Running head: FORMAL STRATEGIC PLANNING PROCESS AND H&M 1
Formal Strategic Planning Process and
H&M – a Swedish clothing-retail company
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April 27th, 2021
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FORMAL STRATEGIC PLANNING PROCESS AND H&M 2
Question 1: Advantages and Disadvantages of Formal Strategic Planning Process
Formal Strategic Planning Process
This paper looks at whether or not companies should use a formal strategic planning
process in their daily’s decision-making process. Over the past few years, business leaders have
been successful driven their organizations through economic collapse with the help of formal
strategic planning. However, Martin (2014) is pretty skeptical of the formal process, he states
that: “This is a truly terrible way to make strategy”. The first part of this study will focus on the
benefits and drawbacks of the formal strategic planning process to evaluate Martin’s view. The
second part will then explain why companies would be better served by the means of a simple
process, in terms of dealing with today’s highly uncertain environment.
To begin with, what is the formal strategic planning process? It can be simply defined as
an explicit procedure to help employees have a clear vision about the company’s goals, drive
every business in the right direction, and obtain stakeholders’ commitment and involvement.
On the one hand, the formal planning approach does provide organizations certain
advantages. In the early 1960s, due to the rapid growth of new technology and competition,
many leaders realized they could not cope with such changes. As a result, the formal strategic
system was introduced (Henry, 1977, p. 40). The approach allows businesses to predict their
future and take necessary precautions to mitigate risks to their business (Ong, 2015, para. 2). In
other terms, businesses are proactive rather than reactive, organizations can keep up with the
ever-changing trends and stay one step ahead of the market competition (Ong, 2015, para. 2). In
addition, strategic planning support operational efficiency. Particularly, it drives decision-making
and management discussions based on budget and resources to achieve set objectives (Ong,
FORMAL STRATEGIC PLANNING PROCESS AND H&M 3
2015, para. 4). To give an illustration, Evernote and other tech companies are using strategic
planning to better align their service to add value to their customers and remain competitive in
the industry (Taylor, 2016, para. 1). Evernote shared that by the means of formal strategic
planning, they created features for their products that moved away from their center organization
aim, resulted in their long-term success and profitability (Taylor, 2016, para. 1). Similarly, the
CEO of Groove HQ had hesitant to hire a business coach to help them with the strategic
planning, stating:
“I’ll admit that I was skeptical about hiring a business coach at first, mostly
because I didn’t know what to expect.
I pictured Alec Baldwin from Glengarry Glen Ross subjecting us to hours of
sports cliches and motivational quotes, and I was nervous. But what we got was
hugely valuable. It helped us look at our business in a way that we had never done
before.
And it gave us direction and accountability for our future growth.
If you’re on the fence about hiring a business coach, I’d urge you to give it a try.
You can find coaches at all price ranges.Some are better than others, but focus on
finding someone who can hold you accountable (not hard) and help you develop a
playbook for success (harder).
If your experience is like ours, you’ll be glad you did.” (Taylor, 2016, para. 2)
With constantly changing technologies and highly competitive markets, the formal
strategic planning process indeed plays a pivotal role in making business more durable.
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On the other hand, the formal planning process arguably has negative outcomes.
According to Marin (2014), “This is a truly terrible way to make strategy”. In my opinion, there
must have been a reason for this statement. Let us look at the weaknesses of formal strategic
planning. First of all, the issue of planning is that it represents a calculating style of management
rather than a committing style (Mintzberg, 1994, para. 6). To be specific, managers with a
committing style lead in such a way that everyone engages in a journey; hence, motivation
naturally establishes along the way (Mintzberg, 1994, para. 6). By contrast, managers with a
calculating style focus on the destination and calculate what everyone has to do to achieve it,
with no concern for other’s creativity and collaboration (Mintzberg, 1994, para. 6); in other
terms, the style depends on one person, and there is no room for diversity of thought and
professional growth. Another key thing to remember is that the fallacy of foresight. An
influential book named Corporate Strategy was written by Igor Ansoff in 1965 declared that “We
shall refer to the period for which the firm is able to construct forecasts with an accuracy of, say,
plus or minus 20 percent as the planning horizon of the firm” (Mintzberg, 1994, para. 8). It is
impossible that any organization can foresee with a given accuracy, although it may be true that
we can predict some certain repetitive patterns, like the weather. However, the prediction of
discontinuities, such as economic crisis, cost increase, or technological advancement, is not
reasonably feasible (Mintzberg, 1994, para. 8). Furthermore, a more elaborate, comprehensive
process that involves external and internal analysis can lead to the fallacy of detachment. For
instance, the issue with hard data is that it takes time to make it more clearly defined, leading to
delay sometimes. Also, it is likely to lack richness (not including qualitative, for example) and
tend to be excessively combined and missing some significant nuances (Mintzberg, 1994, para.
9). Thus, those who depend on formalized data tend to be disconnected in more ways than one
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(Mintzberg, 1994, para. 9). Conversely, various studies have illustrated that managers who rely
on soft forms of information, such as rumors, gossips, or hearsay, tend to be effective and
successful (Mintzberg, 1994, para. 9).
Another reason for the disapproval of the formal strategic planning process is that the
cost of planning can be costly. Is it reasonable that not every firm, especially smaller and start-up
firms, can afford to hire an external business consultant/coach to assist in developing a strategic
planning process. Last but not least, there is a vast dependency on a formalization of future
development. In recent years, environments and technological innovation have rapidly advanced,
whereas formal procedures have not offered any improvement, in terms of dealing with
uncertainties; instead, they have made it even worse (Mintzberg, 1994, para. 10). Formal systems
could never “internalize it, comprehend it, synthesize it. In a literal sense, planning could not
