one totalitarian system and held another at bay, were nonetheless ill-prepared to stop the same transformation happening in their own countries. The drive to collective thinking and action, without powerful efforts to make both leaders and people aware of the real costs of doing that, had such tempting, if illusory, potentials for benefit that, parading under other names, societies built on individual choice and action were plunging rapidly into the socialist abyss.

As impossible as the job of a planner in a centrally planned economy is, consider how much more difficult the job of the planner is in a free market firm. True, she has the guidance of prices to help her, but now she must contend with a complexity that is made infinitely more vast by the presence of other firms. Some of these firms are direct competitors who will take action to counter the effectiveness of her plans. Others are not directly competing for her market, but they still compete for the same limited quantity of resources. Prices may go up, or they may go down. A new technology may make your products, services, and plans obsolete. The tastes of your customers may suddenly change due to an unexpected cause like a hit movie, a fad, or some world event...Can anyone truly anticipate what will happen in such chaos? Obviously, the answer has to be no. Yet such omniscience is precisely what we expect from our planners....Research Casts Dobut..., Pyzdek

In strategic planning, as in ministries that direct the state sector in France's economy, vast surveys of a firm's market and market potential are undertaken, as well as equally expansive and highly speculative forays into forecasting the future of the market in terms of demographics, economic, social, and technological development. It's the kind of thing that dazzles (and employs) MBA's and Ph.D's with degrees in econometrics, management science, behaviorism (still practiced despite being widely debunked), and a dozen other fields. It's one great big party congress -- sorry, one big conference that can last for years. Unfortunately, unlike most academic conferences and off-site meetings, these years ultimately end, and something comes of them -- the Plan.

Before that, preliminary reports come out, directed at first at the outer ring of participants, to convince them with teases about what's to come, show them that it is all worth the trouble. They are also directed at the outermost ring of obstinate questioners of sense and outward things, fallings out, and vanishing of personnel, to convince them to go along.

At last, the big report, thick, beautifully typeset, on linen paper of outrageous cost, bound as nicely as a trade book, is rolled out to the whole institution, or at least to its senior, middle and junior officers and trainees. Then, especially among the most enthusiastic (whatever their reason -- sycophancy is not low on the list), facilitators are organized to enact the great plan. Their task is to convince the proles through a variety of techniques, including reasoned argument, emotional persuasion, and subliminal or overt intimidation, that the plan is good, and, finally, what their individual or group tasks will be in enacting it.

Pyzdek's report suggests that when it comes time to measure the results, they don't look very good. Markets don't act as predicted, even when the predictions are done in multileveled, 3-dimensional spreadsheets that run only on Sun workstations and are attested to by Ph.D's and the CEO. Spreadsheet knowledge is like that; it's beautiful to look at but there's a problem: contingency. Demographics change suddenly due to factors that have nothing to do with the firm's business. Products go out of fashion. War breaks out. A hurricane drowns a city.

When a whole nation does this, the economy fumbles from one disastrous set of errors to another; in such nations the "real" market is often the black market, which ends up being the only place where rational choices can be made about what individuals actually need or want. (In the US, confronted by the results of strategic planning at General Motors, Ford and Chrysler, American buyers turned to Toyota, Honda, and Datsun). This was the case in the Soviet Union for decades before the system blew up in 1989 and 1991, wonderfully detailed in a series of articles in Harpers whose longtime editor seemed to have missed the author's understanding of what was happening, that socialism was failing. (Management at General Motors still seems unaware that strategic planning is failing.) The central committee and the Communist Party used exactly the same tactics employed by institutional strategic planners in the United States, with exactly the same motivations, that a small group of people in the know were better able to manage markets rationally than a market of individuals making rational choices about themselves.

Strategic planning has dropped out of favor in recent years in private companies. It didn't work terribly well, as this report suggests. Aspects of it remain, especially those involving intensive, detailed study of markets. There, a modern and far more successful version of market research has evolved to where it is nearly possible to tailor products to individual buyers. This is all well and good; management fads have their pluses. But, as the writer's late mother once warned him, a management fad of twenty years ago in private business is likely to reappear in the present as something fresh and new in colleges and universities. And indeed it has in US higher education, with a twist far more treacherous than the one practiced in the private economy some time ago.

In the university version of strategic planning, a prior restraint is put on the planning process in the form of an ideologically-driven notion of educational transformation. While there is a lot of talk about the "market" of present and future students, as well as the market of future employment for graduates, an obvious concern when worrying about filling classes, the driving force is progressive evolution of the educational process. The most popular idea like that now is "student centeredness" (derived from the disastrous "child centeredness" movement in primary and secondary education) which has an arguably pathological assumption (and a transparently political one) that students are better able to direct their education than teachers and administrators. This would be news to teachers of the calculus, a foreign language, or constitutional law, areas of study distant from a student's everyday experience, whether of life enjoyed on a streetcorner, "observed" on TV, or imagined in playing the latest PS3 game. The idea is plainly socialist in origin, harking back to bizarre disasters in the prewar Red Army, when an entire generation of experienced field commanders were sacked in favor of noncoms held more able to direct armies because privates and sergeants were on the lowest level, the edge of the sword as it were. Without a qualified officer corps, the Red Army was battered at horrifying costs by the Wehrmacht until officers hardened and instructed in strategy and tactics by war took over. Under their firm, unstinting, personal direction, the Russians pushed the Nazis back to Berlin.

When a prior restraint, an ideological fixation, is added to the already collectivist qualities of strategic planning, a process begins which is more like covert organization of party cells than management of an insitution hoping to sell its program to future students. The atmosphere is poisoned from the start. Why?

Because the plan, and not an individual or group of individuals, is the guiding force in the transformation, it is impossible for critics, or even supporters, to engage in constructive and critical debate about what works and what doesn't. (As in the USSR, dissenters of any kind are described in the language of psychological pathology -- diseased people unable to think correctly.) Negative results are cast aside as being reflective of a process left over from "Mom-and-Pop store thinking." (In the USSR, they would be called reflective of "bourgeois thinking.") Under the aegis of such a plan, which disregards contingencies with an astonishingly cavalier and often brutal attitude, a great school can become a laughing stock, its degrees held as worthless by outsiders, its administration and faculty as buffoons. Inside the protective ring of the plan, though, you would never know about this because the plan itself denies bad news. When students begin to leave programs, or fewer apply, discussion turns to "a preference for quality," that is to say, students willing to accept the terms of this "transformed" education. (Similar to the startlingly small percentage of Russians willing to go through the rigors of becoming members of the Communist Party -- at its peak, they constituted less than 2% of the population of the USSR).

As a parallel to what happened in the now defunct USSR, strategic planning in the university is without peer or review.

Luther