Long Range Planning - History

History

The post-1945 boom in business theory led, in the 1950s and 1960s, to a focus on forecasting as a major component of planning. The principle then adopted was that existing trends could be extrapolated into the medium- and long-term future. The techniques were mainly numerical, and largely based on time-series analysis; though regression analysis, for investigating historical trends, eventually also emerged as a much reported technique. The seemingly mathematical accuracy of the techniques was seductive and, in the relatively stable decade of the 1960s, it often appeared that they worked well, even in the longer term.

The 1970s brought an end to this stability, most notably in the repercussions of the ending of the Bretton Woods agreement on currency stability closely followed by the oil shock of 1973. The emphasis moved to the development of alternative forecasts. The attempt then was to see what the possible range of alternative futures might be, so that contingency plans could be laid to handle whatever occurred in practice. It was the decade of the futurologists, led by the group at SRI (Stanford Research Institute) and, in particular, publicized by Herman Kahn (of the Hudson Institute).

The optimism of these futurologists, even if just in their focus on the future, was overtaken by the pessimism of the 1980s. Even during the 1970s the Club of Rome's report (forecasting the problems posed by population growth at the same time as the depletion of natural resources) was already offering a very pessimistic, indeed alarmist alternative.

The Organisation for Economic Co-operation and Development (OECD), reporting at the end of the 1980s, described the international scene in terms of:

• increased international interdependence
• growing complexity in international relationships
• growing economic competition between nations
• heightened uncertainty.

The result was that many organizations reverted to planning only for the relatively short term, if at all. The optimism of the futurologists was judged to be out of step with the gloomier mood of the times. Planning horizons, even for some of the more sophisticated organizations, shrank from ten years to five to three. Most concentrated once more on the one-year (budgetary) planning cycle they knew and understood.

Indeed, there are practical limits to the resources which can be devoted to long-range planning. It can be a time-consuming process absorbing large resources of money and people, which many organizations do not have (or are unwilling to make available). In too many organizations, however, it is also constrained by ignorance or indifference. With very few exceptions, both long-term and short-term planning are needed for successful corporate management.