מצגת פרופ בנסון הוניג
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מצגת פרופ בנסון הוניג בכנס אסטרטגיית לקוחות באוניברסיטה העברית של customer-obsessionTRANSCRIPT
Planning: The history, theory, and impact
of of business planning in contemporary
businesses and in business schools:
A critical perspective
Benson Honig Teresca Cascioli Chair in Entrepreneurial Leadership
McMaster University, Hamilton, Ontario Canada
2
THE UNTOLD STORY OF BUSINESS PLANNING IN NEW
ORGANIZATIONS
Why plan?
Who plans?
Who doesn’t plan?
Who should plan?
Who should not plan?
3
Why plan?
“why plan” is tantamount to asking “why learn”?
Advocates of planning exist at every turn, inhabiting the
political, social, cultural, economic, and educational spheres
theories to guide the potential planning process are virtually
nonexistent
4
Why plan?
Humans are not the only species that can be accused of
planning, although we are certainly the most capable (squirrels are pretty good!)
For many of us, plans become the end objective, as opposed to the means of attaining particular goals
a set of objectives for determining potential activities in pursuit of future circumstances currently preferred by actors with resources, or seeking resources, in order to influence specific outcomes (Troub, 1982).
Planning assumes that the future is predictable, linear, and manageable
5
Are planning outcomes necessary and
positive?
The pyramids, one of the wonders of the world, took many decades to build, and were obviously well planned activities. Planners would have required precise and elaborate consideration regarding a range of issues including labor, economics, materials, and organizational management.
Is planning an essential component of civilization, technological development, production, organization, and all achievements of any importance? Do we have ‘accidental’ achievements?
The Easter Island Moai construction project, the successful implementation of numerous carefully implemented plans, led to the virtual ecological collapse for the island and its’ people (Wright, 2004; Diamond, 2005)
6
Planners
Individuals
Organizations (firms,
NGO’s)
Public Policy Actors
Government (local,
national, transnational)
Multilateral agencies
Methods
Emergent
planning
Short term
planning
Long term
planning
Contingency
planning
Outcomes
Specific a-priori goal
achievement or failure
General a priori goal
achievement or failure
New goal achievement or
failure
Knowledge acquisition
Failed knowledge
acquisition
Moderating
Forces
Mediated by
Institutional norms
Environmental
changes
(including new
actors and
unanticipated
outcomes)
Constraints
Organizational ethos
Limitations due to size
Not invented here (need for ownership)
7
Empirical Record
In one study of nascent entrepreneurs, for example, while 72 percent claimed to have done a business plan before starting their business, only 22 percent had written plans they believed to be suitable for formal presentations (Honig and Karlsson, 2004)
many of those that literally wrote their plans on the back of an envelope considered themselves as having planned their activities.
8
Theory
Much of the enthusiasm for planning originates in strategic
planning, where it is said to eliminate haphazard guesswork,
help in the interpretation of data, and assist in the
maintenance of organization-environmental alignment
(Armstrong, 1982).
Omitted in much of the business plan discussion in
entrepreneurship is a general criticism towards planning as
found in the area of strategic management (Mintzberg 1987).
Two major theoretical views of strategy contrast the synoptic,
or highly rational proactive process of goal setting, monitoring,
and evaluation with incremental processes that are less
structured and rational (Fredrickson and Mitchell, 1984)
9
Environmental Stability In a comparatively static environment, such as the
building of a house, or the re-establishment of a proven project (such as a franchise, or a mature industry) the degree of variability faced by the planner may be limited, and the advantages of using a plan significantly greater (Fredrickson and Mitchell, 1984)
When the environment is subject to rapid changes, such as the emergence of a new industry, paradigm shifts, and new types of competition, the planner faces considerably more challenges (Christensen, 1997; Kanter, 2001)
.
Environmental Stability: Empirical Record
nascents who perceived their competitive environment to be more uncertain, and who asked financial institutions for loans, were more likely to plan than those who did not.
Thus: nascents who ask for funding, facing increasing competitive or operational uncertainty, are more likely to plan – while those facing increasing financial uncertainty and asking for funding, are less likely to plan.
Environmental Stability: Empirical Record we found that those nascent entrepreneurs who indicated
their environment had low financial uncertainty (e.g., was comparatively certain), and who also asked financial institutions for funding, were more likely to plan than those who did not (Honig and Liao, 08)
In more financially secure situations, entrepreneurs appear better able to resist coercive planning forces.
Entrepreneurs who ask for funding, in increasingly competitive circumstances, are more likely to plan than those asking for funding in less competitive circumstances.
entrepreneurs who asked for money and were exposed to increasing operational uncertainty were more likely to plan than those who were not so exposed.
Judging a book by its cover
(Karlsson and Honig, JBV)
Bankers had no way of evaluating business
plans – they were simply
Checking off a box”
2
3
Perspective
Our view (Honig and Karlsson, 2004) is that planning
provides legitimacy and signals reputational conformity, but
does not provide advantages in the actual process of
organizational evolution.
14
FIGURE 1
Institutional sources, institutional pressures, and
business planning behavior
Government
agencies
Industrial field Educational
system
Normative Mimetic Coercive
Human Capital Social Capital Demographic
Variables
Survival Profitability
Institutional
sources
Institutional
pressures
Performance
outcomes
Control Variables
Writing a business plan
Institutional
behavior
H1
H2
H3
H4
H5
15
Findings: Who is more likely to do a
plan?
having had contact with a business assistance agency,
having taken a business class,
being a member of a business network,
being encouraged to start a business by close friends
and neighbors.
Taking a business class
16
.
Equation 1
Equation 2
Equation 3
Dependent Variable Wrote a formal written
business plan
Abandoned by all
during 24 months
Profitable any time during
24 months
Informal Business Plan -.22
(.26)
-.13
(.31)
Formal Business Plan -.77*
(.34)
.15
(.37)
Business classes
Taken
.48†
(.29)
-.25
(.26)
.08
(.30)b
Previous start-up experience .04
(.15)
.003
(.13)
.29†
(.16)
Encouraged by
friends or family
1.06***
(.37)
.11
(.28)
.01
(.32)
Close friends or neighbors in
business
-.40
(.29)
-.24
(.26)
.64*
(.29)
Contact with assistance agency .99***
(.28)
.65**
(.26)
.18
(.30)
Member of a start-up team .44
(.29)
-.23
(.25)
.28
(.29)
Member of a business network .55**
(.29)
-1.46***
(.32)
1.16***
(.33)
Knew customer before starting .15
(.27)
-1.0***
(.24)
3.24***
(.34)
Cox R2 .13 .17 .37
N 396 396 396
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Findings regarding outcomes
Nascent entrepreneurs who completed formally written
business plans, as well as those completing informally
written business plans, were NOT found to be more
profitable
This finding has been repeatedly observed in groups of
nascent entrepreneurs in the USA Sweden and
Germany
Those with formal plans were only marginally less likely
to abandon their business (persistence).
18
Findings: success factors
social capital related variables:
Having close friends or neighbors in business
being a member of a business network
knowing the customer before starting the business were all factors that appeared to significantly increase profitability,
and were negatively associated with project abandonment.
19
So why do plans?
entrepreneurs may appear more legitimate for having produced an “award winning” business plan,
this legitimacy may be a sufficient return on their psychological and resource investments.
, the b- plan is sufficiently imbedded in our cultural landscape as to be supported by actors and agents in a coercive manner.
Banks, lending institutions, venture capitalists, small business associations, and business assistance agencies all rely upon, and promote, the production and dissemination of the business plan
20
Alternatives to planning and education
Honig, (2004) A contingency model of business planning,
Academy of Management, Learning and Education
21
Instruction on how
to write an
Entrepreneurial
Business Plan
Entrepreneur
completes a
business plan
Entrepreneur
creates a new
organization
(firm,etc…)
A conventional view of
business planning and
entrepreneurship education Method:
Solutions based on
convergent thinking
Outcomes:
Analytical tools
(cognitive factors)
22
Cognitive team
experiences result
in a series of
learning
opportunities
based on failure
Students learn
to maximize
failure as a
learning
experience
Students are
more prepared
for
entrepreneurial
events after they
graduate
Method:
Solutions based on
convergent thinking
Outcomes:
Self confidence
(personal
properties)
Risk tolerance
(motivation)
Leadership and
managerial experience
(cognitive factors)
An experiential model of entrepreneurship education
23
Contingency
planning
instruction
provided for
each module
Yes:Bi-pass
Module X
Immediately
pursue
opportunity
Yes: Step #1
Select one of the modules
Ex: Marketing research market A
Modify and
adapt?
Continue as
before?
Select any module,
proceeding thorough
flowchart from START
marketing module A
production module B
development module D
financial module E
human resource module F
Method:
Solutions based on
divergent thinking
START
Should
opportunit
y be
pursued?
Outcomes:
Self Confidence (personal properties)
Risk Tolerance (motivation)
Leadership and Managerial Tools (cognitive factors)
Practical solutions to new problems (cognitive factors)
Organizational development tools (cognitive factors)
Evaluation tools (cognitive factors)
Abandon
Step #2 Select next module
Return to START
Evaluation
Evaluate Progress
Continue as
before?
Modify and
adapt?
Abandon
No
Abandon
YES
YES
NO
24
Contingency business plan
activities should be developed that interrelate in an
open ended, dialectic manner, supporting the
development of tacit knowledge and the ability to adapt
and modify a plan, rather than the ability to preconceive
and detail one.
25
Contingency planning
In the contingency model of business planning introduced here, there are no direct linear relationships between the different phases consisting of opportunity recognition and exploitation.
Rather than present a linear relationship based on information retrieval, analysis, and decision making,
this model is designed as an open system that can be started from virtually any point in the entrepreneurial cycle.
26
Contingency business planning
Unlike the previous two models, students using the contingency planning model are encouraged to pursue divergent thinking (Getzels & Jackson, 1962).
there is no expectation that any or all modules be completed before beginning entrepreneurial activity.
This is helpful in supporting entrepreneurs to act on the moment, maximizing opportunity, as opposed to waiting and deliberating with further analysis
27
Contingency business planning
The contingency model utilizes Piaget’s theory of
equilibrium, a dynamic process of incremental
knowledge assimulation.
individuals dynamically and incrementally learn
new approaches to entrepreneurship and apply
them as they make sense in terms of novelty,
appropriateness, and cognitive development
Divergent thinking is encouraged
More closely attuned to effectuation (Sarasvathy,
2001),
28
Causation and Effectuation
How does one pursue solving problems – in particular
those that are ambiguous and changing, as with
entrepreneurship?
Causation: take a particular effect as given and focuses
on selecting betrween means to create that effect
Effectuation: takes a set of means as given and focuses
on selecting between different effects that can be created
with a certain set of means
29
Causation
A client demands a certain menu, the chef lists the ingredients, has
them purchased, and cooks the meal.
Relies on marketing management – segmentation, targeting and
positioning.
Requires analytical effort – research, resources, strategies.
30
Effectuation
The chef looks in his kitchen, sees what is available, and plans a meal according the the ingredients and utensils available to him/her.
Look at the resources available, create an idea acceptable given the constraints (alliance, renting, etc..)
End goal might be vastly different from starting point or original objective.
31
Causal decision making
Goal is established
Alternative means identified
Constraints on means
Selection process between the different means takes place
32
Effectuation decision process
A given set of means are identified
A set of effects or outcomes are examined
Constraints on effects are identified
A selection process occurs regarding the different available effects
33
Theory of effectuation (Sarasvathy)
Affordable loss rather than expected returns – not maximizing returns, but minimizing loss
Strategic alliances rather than competitive analysis
Exploiting unexpected contingencies, not preexisting knowledge.
To the extent that we can control the future, we do not need to predict it.
Dr. Boaz Tamir
Letter to Shai Agassi
“Managing a startup requires the ability to make sharp
turns. It's a learning process that goes through a series
of trials and market checks in direct contact with
customers. The plan has to be replaced with planning
that includes a series of hypotheses that require
confirmation or a bold change of direction ”.