Peter Drucker on Strategic Planning

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It is remarkable how the same lessons need to be rediscovered again and again. Sun Tzu dealt with the confusion between a warrior's adaptive strategy in dealing with competing people and long-term planning in dealing with objects. We are still dealing with it today.

In this 1973 book, Management Tasks and Responsibilities, Peter Drucker found the same problem in the confusion that management had about planning for objects and planning for people. He listed four misconceptions arising from the term "strategic planning." He said:

  1. Strategic planning is not a box of tricks, a bundle of techniques.
  2. Strategic planning is not forecasting.
  3. Strategic planning does not deal with future decisions.
  4. Strategic planning is not an attempt to eliminate risk.

While there are techniques in competitive strategy as there are in manufacturing, they work very differently. Competitive techniques always depend on the big picture. As opposed to "a bundle of techniques," Drucker describes strategy from a warrior's perspective of "analytical thinking and commitment of resources to action." He describes attempts at predicting the future as "foolish," because it is of little use to people who seek to "innovate and change the ways in which people work and live."

Drucker saw strategy in terms of the decisions we make today about a future that is inherently uncertain. This is the realm of unpredictable people not predictable objects. Most importantly, Drucker recognized that strategy cannot eliminate risks. Because we cannot predict the future, risks must be taken. The purpose of strategy is to not to eliminate risk, but in Drucker's words, to take the "right risks." Innovation is at is core, an act of discovery, in which we must embrace the uncertainty of the environment, exploring it for opportunities.

Drucker's definition of "strategic planning" is what we simply call Sun Tzu's Rules.

"Strategic planning is the continuous process of making present entrepreneurial (risk-taking) decisions systematically and with the greatest knowledge of their futurity; organizing systematically the efforts needed to carry out these decisions; and measuring the results of these decisions against the expectations through organized, systematic feedback."

In other words, it is the science of making good decisions about the future.

In his analysis, Drucker covers several of key factors first identified by Sun Tzu. Agreeing with Sun Tzu, he says that it "starts with the mission of the organization." After that, strategy must consider the climate, what is changing. He describes decision-making as "a time machine which synchronizes into the present a great number of divergent time spans." His focus on decision-making is about the warrior as an active element. In describing the specific methods of strategy, he even touches on Sun Tzu's idea of analysis being an act of relative comparison.

"Some of the most important questions in strategic planning can be phrased only in terms such as 'larger' or 'smaller,' sooner' or 'later,' and some equally important areas cannot be quantified at all. They can be handled only as restraints, or parameters, but not as factors in the equation itself."

Like Sun Tzu, Drucker also saw this decision-making as a process of innovation. The key is what we choose to do differently. Drucker described the essential questions as, "What new and different things do we have to do, and when?" And that it wasn't only about what we decide about doing but about what we fail to decide to do.

"It is meaningless to speak of short-range and long-range plans. There are plans that lead to action today - and they are true plans, true strategic decisions. And there are plans that talk about action tomorrow - they are dreams, if not pretexts for nonthinking, nonplanning, nondoing."

With Sun Tzu's Sun Tzu's Rules, we seek to move Strategy 2.0 firmly into the area of doing rather than planning.