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Business Planning and Evaluation · Chapter 2 · 2.1.1

Four eras of planning

From the stopwatch to the hypothesis: how business planning changed over a century and why all four traditions are still alive.

1910–1960Engineer with a stopwatch
1960–1990Corporate planner
1990–2010Strategist with a sketchbook
2010+Start-up founder

Rolandas Rakštys · Lecturer · Vytautas Magnus University, Agriculture Academy · Faculty of Bioeconomy Development, Department of Business and Rural Development · [email protected] · ORCID 0000-0003-0299-9930

Chapter 2 “The business planning and evaluation process”, section 2.1.1 · English translation of v1.0.11 (2026-10-15) · set v1.0.2 · 13 slides, ≈ 25 min

Rakštys, R. (2026). Chapter 2. The business planning and evaluation process (English translation of v1.0.11, 2026-10-15). Verslo planavimas ir vertinimas [Business planning and evaluation]. Vytautas Magnus University, Agriculture Academy. https://rakstys.eu/studijos/verslo-planavimas-ir-vertinimas/en/skyriai/ch02/ · CC BY-NC-ND 4.0

Why the history of planning matters to the practitioner

One mistake, two faces

Start-up garage · 2026 MVP? Customer interviews Pivot?
Here is our ten-year strategic plan!

Formal strategic planning where the assumptions change every month.

Investment committee
BUSINESSPLAN
Mintzberg proved that plans do not work!

No plan where the decision needs figures.

The same mistake: one paradigm where another is required

Thesis: contemporary planning is a synthesis of several traditions, and the method must match the level of uncertainty and the context of the organisation.

Era I · 1910–1960
Administrative management

Planning as measurement

F. W. Taylor (1911), The Principles of Scientific Management: work processes can be analysed, measured and optimised by systematic methods.

Break downStandardiseOptimise
Contribution. Management becomes not an art or intuition but an analytical process in which data and measurement are the principal instruments of decision-making. Planning becomes a legitimate managerial function.
Limit. The vision is operational: strategic goals are not questioned, the environment is treated as stable and predictable – it is enough to find the “best method” and adhere to it.
Era I · 1910–1960
Fayol and Weber

Planning – the first management function

  1. 1Planningprévoyance
  2. 2Organising
  3. 3Commanding
  4. 4Co-ordinating
  5. 5Controlling

“Examining the future and drawing up the plan of action”(Fayol, 1916/1949, pp. 5–6)

14 principles – not a recipe. In management there is nothing rigid or absolute: everything is a question of proportion (p. 19).
A plan must be flexible and accept adjustments under the pressure of circumstances (p. 45). → Era IV

M. Weber (1922/1978). Bureaucracy was not a theory of planning, but it created its infrastructure: a chain of responsibility, documented processes, rationality.

The era’s assumption: management is a rational activity that can be analysed, and planning is its point of departure.
Era II · 1960–1990
The strategic planning paradigm

Strategy becomes a process

H. I. Ansoff (1965): attention shifts from internal operations to the external environment, from short-term budgeting to long-term competitive positioning.

  1. Analysis of the environment
  2. Objectives
  3. Alternatives
  4. Evaluation and choice
  5. Implementation
Existing market
Market penetrationlowest risk
Product development
New market
Market development
Diversificationhighest risk
Existing product
New product

Assumptions of the process

  • 1The future is partly predictable and can be forecast
  • 2Management formulates clear long-term objectives
  • 3Decisions are taken in a systematic, analytical manner
  • 4The environment is essentially manageable

Mintzberg et al. (1998) would later call this approach the planning school.

Era II · 1960–1990
Tools, departments, axioms

Planning becomes an industry

Ansoff, 1975Weak signals

Monitor the environment continuously for early indicators of strategic discontinuities, instead of waiting until changes become obvious.

Ansoff, 1979 · CSSFStrategic success formula

Environmental turbulence
Strategic aggressiveness
Managerial responsiveness

Profitability depends on whether aggressiveness and responsiveness match the turbulence. The method must match the uncertainty.

Harvard, BCG, McKinseyAnalytical tools

SWOT
SWOT
StarsQuestion marksCash cowsDogs
BCG matrix

SWOT (Learned et al., 1965; Andrews, 1971) and portfolio matrices for managing business units.

Large corporations set up strategic planning departments with dozens of specialists (Kiechel, 2010).

Planning became an industry – and vulnerable to criticism
Era II · 1960–1990
Threat ofnew entrants Suppliers’bargaining power Buyers’bargaining power Threat ofsubstitutes Intensity of rivalrywithin the industry
The positioning school

What to plan: industry structure

M. E. Porter (1980, 1985): the Five Forces and the value chain gave planning a dimension of content.

Ansoff → how to planPorter → what to plan
Cost leadershipThe lowest cost in the industry
STUCK IN THE MIDDLE
DifferentiationA distinctive product that commands a higher price
FocusA narrow segment, applying one of the two logics

Without a clear position, a firm is usually far less profitable than its competitors (Porter, 1980, p. 41).

Era III · 1990–2010
Mintzberg’s critique

Strategy is not only planned – it also emerges

Intended strategy Unrealised Deliberate Realised strategy Emergent strategy
The false promise of formalisationStrategy formation is a creative synthesis; it cannot be broken down into stages.
The limits of forecastingDiscontinuities make long-term forecasts unreliable; an illusion of certainty arises.
Detachment from thinkingDepartments produce documents that do not become decisions.
Programming, not formationPlanning codifies an existing strategy but does not create a new one.
Not a rejection!Planning elaborates and communicates strategy, while strategic thinking shapes it (Mintzberg, 1994).
Era III · 1990–2010
The resource-based view

Where does value begin: in the market or inside?

5 FORCES MARKET positioning · Porter VRIN COMPETENCIES INSIDE resources and capabilities · RBV in both places
M. E. Porter (1980). Value comes from position in the market: industry structure and competitive forces determine what is worth planning.
Vvaluable
Rrare
Ihard to imitate
Nno substitutes
Prahalad and Hamel (1990). A core competence is collective learning: access to a variety of markets, a contribution to the customer’s perceived benefit, difficulty of imitation.
A business plan integrates an analysis of the external environment and an assessment of internal resources (Barney, 1991).
Era IV · 2010+
The adaptive planning paradigm

The plan as a set of hypotheses

Build Measure Learn MVP data ideas Lean Ries, 2011 pivot – change direction
Not “plan everything and implement it” but “plan a hypothesis and test it at once”

Effectuation Sarasvathy, 2001

Effectuation – the name of the theory: a decision logic that starts not from a goal but from the means at hand.

Causal logicGoal→Means sought
EffectuationMeans at handwho I am · what I know · whom I know→Possible goals

From prediction to control, from competitive analysis to partnerships.

Transient advantageMcGrath, 2013
Rolling forecastsHope & Fraser, 2003
Agile sprintsBeck et al., 2001
Dynamic capabilitiesTeece, 2007
Synthesis · Table 2.1

Paradigms were added, not replaced

PeriodParadigmAuthorsEssenceThe role of evaluation
2010+Adaptive planningRies, Sarasvathy, McGrath, TeeceIteration, experimentation, the testing of hypothesesContinuous, iterative evaluation; real options
1990–2010Strategic thinkingMintzberg, Barney, Prahalad, HamelStrategy partly emergent; internal capabilitiesThe possible emergent strategy is evaluated too
1960–1990Strategic planningAnsoff, Andrews, Porter, BCGLong-term strategy, analysis of the environment, rational decisionsComparison of alternatives (NPV, ROI)
1910–1960Administrative planningTaylor, Fayol, WeberPlanning as a management function; formalised processesCost control and the measurement of efficiency

Towards adaptationthe ability to respond to the future

Uncertainty increases, so planning moves upwards.

From forecastingattempting to predict the future

Level of uncertainty

Courtney et al. (1997): the method must match the level of uncertainty. Click a level.

The paradox of planning and the position of the textbook

“Plans are worthless, but planning is everything”

D. D. Eisenhower (1957) · the same thought: the value lies in the process of producing plans (Ackoff, 1970, p. 15)

Assumptionsstated and tested
Co-ordinationa common logic for all
A structure for decisionsalternatives compared
Preparednessscenarios and “what if”
Learningmental models changed (de Geus, 1988)
The rational coreAnsoff, Porter
+
Recognition of emergent strategyMintzberg
+
An adaptive process formRies, Sarasvathy, McGrath
=
Continuous modelling of decisionsgrounded in figures, aware of their limits

Next: 2.1.2 models and levels of the planning process · 2.1.3 the limits and paradoxes of planning · 2.2 analytical tools

Measure!1911
Analyse!1965
Think!1994
Test!2011
APA 7

References

Ackoff, R. L. (1970). A concept of corporate planning. Wiley-Interscience.

Andrews, K. R. (1971). The concept of corporate strategy. Dow Jones-Irwin.

Ansoff, H. I. (1965). Corporate strategy: An analytic approach to business policy for growth and expansion. McGraw-Hill.

Ansoff, H. I. (1975). Managing strategic surprise by response to weak signals. California Management Review, 18(2), 21–33. https://doi.org/10.2307/41164635

Ansoff, H. I. (1979). Strategic management. Macmillan.

Barney, J. (1991). Firm resources and sustained competitive advantage. Journal of Management, 17(1), 99–120. https://doi.org/10.1177/014920639101700108

Beck, K., Beedle, M., van Bennekum, A., Cockburn, A., Cunningham, W., Fowler, M., … Thomas, D. (2001). Manifesto for Agile software development. https://agilemanifesto.org/

Courtney, H., Kirkland, J., & Viguerie, P. (1997). Strategy under uncertainty. Harvard Business Review, 75(6), 67–79.

de Geus, A. P. (1988). Planning as learning. Harvard Business Review, 66(2), 70–74.

Eisenhower, D. D. (1957, November 14). Remarks at the National Defense Executive Reserve Conference [Speech]. Washington, DC.

Fayol, H. (1949). General and industrial management (C. Storrs, Trans.). Pitman. (Original work published 1916)

Hope, J., & Fraser, R. (2003). Beyond budgeting: How managers can break free from the annual performance trap. Harvard Business School Press.

Kiechel, W., III. (2010). The lords of strategy: The secret intellectual history of the new corporate world. Harvard Business Press.

Learned, E. P., Christensen, C. R., Andrews, K. R., & Guth, W. D. (1965). Business policy: Text and cases. Irwin.

McGrath, R. G. (2013). The end of competitive advantage: How to keep your strategy moving as fast as your business. Harvard Business Review Press.

Mintzberg, H. (1994). The rise and fall of strategic planning. Free Press.

Mintzberg, H., Ahlstrand, B., & Lampel, J. (1998). Strategy safari: A guided tour through the wilds of strategic management. Free Press.

Mintzberg, H., & Waters, J. A. (1985). Of strategies, deliberate and emergent. Strategic Management Journal, 6(3), 257–272. https://doi.org/10.1002/smj.4250060306

Porter, M. E. (1980). Competitive strategy: Techniques for analyzing industries and competitors. Free Press.

Porter, M. E. (1985). Competitive advantage: Creating and sustaining superior performance. Free Press.

Prahalad, C. K., & Hamel, G. (1990). The core competence of the corporation. Harvard Business Review, 68(3), 79–91.

Ries, E. (2011). The lean startup. Crown Business.

Sarasvathy, S. D. (2001). Causation and effectuation. Academy of Management Review, 26(2), 243–263. https://doi.org/10.5465/amr.2001.4378020

Taylor, F. W. (1911). The principles of scientific management. Harper & Brothers.

Teece, D. J. (2007). Explicating dynamic capabilities. Strategic Management Journal, 28(13), 1319–1350. https://doi.org/10.1002/smj.640

Weber, M. (1978). Economy and society (G. Roth & C. Wittich, Eds.). University of California Press. (Original work published 1922)

Rakštys, R. (2026). Chapter 2. The business planning and evaluation process (English translation of v1.0.11, 2026-10-15). Verslo planavimas ir vertinimas [Business planning and evaluation]. Vytautas Magnus University, Agriculture Academy. https://rakstys.eu/studijos/verslo-planavimas-ir-vertinimas/en/skyriai/ch02/ · CC BY-NC-ND 4.0

These slides are based on the textbook Verslo planavimas ir vertinimas [Business Planning and Evaluation]. The text was translated, structured and visually laid out with the help of artificial intelligence tools (Claude), following the protocol for working with AI and the verification procedures set by the author.

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