5.1 Planning & Uncertainty

• Planning is defined as setting goals and deciding how to achieve them. It is also defined as coping with uncertainty by formulating future courses of action to achieve specified results.
• Planning has four benefits. (1) It helps you check your progress. (2) It helps you coordinate activities. (3) It helps you think ahead. (4) Above all, it helps you cope with uncertainty.
• Uncertainty is of three types. (1) State uncertainty is when the environment is considered unpredictable. (2) Effect uncertainty is when the effects of environmental changes are unpredictable. (3) Response uncertainty is when the consequences of a decision are uncertain.
• Organizations respond to uncertainty in one of four ways. (1) Defenders are expert at producing and selling narrowly defined products or services. (2) Prospectors focus on developing new products or services and in seeking out new markets, rather than waiting for things to happen. (3) Analyzers let other organizations take the risks of product development and marketing and then imitate (or perhaps slightly improve on) what seems to work best. (4) Reactors make adjustments only when finally forced to by environmental pressures.

5.2 Fundamentals of Planning

• An organization's reason for being is expressed in a mission statement. What the organization wishes to become and where it wants to go strategically—that is, its clear sense of the future and the actions needed to get there—are expressed in a vision statement.
• From these are derived strategic planning, then tactical planning, then operational planning. In strategic planning, managers determine what the organization's long-term goals should be for the next 1–10 years. In tactical planning, managers determine what contributions their departments or similar work units can make during the next 6–24 months. In operational planning, they determine how to accomplish specific tasks with available resources within the next 1–52 weeks.
• Whatever its type—strategic, tactical, or operational—the purpose of planning is to achieve a goal. A goal, also known as an objective, is a specific commitment to achieve a measurable result within a stated period of time. The goal should be followed by an action plan, which defines the course of action needed to achieve the stated goal. As with planning, goals are of the same three types—strategic, tactical, and operational.
• Strategic goals are set by and for top management and focus on objectives for the organization as a whole. Tactical goals are set by and for middle managers and focus on the actions needed to achieve strategic goals. Operational goals are set by and for first-line managers and are concerned with short-term matters associated with realizing tactical goals.
• The five characteristics of a good goal are represented by the acronym SMART. A SMART goal is one that is Specific, Measurable, Attainable, Results oriented, and has Target dates.

5.3 The Planning/Control Cycle

• Once plans are made, managers must stay in control using the planning/control cycle, which has two planning steps (1 and 2) and two control steps (3 and 4), as follows: (1) Make the plan. (2) Carry out the plan. (3) Control the direction by comparing results with the plan. (4) Control the direction by taking corrective action in two ways—namely, (a) by correcting deviations in the plan being carried out, or (b) by improving future plans.

5.4 Promoting Goal Setting: Management by Objectives

• Management by objectives (MBO) is a four-step process in which (1) managers and employees jointly set objectives for the employee, (2) managers develop action plans, (3) managers and employees periodically review the employee's performance, and (4) the manager makes a performance appraisal and rewards the employee according to results. The purpose of MBO is to motivate rather than control subordinates.
• For MBO to be successful three things have to happen. (1) The commitment of top management is essential. (2) The program must be applied organization-wide. (3) Objectives must cascade—becoming more specific at lower levels of the organization.

5.5 Project Planning

• Tasks (work assignments) must be distinguished from programs and from projects. A task is simply something one does. A program is a single-use plan encompassing a range of projects or activities. A project, which appears between a task and a program, is a single-use plan of less scope and complexity than a program; it is a one-time set of events.
• Project planning is becoming the fastest way of getting things done. Project management works outside an organization's usual chain of command. An example of project planning is the skunkworks.
• A project evolves through a project life cycle involving four stages: (1) In the definition stage, a project manager looks at the big picture, stating the problem, identifying the project's goals and objectives, and determining the budget and schedule. (2) In the planning stage, managers consider the details needed to make the big picture happen, such as identifying equipment, people, and coordination efforts needed. (3) In the execution stage, the actual work stage, managers define the management style and establish the control tools, then ensure the work is being done on time and under budget. (4) In the closing stage, the project is accepted by the client.
• Deadlines are essential to project planning because they become great motivators both for the manager and for subordinates.