LEARNING TO PLAN AND PLANNING TO LEARN: RESOLVING THE PLANNING SCHOOL/LEARNING SCHOOL DEBATE

This paper resolves the iong-standing debate between the two dominant process schools in

strategy. Analysis of the planning practices of 656 firms shows that formal planning and

incrementalism both form part of 'good' strategic planning, especially in unstable environments.

Environment neither moderates the need for formal planning nor the direction of the

planning/performance relationship, but does moderate firm planning capabilities and planning

flexibiUty. In unstable environments planning capabilities are far better developed arid formal

plans more amenable to change. The planning/performance relationship is, however, moderated

by planning duration: at least four years of formal planning are required before extemal

performance associations are noted. Copyright © 1999 John Wiley & Sons, Ltd.

INTRODUCTION regime has been employed at a firm on the

planning/performance relationship was also

A recent bitter debate between two prominent explored, together with other Leaming School

strategy academicians considers a question vital critiques of the Planning School After reviewing

to the theory and practice of strategy: what types prior research, the key constmcts utilized in the

of planning should firms utilize in their strategy study are presented and discussed. Then, hypothformation

behaviors? Ansoff, flying the Planning eses are presented, followed by the study method-

School flag, contends that formal planning is ology and a report of the findings. Once the study

beneficial in both stable and unstable environ- limitations are acknowledged, a discussion of the

ments (Ansoff, 1991, 1994) while Mintzberg, art- key implications of the findings, for research and

iculating the Leaming School view, favors logical practice, concludes the paper,

incrementalism, especially in unstable environments

(Mintzberg, 1991; 1994a, 1994b). This

paper presents a resolution to the debate, and THEORY DEVELOPMENT

reports on a study investigating whether environ- „ . .

mental conditions moderate the type of planning

firms employ in their strategy formation activities. Few issues have attracted more attention in strat-

The impact of the length of time a planning egy research than the relationship between the

mode of strategic planning adopted by the firm

Key words: formal strategic planning, logical ^ ^ ^^^ economic performance of the firm,

incrementalism, environmental stability, firm perform- Regrettably, decades of planning/performance

ance research have yielded inconsistent findings. A

•Correspondence to: Professor Peter J. Brews, The Fuqua review of 18 empirical Studies testing the effect

School of Business, Duke University, Box 90120, Durham, ^ ^ i *_ .. • t •

NC 27708-0120 USA °' formal Strategic plannmg on econonuc performance

concluded the link was 'tenuous'

CCC 0886-9383/99/100889-25 $17.50 Received 10 June 1998

Copyright © 1999 John Wiley & Sons, Ltd. Final revision received 21 April 1999

890 P. / Brews and M. R. Hunt

(Pearce, Freeman and Robinson, 1987). A meta- to stable environments (Fredrickson, 1984; Fredanalysis

of 21 studies found that the formal stra- rickson and Mitchell, 1984; Fredrickson and

tegic planning/performance link was weak, with laquinto, 1989; Mintzberg, 1973) but recommend

a correlation of 0.1507 (Boyd, 1991). More incrementalism for unstable, complex, dynamic

recently, a meta-analysis of 26 studies concluded environments facing high uncertainty, discontithat

strategic planning positively influenced firm nuity and/or rapid change. The impact of environperformance

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