Enlightened Planning

Using Systematic Simplicity to Clarify Opportunity, Risk and Uncertainty for Much Better Management Decision Making

Christopher Chapman

• Publisher: Routledge
• Year: 2019
• ISBN:
  9780429757860
• Edition: 1
• Topic: Business
• Subtopic: Business Strategy
• Index: Business

Strategy, risk management and project management are often considered separately by those applying their principles—but at their most effective, all are dependent upon each other for success. Enlightened Planning teaches this holistic perspective and demonstrates how a synthesis of these approaches yields far greater opportunities. A strategic, calculated risk, for example, can be less inherently risky than chronic risk aversion over time.

Here, a respected specialist and teacher demonstrates how to become an 'enlightened planner', one that is aware of project, strategy and risk concerns, and their potential interplay. Following the core principle of Keep It Simple Systematically, he shows how organised, systematic thought processes can demystify the complexities of decision-making when considering a huge variety of concerns at once.

Supported throughout with real-life cases from the author's considerable experiences with commercial organisations, it is also supported by a website containing even more cases, learning and teaching materials. This book is essential reading for any practitioner specialising in risk management, project management or strategy; as well as those teachers or participants in executive programmes.

Part 1
Foundations

Chapters 1 to 4 contents indicating sections within chapters

1 Why planning is usually vital but often difficult and frequently inept

Formal planning and related informal planning

Planning application areas

What enlightened planning (EP) means at an overview level

Dealing with process design choices

The simplicity dilemma and the enlightened simplicity response

The framing assumptions mantra

Stealth assumptions which matter

Confronting the terminological quagmire

Risk efficiency, clarity efficiency and opportunity efficiency

Framing multiple objective trade-off approaches

Stochastic modelling framework choices

Risk management failures as part of a very complex mess

The good or bad behaviours and practices mantra

Two further enlightened planning mantras

Strategic clarity and tactical clarity

Systematic simplicity as a composite concept

A summary with linked inferences

2 A ‘universal planning uncertainty and complexity management process’ (UP)

A UP overview

Process initiation and termination

Process phase structure

Capability-culture concepts

The ‘closure with completeness’ concept

UP generality in principle and in practice

The provenance of the UP concept

Further clarifying what a UP is and is not from an EP perspective

3 Low to high clarity approaches and the ‘estimation-efficiency spectrum’

A minimum clarity approach to estimation

A two scenario HAT example

More than two scenarios to ‘refine’ an estimate

One or more ‘condition’ scenarios

Parametrically defined probability distribution special cases

The synthesis underlying a HAT approach

Systematic decomposition of multiple sources of uncertainty

Higher or lower levels of clarity when appropriate

Clarity efficient boundary concepts

Risk efficiency – with avoiding risk inefficiency as the focus

Risk efficiency – with enlightened caution as the focus

Opportunity efficiency – with enlightened gambles as the focus

Opportunity efficiency – with enlightened prudence as the focus

Interim consolidation of the opportunity efficiency concept

The importance of seeking both specific and general responses

More interim consolidation of the opportunity efficiency concept

4 Confronting challenging complexities usually needing more clarity

Sensitivity diagrams as portals to further opportunities

Source-response diagrams as portals for further clarity

Consolidating unbiased parameter estimation issues

A general conceptual framework for multiple objectives

Seeking effective low clarity views of trade-offs

Simple but effective strategies for dealing with multiple objectives

A very dangerous myth and a closely coupled bias

A multiple objectives approach to planning the planning

A key strategy for dealing with multiple objectives

Informal treatment of all objectives not addressed formally

A ‘menu view’ of decision-making process goals

1 Why planning is usually vital but often difficult and frequently inept

This chapter begins the process of clarifying why planning is usually vital but often difficult and frequently inept. Several further goals are also pursued throughout this chapter. The central further goal is providing an overview of key foundation level concepts, using a layered approach, with each layer building on earlier discussion. Another important related goal is beginning to clarify why some significant departures from common practice planning are needed, including aspects of common practice which are widely believed to be good practice.

The next two sections outline what ‘planning’ means in this book. A third section explores key implications of ‘enlightened planning’ (EP) at an overview level. This is followed by a series of sections introducing specific defining features of enlightened planning. The final section provides a summary with linked inferences. By the close of this chapter you should have an overview understanding of why planning is usually vital but often difficult and frequently inept, what is implied by enlightened planning terms like ‘strategic clarity’, and why it may be worthwhile investing the time to read the rest of this book if you already are, or you would like to become, an effective ‘reflective practitioner’ with an interest in approaches to planning and associated management decision making which keep it simple systematically.

Formal planning and related informal planning

‘Plans’ sometimes begin as very simple descriptions of a concept or intent. Plans may evolve into explicit base plans (like an aspirational target ‘plan A’ – what an organisation would like to do assuming there are no new significant opportunities or big problems) plus contingency plans (‘plan B’, ‘plan C’, and so on – a set of alternative plans to be used if circumstances arise which make ‘plan A’ inappropriate). Base plans plus contingency plans usually need to include ways to capitalise on possible good luck as well as possible bad luck. Contingency plans frequently have to address ambiguous scenarios involving ‘unknown unknowns’ of the ‘any other unspecified major opportunity or problem’ variety. ‘Plan A’ may need refinement, relabelling it as A1, and then replacing A1 with A2 followed by A3 to incorporate proactive adjustment of the base plan to better cope with uncertainty prior to plan implementation. One or more contingent ‘exit plans’ may be prudent, as well as prior plan B and plan C contingency planning.

Sometimes plans are usefully described as ‘policy’, in the sense that plans are broadly defined strategies for making specific kinds of decisions rather than plans for use on a single occasion. Sometimes plans are usefully described as ‘process’, in the sense that plans are a flexible process for implementing policy. Sometimes plans are usefully defined as ‘procedures’ or ‘protocols’, in the sense that plans are sets of rules for implementing policy with minimal room for creative interpretation normally assumed. Plans may address activities, resources, designs, operating policies, strategies, operational rules, formal contracts and informal relationships.

The basic role of all the planning addressed by this book is effective and efficient approaches to management decision making in ‘commercial organisations’. Commercial organisations are broadly defined to include all product and service providers who charge a price for what they provide. The example organisations considered in Part 2 span a wide range of examples, but a much wider range of application areas and planning concerns is within the scope of the approaches explored in this book.

Planning may involve significant amounts of underlying analysis. In some contexts, you and many others may regard ‘analysts’ as a more appropriate term than ‘planners’ for those doing the work referred to as planning in this book. Furthermore, many of the people involved in planning whom this book addresses as key target readers may prefer to see themselves as ‘managers’, not ‘planners’ or ‘analysts’, with planners and analysts reporting to them.

Target readers may serve their organisations in a wide variety of roles, as project managers, marketing managers, corporate strategy managers, or managing directors, for example. A key premise this book is based on is all target readers need to be able to communicate effectively and efficiently about planning, using a shared common language and shared key assumptions about other important concerns.

You can interpret the word ‘planning’ in plain English terms, along with most other words used in this book. However, to ‘keep it simple’ this book’s default interpretation of planning is formal planning, including all associated formal analysis.

The roles of formality when planning include ensuring that all the people involved in creating and shaping the plans make explicit what they have in mind. Associated purposes include testing assumptions and conveying information to other people who need to understand the implications of the plans in various ways. These other people may need to understand the plans because of the need for mutual support when ‘component teams’ of a ‘big team’ adjust their component plans and actions to the plans of other component teams. This is a key contingency planning issue within a broader concern for coordination and collaboration as part of effective and efficient teamwork. Other specific reasons for shared understanding relevant to some players may include their role in helping to execute the plans, their role in helping to test the plans, and their role in approving the plans. Controlling the relationship between what planners had in mind initially and evolving development and realisation of the plans may also be a crucial role for formality. Ongoing learning from experience and more general corporate knowledge capture may be further reasons of considerable importance for employing formal planning rather than relying on informal planning.

Assumed ‘non-players’ may become relevant players if they are not prepared to tolerate the plans – a potentially serious risk. But those initially assumed to be in opposition to or indifferent to plans may become important allies if mutual opportunities are identified – a potentially important opportunity.

Making specific aspects of planning formal involves crucially important implications for associated informal planning. Sometimes these implications are just mentioned in this book, sometimes they are developed immediately, and sometimes they are developed later at a more convenient point in the overall dialogue.

All relevant planning concerns must be dealt with via one of three options:

1. 1 formal planning,
2. 2 informal planning, and
3. 3 being ignored.

Clarity about which of these three options is being used to deal with each category and area of planning, as well as ensuring appropriate option choices, is a central aspect of the ‘strategic clarity’ concerns which formal planning has to address.

Sometimes informal planning of some aspects is more appropriate than formal planning, and where the line is drawn between formal and informal treatment is often crucial. Usually effective understanding of informal planning using more sophisticated structures and more detail is a crucial basis for effective formal planning. All formal planning certainly needs underpinning by background informal planning. Almost invariably effectively implementing formal plans involves further detailed informal planning plus creative leaps and real-time responses to unfolding events. ‘Constructive insubordination’ can be crucial – departing from prescribed formal plans which are inappropriate, even in military or emergency service contexts, where disobeying orders or protocols is generally discouraged in fairly harsh terms.

Any holistic formal planning process has to integrate formal and informal components and anticipate how best to encourage creative implementation in addition to creativity at the outset and creativity throughout the planning process. Deciding whether formal or informal treatment is the most appropriate option raises complex concerns, and simply ignoring planning issues raises quite different concerns which also have complex implications. The core issues include ‘capability-culture’ considerations involving the capabilities provided by the relevant players and systems and the culture these capabilities are embedded in.

Two ‘modes’ of planning are distinguished: ‘top down’ and ‘bottom up’. In the top-down mode ‘goals’ at the current decision-making level are the starting point, asking questions like ‘What are we trying to achieve, and what matters most?’ In the bottom-up model the starting point is decomposing what we think needs to be done to get to where we think we want to go, asking questions like ‘How are we going to do it, how long is it going to take, and how much is it going to cost?’ The use of ‘we think’ implies we may change our mind.

Sometimes ‘the top’ needs moving up or ‘the bottom’ needs moving down in terms of the organisational hierarchy or scope of analysis, as part of considered revisions to the planned approach through an iterative process.

Multiple iterations are a central process feature of many of the most effective and efficient formal approaches to planning. Planned iterations can be a cost-effective feature of immense importance, built into processes with this in mind. But unplanned iterations may prove essential because of earlier errors of judgement. Unplanned iterations may be very costly.

This kind of planned plus unplanned iterative process is often inherently complex. It is always important to keep planning processes as simple as possible for all those involved. However, oversimplification in the ‘wrong way’ can have seriously dysfunctional implications, and how to simplify in the ‘right way’ may not be obvious unless the approach to simplicity employed is well informed and systematic.

Planning application areas

To keep this book’s discussion as simple as possible all relevant planning is decomposed into three very broad application areas:

1. 1 operations management,
2. 2 project management,
3. 3 corporate management.

These three application areas need separable treatment because significant differences in approach need attention, but they are interdependent in important ways.

Each of these three application areas can be further decomposed, and often this is important in practice. However, the greater the level of decomposition, the more difficult and crucial treating interdependency issues becomes, and the importance of commonalities may be lost.

‘Operations management’ is sometimes interpreted as the day-to-day management of ongoing operations with a focus on short-term planning for the physical systems used by an organisation plus input supply chains. However, in this book operations management and all embedded ‘operations planning’ also addresses the ongoing operation of all other systems and resources, including output marketing chains. Furthermore, generating corporate strategy propositions to address future operations concerns is a crucial aspect of the interdependence between operations and corporate planning. Using this broad interpretation of operations planning, all Part 2 chapters involve a central concern for different kinds and levels of operations planning, with key roles for a traditional ‘Operations Director’ in Chapters 7, 8 and 9.

‘Corporate management’ effort and associated ‘corporate planning’ may be focused on formulating corporate strategy in a top-down planning mode in some organisations. For some people, this kind of strategic planning is the focus of all corporate planning. But in this book corporate management and all embedded corporate planning includes five aspects:

1. 1 Top-down corporate planning, which starts by clarifying the corporate mission or vision in terms of goals and then moves on to strategic planning top-down to achieve those goals effectively and efficiently.
2. 2 Corporate planning, which involves the strategic scope of operations and project planning intersecting with the rest of corporate planning.
3. 3 Planning for all corporate resources and capabilities needing attention which may not be covered fully, if at all, by operations planning or project planning, including corporate information systems, corporate finance and human resources functions.
4. 4 Dealing with all relevant interdependency concerns not picked up elsewhere.
5. 5 Effective corporate governance addressing everything that matters, including all relevant capability-cult...

Table of contents

• Cover
• Half Title
• Title
• Copyright
• Dedication
• Contents
• Foreword by Stephen Ward
• Comments by other colleagues
• Preface
• Overview
• About the author
• Acknowledgements
• Part 1 Foundations
• Part 2 Employing planning tools in practice – five illustrative tales
• Part 3 Further synthesising and reflecting
• References
• Website information
• Index