Strategic Planning Processes in Chaotic Environments: How to Calm a Turbulent Sea?

Abstract

This study explored the linkages between environmental turbulence, strategic planning, and process effectiveness. Going beyond the traditional literature on the planning process, the present research included both an examination of the planning process itself and the external environment in which the organization of interest exists. The objective of this research was to examine the multi-dimensional treatments of environmental turbulence, strategic planning processes, and process effectiveness. It proposed to explore the planning-process effectiveness construct across two industries. By adding the aspect of environmental turbulence into the equation, the multi-dimensional treatments of planning and process effectiveness were broadened. This study examined the linkage between the external environment, the strategic planning process, and effectiveness of the process. It addressed two research questions: What components and contextual elements of the planning process are critical for that process to be effective? Are these components and contextual elements of the planning process different in various levels of environmental turbulence? The research model demonstrated that in different levels of environmental turbulence, the components and contextual elements of the strategic planning process would be stressed differently. Specifically, in more turbulent environments, the organization's strategic planning process would devote more resources to the planning function, be less resistant to planning, pay more attention to external and internal facets, employ more planning techniques, and encourage greater functional coverage and integration. All these were relative to another organization's planning process that was operating in a less turbulent environment. One of the aims of this research study was to develop concrete recommendations to the automotive and beverage industries. Based on the findings of the study, it was recommended that: The strategic planning managers in the beverage industry pay special attention to ensure that there is sufficient functional coverage in their strategic planning process. Sufficient resources be made available to the planning function. Also, the level of resistance to planning be monitored by which resistance should be an on-going process throughout the strategic planning process and in every functional area of the firm. The other aim of this research study was to explore the "black box" of strategic planning. The findings revealed that: Functional coverage was the key component in the process and that the adequate supply of resources to the planning function was the most critical contextual element for the effectiveness of the planning process. Organizations with highly turbulent environments tended to need more resources placed against the planning function and required extensive attention to the external facets of planning for their strategic planning process to be effective. At the same time, firms in lower turbulence industries such as paints and coatings, railroads, and forge casting could look to the beverage industry for a concrete action plan to improve the effectiveness of their planning processes.