Chapter 4

1. Chapter 4 Planning

2. 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?

3. Learning ObjectivesPlanning After discussing this section you should be able to: • discuss the costs and benefits of planning. • describe how to make a plan that works.

4. Costs and Benefits of Planning • The Benefits • The Pitfalls of Planning

5. Intensified Effort Persistence Direction The Benefits Creation of Task Strategies It Works!

6. Planning Pitfalls Impede Change & Prevent Adaptation Create a False Sense of Certainty Detachment of Planners

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

8. How to Make a Plan That Works Maintain Flexibility in Planning Set Goals Develop Commitment to Goals Develop Effective Action Plans Track Progress Toward Goal Achievement Adapted from Exhibit 4.1

9. Setting Goals Specific Measurable Attainable Realistic Timely

10. Goal Commitment • The determination to achieve a goal • Increased by: • Setting goals through participation • Making goals reasonable • Making goals public • Obtaining top management support

11. Developing Effective Action Plans • For accomplishing a goal, these list the: • specific steps • people • resources • time period

12. 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

13. 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

14. Learning ObjectivesKinds of Plans After discussing this section you should be able to: • discuss how companies can use plans at all management levels, from top to bottom, • describe the different kinds of special-purposeplans that companies use for change, contingencies, and product development.

15. Planning from Top to Bottom Single-Use Plans Management by Objectives Operational Plans Mission Vision Tactical Plans Standing Plans Adapted from Exhibit 4.3

16. Vision Mission Tactical Plans Management by Objectives Operational Plans Standing Plans Single-Use Plans Planning from Top to Bottom (cont’d) Top Managers Middle Managers First-Level Managers Adapted from Exhibit 4.4

17. 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

18. 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

19. 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

20. What Really Works? Management by Objectives (MBO) MBO & Production 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 97% Probability of success MBO is based on goals, participation and feedback. Companies that use MBO are 97% more likely to outproduce companies that don’t! 68%

21. 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

22. Planning for Change Planning for Contingencies Planning for Product Development Special-Purpose Plans

23. 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

24. Been There, Done That Steve Kerr on Stretch Goals at GE • Stretch goals are more than just demanding more from employees • Give employees the tools to succeed • Don’t punish failure

25. 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 ContingenciesScenario Planning

26. 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

27. Block Diagram Evolution of System Specification Simulation ASIC and Board Design Hardware Mock-ups & Models “Bring-up” Ship Date Full System Prototype Conceptualization Simulation Implementation Overlapping Product-Development Phases for a New “Supercomputer Server January January January July July July Adapted from Figure 4.7

28. 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.