Strategic planning in a turbulent environment: evidence from the oil majors

The long‐running debate between the ‘rational design’ and ‘emergent process’ schools of strategy formation has involved caricatures of firms' strategic planning processes, but little empirical evidence of whether and how companies plan. Despite the presumption that environmental turbulence renders conventional strategic planning all but impossible, the evidence from the corporate sector suggests that reports of the demise of strategic planning are greatly exaggerated. The goal of this paper is to fill this empirical gap by describing the characteristics of the strategic planning systems of multinational, multibusiness companies faced with volatile, unpredictable business environments. In‐depth case studies of the planning systems of eight of the world's largest oil companies identified fundamental changes in the nature and role of strategic planning since the end of the 1970s. The findings point to a possible reconciliation of ‘design’ and ‘process’ approaches to strategy formulation. The study pointed to a process of planned emergence in which strategic planning systems provided a mechanism for coordinating decentralized strategy formulation within a structure of demanding performance targets and clear corporate guidelines. The study shows that these planning systems fostered adaptation and responsiveness, but showed limited innovation and analytical sophistication. Copyright © 2003 John Wiley & Sons, Ltd.     

Managing Supplier Involvement in New Product Development: A Multiple‐Case Study*

Existing studies of supplier involvement in new product development have mainly focused on project‐related short‐term processes and success factors. This study validates and extends an existing exploratory framework, which comprises both long‐term strategic processes and short‐term operational processes that are related to supplier involvement. The empirical validation is based on a multiple‐case study of supplier collaborations at a manufacturer in the copier and printer industry. The analysis of eight cases of supplier involvement reveals that the results of supplier–manufacturer collaborations and the associated issues and problems can best be explained by the patterns in the extent to which the manufacturer manages supplier involvement in the short term and the long term. The results of this study reveal that the initial framework is helpful in understanding why certain collaborations are not effectively managed yet conclude that the existing analytical distinction among four different management areas does not sufficiently reflect empirical reality. This leads to the reconceptualization and further detailing of the framework. Instead of four managerial areas, this study proposes to distinguish between the strategic management arena and the operational management arena. The strategic management arena contains processes that together provide long‐term, strategic direction and operational support for project teams adopting supplier involvement. These processes also contribute to building up a supplier base that can meet current and future technology and capability needs. The operational management arena contains processes that are aimed at planning, managing, and evaluating the actual collaborations in a specific development project. The results of this study suggest that success of involving suppliers in product development is reflected by the firm's ability to capture both short‐ and long‐term benefits. If companies spend most of their time on operational management in development projects, they will fail to use the leverage effect of planning and preparing such involvement through strategic management activities. Also, they will not be sufficiently able to capture possible long‐term technology and learning benefits that may spin off from individual projects. Long‐term collaboration benefits can only be captured if a company can build long‐term relationships with key suppliers, with which it builds learning routines and ensures that the capability sets of both parties are aligned and remain useful for future joint projects.     

Planning and financial performance of small,mature firms

This article develops a classification scheme of planning process sophistication in small firms, categorizes small firms according to planning process sophistication, and examines the relationship between planning process sophistication and the financial performance of a select group of small, mature firms. The study overcomes several methodological shortcomings of prior research on strategic planning and firm performance. Multivariate analysis of variance is used to identify statistically significant differences between the financial performance data of firms that employ structured, strategic plans and those that do not. The results confirm previous research on strategic planning and financial performance. Finally, recommendations are made for future research.     

Does Strategic Planning Enhance or Impede Innovation and Firm Performance?*

Does strategic planning enhance or impede innovation and firm performance? The current literature provides contradictory views. This study extends the resource‐advantage theory to examine the conditions in which strategic planning increases or decreases the number of new product development projects and firm performance. The authors test the theoretical model by collecting data from 227 firms. The empirical evidence suggests that more strategic planning and more new product development (NPD) projects lead to better firm performance. Firms with organizational redundancy benefit more from strategic planning than firms with less organizational redundancy. Increasing R&D intensity boosts both the number of NPD projects and firm performance. Strategic planning is more effective in larger firms with higher R&D intensity for increasing the number of NPD projects. The results reported in this study also consist of several findings that challenge the traditional views of strategic planning. The evidence suggests that strategic planning impedes, not enhances, the number of NPD projects. Larger firms benefit less, not more, from strategic planning for improving firm performance. Larger firms do not necessarily create more NPD projects. Increasing organizational redundancy has no effect on the number of NPD projects. These empirical results provide important strategic implications. First, managers should be aware that, in general, formal strategic planning decreases the number of NPD projects for innovation management. Improvised rather than planned activities are more conducive to creating NPD project ideas. Moreover, innovations tend to emerge from improvisational processes, during which the impromptu execution of NPD activities without planning spurs “thinking outside the box,” which enhances the process of creating NPD project ideas. Therefore, more flexible strategic plans that accommodate potential improvisation may be needed in NPD management since innovation‐related activities cannot be planned precisely due to the unexpected jolts and contingencies of the NPD process. Second, large firms with high levels of R&D intensity can overcome the negative effect of strategic planning on the number of NPD projects. Specifically, a firm's abundant resources, when allocated and deployed for NPD activities, signal the high priority and importance of the NPD activities and thus motivate employees to acquire, collect, and gather customer and technical knowledge, which leads to creating more NPD projects. Finally, managers must understand that managing strategic planning and generating NPD project ideas are beneficial to the ultimate outcome of firm performance despite the adverse relationship between strategic planning and the number of NPD projects.     

Strategic management cycle: The underlying process building aligned linkage among operations practices

This study explores the mechanism of building an effective linkage among manufacturing practices that is a basic attribute of high performance manufacturing. High performance manufacturing companies are those that sustain high levels of performance over time. We propose a strategic management cycle, which explains how a firm establishes and maintains sustainable performance. We hypothesize and demonstrate how the cycle creates an effective linkage that integrates strategic activities and operational practices, which in turn yields high performance. We also argue and show how the first stage of the cycle, visionary planning, supported by the cross-functional culture, is a key to the high performance manufacturing company.     

Industrial exploitation of new joining technologies

Joining technology is critical to manufacturing and fabrication industries, since it greatly influences the design, assembly and ultimate competitiveness of the product. In particular, adhesive bonding is now attracting strong interest from many industries. This trend is further strengthened by dramatic advances in new materials, many of which cannot be joined by conventional means.
However, most industries are failing to exploit the opportunities offered by current adhesive technology, for a variety of reasons. CEST (the Centre for Exploitation of Science and Technology) has undertaken to examine these reasons, and to initiate a programme of actions which will lead to wider acceptance of adhesive joining within industry.
We have selected a number of companies from a range of industries, which we believe can effectively drive the exploitation process. By working closely with these companies it has been possible to define a number of strategic projects, which will promote this exploitation process. Several projects consist of targeted research and development, to fill the 'missing links' of technology which have impeded exploitation to date.
These coordinated actions will be initiated from the end of 1989. Typically, these projects will be collaborative, involving both industrial and university or polytechnic partners. The scopes of a number of such projects are described in detail, and their potential impacts on manufacturing processes are explained.     

Cognitive biases and their impact on strategic planning

Subjective judgements by planners and managers are a major component in the process of strategic planning. If such judgements are faulty, efforts at better strategic plans are likely to be misdirected. This paper discusses those biases which appear common to both managers and planners when they make judgements about risk. Implications of biased judgement are discussed in a planning context. Although we still do not know the best ways to elicit judgements, the paper concludes with a discussion of subjective sensitivity analysis which appears to offer some hope.     

Principles vs. Practice in New Product Planning

The product planning practices at nine large companies in the electronics industry are described and examined in the light of three principles derived from modern management practice. Major deviations between principle and practice are revealed. Close examination of the firms' new product activities suggests that the deviations stem from the inherently complex nature of the process and the premium it places on the need to manage it effectively. Suggestions for improving product planning performance are made. These relate to the need to make the process more uniform and systematic, to improve the guidance provided by strategic planning, and to obtain greater input to the process from marketing research.     

Can top managers be strategists?

Given the multiple calls on top excutive time and the increasingly complex and disparate makeup of most large diversified companies today, top management involvement in the strategic planning process in too often limited to little more than the basic allocation of corporate resources among previously selected options. This situation, the author suggests, is for from ideal; it is time to reassess top management's role in and generally orchestrating the diverse human elements of the planning process so as to steer it on a course between advocacy and consensus toward the best possible strategy for the corporation as a whole.     

Success is not enough: The spectacular rise and fall of a strategic alliance between two multinationals

This article analyzes a strategic alliance between two multinational companies from the same geographical region. Originating in the same industrial culture and with technically advanced, complementary products, they formed a strategic alliance for international growth in 1947. Despite significant changes in the market over the years, the companies remained market leaders and icons of a successful alliance until 1988, when the alliance suddenly collapsed. The study describes the alliance process from a long-term perspective using a theoretical framework based on motives, resources, competitive advantage, trust and performance. Although the alliance is no more, it is found to have made a substantial contribution to the collaborating firms with respect to their growth and expansion in the world market. Both partners achieved what they expected from the alliance. They also have developed well as competitive companies thereafter. The sudden end to the collaboration can therefore not be seen as a failure. However, it is argued that the separation process, as the process of alliance formation, needs to be taken seriously, and managers must give sufficient time and effort to ensure that the break-up becomes non-dramatic and less painful.     

Diagnosing and treating operational and implementation barriers in synoptic marketing planning

Strategic marketing planning is now widely adopted by business-to-business organizations. While marketing planning principles are well established, practitioners attempting to implement the process often find their progress impeded by a variety of barriers. These barriers are explored through a review of published evidence and case study analysis of several organizations. This analysis exposes three levels of barriers to effective business-to-business marketing planning, relating to (i) organizational infrastructure, (ii) the planning process and (iii) implementation. These barriers reflect the synoptic nature of planning in many organizations. The findings lead to the development of a practitioner-oriented diagnostic and treatment tool which guides managers through the marketing planning process. Although this diagnostic deals specifically with issues which are relevant to the marketing planner, its wider implications for strategic planning are also explored.     

Managing strategic intellectual property assets in the fuzzy front end of new product development process

The strategic use of intellectual property (IP) is crucial for technology-based companies to gain competitive advantage. The recent transformation of the US patent system brings new challenges and opportunities in this arena. In this regard, this study attempts to identify techniques which can help with IP evaluation and selection in the fuzzy front end (FFE) of new product development (NPD) process. This study combines data collection methods such as mining the literature, conducting in-depth interviews, surveying questionnaires, and analyzing cases. This research serves as an analysis of modern literature and identifies a multicriteria weighted scoring model that can be employed to help with the patent decision process. The criterion to discern patent eligibility is a contended discussion. For this survey administration, 300 companies, as the targeted sample, were randomly selected to be reached from LexisNexis database. Consequently, this paper identifies the key decision criteria to incorporate into this model and obtains weights gathered from surveying IP professionals and R&D managers in US-based electronics manufacturing firms (SIC code: 36). This study proposes a structured approach to identify ideas that should be patented in the FFE of NPD process by way of an analysis of pertaining literature and case studies. The technique we present in this paper could be essential for many firms to achieve IP success as their strategic means. Moreover, this tool can help R&D managers not only speed up the FFE of NPD process but also make more informed and target-worthy decisions for IP filing.     

Platform-Driven Development of Product Families: Linking Theory with Practice

Firms in many industries increasingly are considering platform-based approaches to reduce complexity and to better leverage investments in new product development, manufacturing, and marketing. However, a clear gap in literature still exists when it comes to discussing the problems and risks related to implementing and managing product families and their underlying platforms. Using a multiple-case approach, we compare three technology-driven companies in their definition of platform-based product families, investigate their reasons for changing to platform-driven development, and analyze how they implemented platform thinking in their development process and which risks they encountered in the process of creating and managing platform-based product families. The field study shows that the companies involved in the study use a homogeneous concept of platform-based product families and that they have similar reasons to turn to platform thinking and to encounter comparable risks. However, the companies analyzed use mainly product architecture as a basis for their platforms (and ignore many of the platform types advocated in literature), while on the other hand they show divergent applications of the platform concept regarding the combinations of product families and market applications. Through this exploratory study, some important white spots in literature became evident as well. In the discussion part of this article these white spots are discussed and directions for future platform research are proposed. The article concludes that given its importance, platform-driven development of product families clearly deserves further research to provide more insight into strategic planning for new products.     

From lead compound to product

The process of turning a promising chemical compound into a safe and effective drug is both expensive and risky. Effective strategic planning is vital to ensure that investment in staff and equipment is used productively and that an acceptable output of products can be maintained. But methods of planning in common use do not deal satisfactorily with the uncertainties. This paper sets out an analysis of the process and describes the use of a simple model to establish a strategic plan. The model allows the output, resource efficiency and robustness of a plan to be examined. Important conclusions about the relative distribution of resources between different activities are drawn and the effects of possible changes in regulatory requirements are explored.     

Research notes and communications strategic planning as competitive advantage

Since 1970, over forty empirical studies have examined the performance consequences of formal strategic planning. This line of research has drawn heavy criticism from reviewers on methodological grounds, and has produced confusing, apparently contradictory results. This article reevaluates the planning-performance relationship from a resource perspective, arguing that strategic planning does not satisfy the criteria for sustainable competitive advantage– although it may produce economic value, it is easily imitated and may be substitutable. The article suggests that previous studies produced inconsistent results because they did not account for the dissemination of strategic planning over time, or for industry differences in strategic planning factor markets. An empirical test in two industries finds that formal strategic planning and financial performance are unrelated in a ‘planning equilibrium’ industry, but positively related in an industry with strategic planning factor market imperfections.     

Long range planning in the mature corporation

The decade of the seventies has seen a dramatic surge in the acceptance and adoption of long range planning systems by U.S. firms. This paper examines the planning experiences of 86 Fortune 1000 companies, many of them with formal planning systems ten years of age or more. Data collected in this study suggests that planning systems move through different phases in a development cycle. The ability to cope with planning problems, the satisfaction of planning participants, and the extent to which companies formulate explicit policies to recognize managerial contributions to long range planning activities are associated with the age of a company's formal planning system and its phase of planning system development. Mature system companies do a better job in coping with planning problems, are more satisfied with their planning systems, and are more likely to recognize managerial contributions to long range planning.     

Strategic groups and competitive enactment: a study of dynamic relationships between mental models and performance

This study used computer-assisted content analysis of more than four hundred presidents' letters to shareholders to examine empirical linkages between cognitive strategic groups clustered by themes in the reports and strategic groups clustered by performance. We found these groups converged as predicted by the literature, and that mental models and performance are involved in a recursive process of competitive enactment which contributes to strategic group stability. Our research used inductively derived themes from the letters to structure a mental model widely shared in the pharmaceutical industry, and then employed thematic variations to find stable clusters of companies. These thematic clusters were triangulated with the strategic groups from a published study of the same industry, in the same period, and were shown to converge. Additionally, longitudinal linkages between earlier mental models of strategic goals and later reports of performance were found. The findings of our large-scale empirical study support strategic group theory, demonstrate a novel approach to data mining, and pose questions for future research. Copyright © 2001 John Wiley & Sons, Ltd.     

Designing Visual Recognition for the Brand*

The present paper examines how companies strategically employ design to create visual recognition of their brands' core values. To address this question, an explorative in‐depth case study was carried out concerning the strategic design efforts of two companies: Nokia (mobile phones) and Volvo (passenger cars). It was found that these two companies fostered design philosophies that lay out which approach to design and which design features are expressive of the core brand values. The communication of value through design was modeled as a process of semantic transformation. This process specifies how meaning is created by design in a three‐way relation among design features, brand values, and the interpretation by a potential customer. By analyzing the design effort of Nokia and Volvo with the help of this model, it is shown that control over the process of semantic transformation enabled managers in both companies to make strategic decisions over the type, strength, and generality of the relation between design features and brand values. Another result is that the embodiment of brand values in a design can be strategically organized around lead products. Such products serve as reference points for what the brand stands for and can be used as such during subsequent new product development (NPD) projects for other products in the brand portfolio. The design philosophy of Nokia was found to depart from that of Volvo. Nokia had a bigger product portfolio and served more market segments. It therefore had to apply its design features more flexibly over its product portfolio, and in many of its designs the relation between design features and brand values was more implicit. Six key drivers for the differences between the two companies were derived from the data. Two external drivers were identified that relate to the product category, and four internal drivers were found to stem from the companies' past and present brand management strategies. These drivers show that the design of visual recognition for the brand depends on the particular circumstances of the company and that it is tightly connected to strategic decision making on branding. These results are relevant for brand, product, and design managers, because they provide two good examples of companies that have organized their design efforts in such a way that they communicate the core values of their brands. Other companies can learn from these examples by considering why these two companies acted as they did and how their communication goals of product design were aligned to those of brand management.     

The role of e-marketplaces in supply chain management

Electronic marketplaces (e-marketplaces) have a profound influence on the way in which organizations manage their supply chains. Proponents of the e-marketplace concept suggest that web-based trading systems, such as World Wide Retail Exchange (WWRE) and GlobalNetXchange (GNX), would enable companies to more efficiently buy, sell, and manage their supply chain processes on a global scale. This study investigates the extent to which e-business tools of the e-marketplace are used by channel members in the retail sector for business-to-business supply chain management (SCM). The study is based on a survey involving food service companies, retailers, and wholesalers in the UK. It is shown that the e-marketplace supply chain applications enable the majority of companies to automate transaction-based activities and procurement-related processes rather than strategic supply chain activities. The results also indicate that full participation in e-marketplaces requires companies to integrate their internal and external supply chain activities and share strategic information.