Did the focus on benchmarking instead of strategic planning bring on the recession?
For the first time in the 15+ year history of the Bain & Company survey on Management Tools and Trends 2009, strategic planning was displaced as the #1 business tool and it was replaced by benchmarking. At first blush one might say "hey that was a good run that was had by strategic planning" and it was time for a new management tool to influence the growth of enterprise companies.
After thinking about this I started to wonder:
If enterprises were making business decisions by benchmarking what others were doing did it drive the herd towards a series of bad decisions that were validated over and over again?
- Did banks look at other banks making risky loans and say "look at what they are doing and see all that money they are making, maybe we should be doing that"?
- Did the U.S. auto makers continue making cars that were irrelevant and maintaining operational patterns that were sure to bankrupt them because their benchmarks were the other U.S. auto makers who aside from Ford were all doing the same thing?
In the above cases it would appear that everyone thought everyone else was smart and doing the right things so they all just kept on doing it because the 'benchmarking' against the industry was just benchmarking faulty assumptions and patterns.
It may be only coincidence that in between the last two Bain studies that benchmarking gained ground and overtook strategic planning as the top management tool but it would certainly on the surface seem to explain a lot about what happened.
If everyone believes that as an industry they are all fairly intelligent and if they then benchmark themselves against the perceived leaders in the industry then at some point there is no one to say "hey, wait a minute are we sure we've got this right?".
In the end the business community will be much better served if strategic planning regains it rightful spot for the following reasons:
- Strategic planning forces you to look under every rock
- Strategic planning brings out alternate opinions
- Strategic planning drives you to not copy the competition but to excel past the competition
Of course even strategic planning isn't a fail safe against bad performance and I am not entirely suggesting that it could have stopped the recession that we have just experienced (and may still experience for a while) but I would submit that as a business tool it is much more difficult to manipulate strategic planning for all the reasons above.
Ed Loessi
