Abstract
As was suggested in the previous chapter, when an organization is resident in a context characterized by moderate state-stochasticity, it might attempt to answer for strategic readiness requirements by electing to operate under a bipartite, model-based contingency planning platform: [E] ↔ [R]. Again, both [E] and [R] can be expected to house referents that are comprensible as models … as scenarios and scripts, respectively. Given the preadaptive orientation of traditional contingency planning, the contingency event set [E] would be expected to contain the set of environmental and/or competitive state-level events to which an organization may be subject at some future period(s). The response-side set [R] will thus ideally contain a predefined and fully-invested strategic plan available for execution should any member of the contingency event set actually occur. In terms of its broad practical implications then, a contingency planning structure of this sort may be seen as a basis for bringing some degree of formal discipline to strategic analysis operations conducted over what is referred to as the SWOT quartet … the assessment of Strengths, Weaknesses, Oppportunities and Threats.
Though contingency planning is frequently mentioned as something that organizations ought to be doing more of, there has in fact been very little discussion of how they might best go about actually doing it in a properly disciplined way. This is not entirely surprising. For in terms of the technical provisions it might entail —procedural and instrumental requirements— it is a very demanding activity . . . especially when undertaken at the strategic level. Nevertheless, there are two different (but ultimately complementary) classes of structuring techniques that can bring some degree of formality to strategic contingency planning exercises:
1) Matrix-based (Markov type) structures
2) Simple stochastic network (tree) structures
For the most part however, use of these techniques has been restricted to the military sector (and not even there are they always properly employed). They do however have application for competitive contexts in general, not just the military. We’ll thus use this chapter to go through a rather detailed examination of how organizations might make best practical use of these two structuring conventions, and what might they might provide in terms of strategic readiness.
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Notes and References
For more on the rationale for a contingency-based approach to management, see the following: Bums & Stalker, Management of Innovation (Tavistock, 1961);
Hofer’s article, “Towards a Contingency Theory of Business Strategy”, Academy of Management Journal (18; 1975);
Lawrence and Lorsch’s book, Organizations and Environment (Harvard University Press, 1967),
Miller & Friesen, “Strategy-Making and Environment”, Strategic Management Journal (4; 1983).
As an indication of the extent to which the goal-driven approach monopolizes not only popular but also academic attention, one of the most popular and widely-referenced of management authors, Russell Ackoff, has written that “Planning consists in conceiving a desired future and the practical means of achieving it” (Concept of Corporate Planning; Wiley, 1970). But as we’ve suggested in this volume, this can only be taken to be an adequate description of planning requirements only for those those corporations that are effectively dominant in their fields and/or autonomous, and so essentially immune from exogenous threats. In all other cases, following Ackoff’s advice as to what planning entails would very likely put organizational authorities in peril of being visited by a steady stream of unpleasant strategic surprises.
For more on singular-scenario or essentially linear-sequential strategic planning practice, see: Fry & Killing’s, Strategic Analysis and Action (Prentice-Hall Canada, 1986);
Green & Jones, “Strategic Management Step-by-Step”, Long Range Planning (15, 3; 1982);
B. E. Gup’s book, Guide to Strategic Planning (McGraw-Hill, 1980);
Naylor’s paper, “Strategic Planning and Forecasting”, Journal of Forecasting (2; 1983).
For ideas on generating scenarios, see Michael Godet’s, Scenarios and Strategic Management (Butterworths, 1987);
Hirschhorn’s paper, “Scenario Writing: A Developmental Approach”, Journal of the American Planning Association ((46, 2); 1980);
McNulty’s “Scenario Development for Planning”, Futures (9; 1977).
An excellent discussion of Markov operations is in Massey, et. al., in their: Stochastic Models of Buying Behavior (Cambridge: MTT Press, 1970). Indeed, interest in the employment of Markov processes seems to have peaked during the early 1970’s, at least so far as non-engineering applications are concerned. Note also that Markov structures could be fitted over either strategic, tactical or operational event possibilities without any major modification (and indeed, most of the actual uses to which Markov analysis has been put are better thought of involving operational or tactical than strategic choices) ... c.f.,
Rowland & Sovereign, “Markov-Chain Analysis of Internal Manpower Supply”, Industrial Relations (9,1), 1968.
There are of course other methods for trying to display concatenative dynamics. Of such, perhaps the most widely employed is the influence diagram, c.f.: John Diffenbach, “Influence Diagrams for Complex Strategic Issues”, in Strategic Management Journal (3), 1982). There are, however, no formal manipulation mechanics underlying this or any of the more popular graphic display media designed for direct use by managers. Somewhat more sophisticated approaches to representing simple state-transform dynamics (which could easily be extended to a graphic format) are certain of the computer-based modeling grammars now under development.
For a description of a typical approach, see Arthur M. Geoffrion’s An Introduction to Structured Modeling (Western Management Science Institute, UCLA: Working Paper No. 338, June 1986).
For more on the generation and use of generic referents, see Part II of my Societal Systems: Methodology, Modeling and Management (New York: North Holland, 1978).
Discussions of the concept of X-efficiencies appeared in the Summer 1980 issue of the Journal of Post-Keynesian Economics, e.g.: Roger Franz, “On the Existence of X-efficiency”, or my paper: “Corporate Autonomy and X-inefficiency”.
Of such books, those by Michael Porter are of enormous appeal to practitioners; c.f. his Competitive Advantage (Free Press, 1985). But while easy to read and engaging for executives that have no good disposition towards serious academic argument or technical dissertation, such works may often encourage strategic planners to be preoccupied with searching for opportunities they can exploit by virtue of apparent competitive advantages (some of which may be more a matter of wishful thinking than fact) their firm enjoys over others. But while such an emphasis would be entirely appropriate for effectively dominant enterprises (being really just a natural extension to popular goal-driven planning practice), the better part of valor for organizations operating in highly competitive contexts —or significantly vulnerable to environmental vaguaries— is to worry about dealing with what others might do to us before undertaking the more entertaining task of speculating about what we might do to others. Hence, again, the reason why the Structured contingency planning protocol discussed in this chapter is threat-driven.
Operations over tree structures and other simple network-based constructs are simple expressions of basic graph theory conventions, c.f.: Harary, et. al., Structural Models: An Introduction to the Theory of Directed Graphs (Wiley, 1965).
Or for a more recent discussion of their decision implications, see the appropriate sections in Andrew Sage, Methodology for Large-Scale Systems (McGraw-Hill, 1977);
or Sage and Rajala’s paper: “On the Role of Structure in Policy Analysis and Decision-making (in Management Handbook for Public Administrators: Van Nostrand Reinhold, 1978).
For example of combined-force concepts, see a document developed by the BDM Corporation under a grant from DARPA (the Defense Advanced Research Projects Agency): The Airland Battle Management Program: Corps Operations and Scenario Description, October 31, 1985. This is representative of what popularly passes in the contemporary defense community as a Planning scenario, and also shares with virtually all of its counterparts this vital aspect: The NATO forces always win.
To generalize from this point, there is one very critical caution that might be directed not merely at those doing military planning, but also at corporate planners. For as a consequence of trends noted in the very first chapter of this book —the increasing quality of foreign competitors, coupled with (indeed, in part a cause of) decreasing general American affluence— we are running into more and more situations where strategic planning must be done in anticipation of possible tactical-level disadvantages. That is, both US commercial firms and military elements may for the first time be called upon to confront adversaries who are relatively richer in assets. Doing high-quality, disciplined strategic planning, oriented towards realistic net assessments rather than comforting fictions, now takes greater urgency than even before. For if you’re not as rich or strong as the other guy, about the only way to avoid defeat is be smarter (or of course luckier, though so much of what is taken at first to be the spawn of luck may in retrospect better be seen to be the consequence of wit).
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© 1989 Kluwer Academic Publishers
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Sutherland, J.W. (1989). Structured Strategic Contingency Planning. In: Towards a Strategic Management and Decision Technology. Theory and Decision Library, vol 8. Springer, Dordrecht. https://doi.org/10.1007/978-94-009-0953-3_3
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