Lewis J. Perelman is pr es iden t of S trategic Performance

Services, a am s ul ting fi rm in Alexandri a , Vi rgi ni a .

Continued on pag e 42

shares of corporate stock. And, rather than

generating a collection of ad hoc strategies for each

business unit and corporate office, the emerging

approach emphasizes "strategy for strategy"-the

process of choosing, integrating, coordinating, and

revisingstrategies, which leads to a coherent srrategic

thrust for the corporation as a whole.

This transformation of thinking about strategy

will have a big impact on the role of corporate

planning staff and consultants. Peter Drucker has

long held that staff positions should be few in

number and mainly temporary assignments for

line managers, not full-time professional slots. His

view is increasingly echoed by contemporary man

agement experts.

Kenichi Ohmae criticizes the separation of brain

from muscle in the typical American corporation,

and its Soviet style of planning. Tom Peters and

Bob Waterman, in their best-selling In

Se arch of

Exce llence ,

assert that long-range planning is either

irrelevant or downright hostile to superior corporate

performance. In his watershed article last year in

Fortune

on the disrepute of strategy consultants,

Walter Kiechellll observed that "some corporations

are apparently coming to believe what the wisest

among them have always suspected: an operating

manager is his own best strategist." As a result a

number of companies, including such pioneers of

formal planning systems as General Electric, have

drastically cut planning staffs.

T

HEWORLD OF

corporate strategy is in up

heaval. A new paradigm is overturning

traditional notions not only of the practice

of strategic planning, but of the very meaning of

"strategy." It will revolutionize the structure of

corporate organizations, as well as the roles and

effectiveness of manage s.

On the way out are annual strategic planning

rituals, professional planning staffs, portfolio

manageme t, and strategy marrices. Academic con

cepts of strategy are biting the dust, and fast

disappearing is the notion of return on equity as

a principal measure of performance. Also on the

endangered list is the fragmentation of strategy

into such discrete categories as marketing, opera

tions, distribution, pricing, mergers/acquisitions,

human resources, public relations, and government

affairs.

The old school of corporate strategy is being

replaced by a revolutionary paradigm-one that is

softer, in the sense of being more complex, non

linear, holistic, humanistic, and political. in the

soft model, strategy becomes a characteristic of

managerial performance rather than a dictum that

gets bound into notebooks and gathers dust on the

shelf. The spotlight

is

now on day-to-day executive

decisions made by responsible line managers rather

than on academic exercises performed by staff or

consultants. The newmode realizesthat the modem

corporation must pursue multiple objectives, not

simply maximum ROE, and that it must serve the

interests of stakeholders besides those who own

Paradigm Revolution

B y Lew i s]. Perelman

EDITORIAL

November

Planning Review

1983

4

 

This isnot merelyatemporaryausteritymeasure,

but a long-term reform of management systems.

Thus, Business Week recently reported: "Many

corporate leaders maintain that they intend to

'hold the line' on rehiring managers-especially

for staff and middle-managementpositions." And

theyanticipate"a fundamentalshift in themanage

ment skillsindemand," withheadhuntersreporting

"little interest in strategicplannersand other staff

specialists."

In practice, the advanceof the newparadigmcan

be detected on three major fronts. First, the ritual

of the annual planning cycle is givingway to a

real-time, continual issues-managementprocess,

based on enhanced business intelligence, more

flexibleand user friendlydecision-supportsystems,

and assignmentof responsibility to line managers

to anticipateand resolvestrategic problemsbefore

they blossom into crises. Second, there isgrowing

attention on the managementof the symbolicand

qualitativedimensions of the "corporate culture,"

to create a cl mate of quality, flexibility, and

innovation. And third, corporations are beginning

to recognize that strategic performance depends

heavilyon individualmanagers' strategicthinking

-a range of skills not necessarilydeveloped by

formal schoolingor substituted for byacomputer.

As a result, the ttaditional job of planner is

disappearing. MIS departments have been intro

ducingdecision-supportsystemsthatareautomating

most of the analyticalwork done by planners and

deliveringit directly to the linemanager'sdesktop.

Human Resources departments are becoming the

corporateculture,andbydevelopinglineexecutives

who are capableof strategicthinking,and who can

function compatibly with advanced computer/

communicationstechnology.Meanwhile,th public

relations, shareholder relations, and government

affairs people are taking charge o the issues-

managementprocessthat will increasinglysupplant

the annual planning ritual. Some planners will

survive this transformation, but only those with

stron skills in one or more of these emerging

fields. 0

EDITORIAL,

fro m pa ge 4

November

Planning Review

1983

42