Planning has long been one of the cornerstones of management. At the beginning of the 20th century, Henri Fayol defined the work of managers as planning, organizing, directing, coordinating and controlling. The ability and willingness of managers to plan developed throughout the century. Management by Objectives (DPO) became the height of business craze in the late 1950s. The world seemed predictable. The future could be planned. So it seemed sensible for managers to identify their goals. They could then focus on managing to achieve those goals.

It was the capitalist equivalent of the five-year plans of the communist system. In fact, a management theorist from the 1960s suggested that the best-run organizations in the world were the Standard Oil Company of New Jersey, the Roman Catholic Church, and the Communist Party. The belief was that if the future was mapped out, it would happen.

Later, the MBO evolved into strategic planning. The companies created large corporate units dedicated to this. They were deliberately detached from the day-to-day reality of the company and emphasized formal procedures around numbers. Henry Mintzberg defined strategic planning as “a formalized system to codify, develop, and operationalize the strategies that companies already have.” The fundamental belief remained that the future could be largely predicted.

Now, strategic planning has fallen out of favor. In the face of incessant technological change, disruptive forces in one sector after another, global competition, etc., planning seems like a meaningless illusion.

And yet planning is clearly essential for any business of any size. Look at your own organization. Having a workplace equipped for it, and having you and your colleagues work on a specific project at a specific time and place, requires some planning. The reality is that you have to make plans about the use of a company’s resources all the time. Some are short-term, others extend into an imagined future.

Universally valuable but desperately old-fashioned, planning waits like an old maid in a Jane Austen novel for someone to recognize its worth.

But executives are wary of planning because they find it rigid, slow, and bureaucratic. Fayol’s legacy persists. A 2016 HBR Analytics survey of 385 executives revealed that most executives were frustrated with planning because they believed speed was important and that plans changed frequently anyway. Why go through a slow and painful planning exercise if you won’t even stick to the plan?

The frustrations with current planning practices intersect with another fundamental management trend: organizational agility. Reorganization around small, self-managed teams – enhanced by agility methods like Scrum and LeSS – is emerging as the route to the organizational agility needed to compete in the changing business reality. One of the key principles underpinning team-based agility is that teams autonomously decide their priorities and where to allocate their own resources.

The logic of long-term centralized strategic planning (done once a year at a fixed time) is the antithesis of an organization redesigned around teams defining their own priorities and assigning resources on a weekly basis.

But if planning and agility are necessary, organizations have to make them work. They have to create a Venn diagram with planning on one side, agility on the other, and a practical and workable sweet spot in the middle. Therefore, the search for a rethinking of strategic planning has never been more urgent and critical. Planning in the style of the 21st century must be reconceived as agile planning.

Agile planning has a number of characteristics:

• Frameworks and tools capable of facing a future that will be different
• The ability to cope with more frequent and dynamic changes
• The need to invest quality time for a true strategic conversation rather than just a numbers game;
• Availability of resources and funds in a flexible way for the opportunities that arise.

The intersection of planning with organizational agility generates two other overriding requirements:

A process capable of coordinating and aligning with agile teams

Agile organizations face the challenge of managing local squad autonomy (bottom-up input) consistent with a broader vision represented by tribe goals and interdependencies between tribes and communities.
strategic priorities of the organization (top-down vision). Controlling this tension requires new planning and coordination processes and routines.

Consider the Dutch financial services company ING Bank. It restructured its operations in the Netherlands by reorganizing 3,500 employees into agile squads. These are autonomous multidisciplinary teams (up to nine people per team) capable of defining their work and making business decisions quickly and flexibly. Squads are organized into a Tribe (of no more than 150 people), a set of squads working in related areas.

ING Bank revised its process and introduced routine meetings and formats to create alignment between and within tribes. Each tribe produces a QBR (Quarterly Business Review), a six-page document outlining priorities, objectives and key results at the tribe level. It is then discussed in a large alignment meeting (called the QBR Marketplace) attended by tribal leaders and other relevant leaders. This meeting addresses a fundamental question: when we add everything together, does this contribute to the strategic objectives of our company?
The alignment within a tribe occurs in what is called a Portfolio Market event: representatives of each of the squads that make up the tribe meet to agree on how the set objectives will be achieved and to address opportunities for synergies.

The ING Bank example shows how the planning process is still necessary and essential for an agile company, albeit in a different way, with different processes, mechanisms and routines.
As more and more companies transform into agile organizations, agile planning is likely to become the new normal to replace the traditional central planning approach.

A process that uses both unlimited hard data and human judgment

Traditionally, planners have been obsessed with collecting hard data about their industry, their markets, and their competitors. Soft data – networks of contacts, conversations with customers, suppliers and employees, use of intuition and the vine – have been practically ignored.
Starting in the 1960s, planning was built around analysis. Now, thanks to Big Data, the ability to generate data is practically unlimited. This does not necessarily allow us to create better plans for the future.
Soft data is also vital. “Although hard data can inform the intellect, it is to a large extent the soft data that generates wisdom. They can be difficult to ‘analyze’, but they are indispensable for synthesis, the key to developing strategy,” says Henry Mintzberg .

Businesses need to imagine the possibilities first, and choose the one with the most compelling argument second. To decide which is the most convincing argument, they must take into account all the data that can be obtained. But, in addition, they must use qualitative judgment.

In an agile organization, teams use design thinking and other exploratory techniques (in addition to data) to make quick decisions and change course on a weekly basis. Decision-making is carried out by a team of people, thus compensating for the possible biases of a single person who makes a decision based on their individual judgment. To some extent, an agile team-based organization allows the ability to leverage qualitative data and judgment – combined today with infinite hard data – to make better decisions.

Relying solely on hard data has undoubtedly killed many would-be large companies. Take Nespresso, the pioneer of coffee pods developed by Nestlé. Nespresso took off when it stopped heading to offices and started marketing to homes. There was little data on how households would respond to the concept, and available information suggested a consumer perceived value of just 25 Swiss cents, compared to a company-required threshold of 40 cents. The Nespresso team had to skillfully interpret the data to present a better case to top management. Because he firmly believed in the idea, he forced the company to take a higher risk than usual. If Nestlé had been guided solely by quantitative market research, the concept would never have taken off.

The traditional approach to planning needs to be revised to better serve the purposes of the agile business of the 21st century. Agile planning is the future of planning. This new approach will require two fundamental elements. First, replace the traditional obsession with hard data and the numbers game with a more balanced coexistence of hard and soft data in which judgment also plays an important role. Second, the introduction of new mechanisms and routines that ensure alignment between the hundreds of self-organized local autonomous teams and the general objectives and directions of the company.