The Myth of Planning

Expectations of this nature are rooted in the wishful belief that even far-reaching transformations can be planned in detail and are fully predictable. Classic management teaching describes the management process as a linear sequence of goal – plan – realization – controlling (see Figure 1). If the realization is to be a success, the planning must be complete. Even the implementation of highly complex changes such as the establishment of a new company – in the Web 2.0 environment or after being awarded a mobile network license on a previously undeveloped national market, for example – is generally based on this pattern. The most extreme case of this faith in planning can undoubtedly be seen in socialist economies and their five-year plans.

Such blind faith in the virtues of planning is becoming increasingly rare among today's managers. But the old faith goes deep. During projects, for example, recurring demands are made on consultants during the preparation of business plans to predict market developments, turnover potential, or the lifetimes of technologies for up to ten years into the future. But just because the concept of secure planning is a myth does not mean that plans cannot or should not be made at all. There is a core of truth in every myth. But it has been exaggerated and overrated in people's perception. The danger is in this exaggerated overevaluation.

Complexity and the All Too Human Desire for Predictability

There was a time when the application of system theory and chaos research in economic sciences was very much in vogue. Stock markets, markets, and companies were understood to be highly complex, dynamic systems of exponentially growing interdependencies which were consequently subject to major limitations in predictability. Self-organization, feedback loops, and autopoiesis were discussed as fundamental principles of economic systems and companies. Business schools quickly seized on these ideas, originally derived from natural sciences, as a genuine, intellectual enrichment of their teachings, and they remain today state-of-the-art in the world of academics.

But this approach from the standpoint of unpredictability is not the stuff which the dreams of shareholders and financial investors are made of. Financial investors still want to see a business plan containing the forecast for a number of years which will reassure them as reliably as possible of the security of their investments. The question of the extent to which such projections are really tenable and reputable is another chapter. Persuading investors to back a self-organizing process which, for the most part, defeats any attempts at management and does not promise a clearly defined result is a difficult undertaking, to put it mildly. So, despite all of the criticism from academic circles, the classic business plans and strategy concepts, along with their concrete promises, continue to dominate decisions in the world of business. The (lack of) precision in predicting the future is frequently sobering, as has been demonstrated first by the bursting of the dot-com bubble and now by the current financial crisis. Even successfully realized visions such as the oft-quoted business models of Amazon, eBay, Google, or Dell have today taken on completely different forms in reality from what was originally expected by their inventors and investors.