Strategic Planning in a Turbulent Environment:

Evidence from the Oil Majors

Grant, R.M. (2003). Strategic planning in a turbulent environment: Evidence from the oil majors. Strategic Management Journal, 24, 491-517.

This article’s goal was to describe the characteristics of strategic planning systems of multinational, multibusiness companies faced with volatile, unpredictable business environments.  The author’s findings point to possible reconciliation of the “design” and “process” approaches to strategy formation.

This study pointed to a process of “planned emergent” strategy.  In such a process, strategic planning systems provided a mechanism for coordinating decentralized strategy formulation.  This structure produced demanding performance targets within clear corporate guidelines.  Further, the planning systems in particular fostered adaptation and responsiveness but showed limited innovation and analytical sophistication.

There were some elements of the strategic planning process that were common to all the companies in the study.  All companies’ plans included:
            1. Planning guidelines
            2. Draft business plans
            3. Discussion with corporate
            4. Revised business plans
            5. Annual capital and operating budgets
            6. Corporate plan
            7. Board approval
            8. Performance targets
            9. Performance appraisal

Within this framework of common planning attributes, there were some notable differences between the companies.  For instance, companies varied in the formality and regularity of the planning process, the time horizon of strategic plans, and the differences in the role and activities of planning departments.

The most interesting conclusion from this study was how strategic planning had become less about strategic decision making for these companies and more a mechanism for coordination and performance managing.  Performance targets are growing in prominence within strategic plans, and as a result, strategic planning has been found to serve as a corporate control system.  

However, with increased decentralization of strategic decision making and a greater adaptability and responsiveness to external change, companies can benefit from using performance targets.  Even if the strategy itself doesn’t lead the company to success, sometimes the structure and accountability of the process will be enough.

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