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Making planning relevant to public agency management
Making Planning Relevant to Public Agency Management Gerald L. Barkdoll Assistant Commissioner for Planning and Evaluation, Food and Drug Administration, Department of Health, Education, and Welfare
The special considerations of planning in the public area have exercised many minds during the last decade, in this article the author reports on the particular experience of the (U.S.) Food and Drug Administration (FDA) from the initiation of a new planning system in 1972 to 1975. The lessons learned and the conclusions drawn from this experience are described in the article, many of which wi// have relevance to public sector planning in other environments.
INTRODUCTION
O
NE OF MANAGEMENT'S MOST SOUGHT-AFTER~
and elusive--goals is effective long range planning. A 1969 survey s of 300 business executives indicated that two-thirds of them considered planning to be their most important activity. The public sector pursues effective planning with equal intensity, as evidenced by the enthusiastic rush of many federal agencies to PPBS (Planning-Programming-Budgeting System) in the mid- to late 1960s. Despite the attention paid to it, most planning turns out to be far from effective. Results are often disappointing, as shown in the following list of common 'planning frustrations' distilled from the literature and from personal discussions with professional planners and top operation executives. Some of the most universal pitfalls are: • The plan and planning lack credibility. • The plan is not actionable. • Planning activities are defeated by the tyranny of tradition. • Producing a plan is a sterile exercise. • Planners try to decide too much too soon. FEBRUARY, 1976
Q The plan does not deal with what is really important. Planners have the difficult task of trying to satisfy executive expectations while avoiding the numerous pitfalls and frustrations inherent in the planning process. The 'nearly complete success story' described in this article demonstrates that it is possible to meet many of the expectations while avoiding a large part of the frustration. It further suggests that a heuristic approach to planning will improve the ratio of satisfied expectations to engendered frustrations. The case study described in this article deals with the experience of one agency--the Food and Drug Administration (FDA)---from the initiation of a new planning system in 1972 to the present. The FDA's successes and failures in designing and implementing a planning process, and some of the unique permutations and combinations of planning techniques which were used, may serve as useful lessons and guidelines to other planners. The agency's experience is relevant to business planning because of two factors: (1) The increasing concern of business planning with multiple, hard-to-measure objectives similar to those which affect the public sector. Business planning is no longer directed simply at profit or cash flow maximization, but at the often competing objectives demanded by interest groups such as consumer activists, stockholders, employees and the government. The public sector, as exemplified by the FDA in this case study, has long been struggling with multiple and often contradictory objectives imposed by various influential groups ranging from congressional committees to consumer advocates. (2) The growing tendency for corporations to initiate planning for their more important 59
functional activities, such as computer operations and research. These functional activities are similar to many government operations since budget levels must often be decided on an arbitrary basis. In addition, these functional activities must often plan and record their performance through a variety of surrogate measures rather than through a direct measurement of contribution to profit. The planning activities of the public sector often deal with arbitrary funding levels and indirect measures of performance and consequently can serve as prototypes for functional business planning. T H E P H I L O S O P H I C A L B A S E OF T H E NEW PLANNING PROCESS
A history of frustration preceded the development of the FDA's new planning process. From the mid1960s to early 1971, agency-wide planning had been attempted several times with mixed, but generally poor, results. The state of planning in early 1971 could be described as: •
not contributing to the decision-making processes and management activities of the agency;
•
consisting largely of 'planners talking to planners' with little or no executive involvement;
•
•
•
completely independent of (and occasionally counter-productive to) the mandatory budgeting activities; undergoing constant change with annual or more frequent changes in the planning people, goals, and mechanisms; and
T h e Planner a
We never really knew what happened to the information once it left heremexcept that it would get printed out by the computer and sent back to us for 'checking and correcting'. Fortunately, the atmosphere in the agency in 1971 was not entirely anti-planning in spite of the years of non-productive and negative experience. A number of organizational and personnel changes were made in 1971 to give a new emphasis to agency-wide planning. Top management restated its desire to have a cost effective planning process which contributed to, and was an integral part of, the management process. The new planning teani was given almost complete freedom to determine the mechanisms and activities to be used in the planning process, the time table for planning, and the specific goals to be achieved. As a first step, the team conducted a careful review of the state (and reputation) of the existing planning process, the resources immediately available to the planning team, and most importanfly, the short- and long-term goals of the agency. On the basis of this information, the team then developed and articulated a planning philosophy to guide the. design of the planning mechanisms and activities. The philosophy expressed the following concepts:
•
The new planning process must fit the existing 'management style' of the agency rather than attempt to change it.
•
An opportunistic use of existing systems, knowledge, and management activities will expedite the acceptance and effectiveness of planning.
•
A comprehensive planning process will take up to 5 years to implement and debug. 4 Therefore, intermediate goals and objectives must be included in the plan for planning. Top management must be advised that some attractive and desirable planning activities will have to be deferred until some of the basic activities are in place and working.
•
The role of the planning staff is to design the planning system and to facilitate, precipitate and support planning, rather than to actually do planning. 5 It is apparent that the operating and line executives believe that planning is an important part of their job, and that they alone have the program knowledge necessary for effective planning. However, they do not have the time or inclination to personally design and 'operate' the planning system.
•
The planning process will have to be tailormade to fit the agency,
•
The question, 'Why are we doing this?' should never have to be asked by the participants. The planning process will have to be simple and understood by everyone involved.
generating a number of negative reactions among top and middle managers ranging from apathy to frustration and hostility.
The 1970 planning activities were largely designed to satisfy requests from higher headquarters for voluminous data on activities and 'outputs'. Substantial amounts of time were spent at various levels of the agency accumulating or creating information and transferring it to computer input sheets which were sent forward to the next higher headquarters. Reaction at the lower levels was negative, as these comments from an agency executive and an agency planner indicate: The Executive =
The planning process we had in 1970 and early 1971 was really independent of what was actually happening in FDA. I remember we spent a lot of time collecting data about unimportant things. The data collection and printout system was very elaborate. It appeared that the whole purpose of the exercise was to measure things.., anything.
60
LONG RANGE PLANNING
THE PLANNING
PROCESS
believe things will be in 5 years. In developing them, the operating units are encouraged to consider expected changes in important variables such as technology, legislation, and consumer expectations. The scenarios are supplemented by a series of meetings between line managers, key staff directors, and the chief executive. The meetings are designed to assure that the top executives understand each others' perceptions of the future and the forecasts which support these perceptions. The various scenarios, and the minutes of the meetings, are carefully compared and contrasted by the planning staff to identify differences in predictions and perspectives. Additional planning attention is then focused on these differences. This 'comparison of perceived futures' technique has surfaced strategic issues in a number of essential and controversial areas, including:
Based on the philosophy outlined above, the new FDA planning process was designed by mid-1971 and 'activated' late in 1971 to produce a plan for fiscal year 1974. The basic framework of the process has subsequently been used during two additional cycles. However, a number of mechanisms and activities have been added, altered, or deleted. Following is a description of the existing planning process with comments on earlier versions. The planning process is divided into four separate but complementary steps, which are accomplished over a 10-month period as shown in Figure 1. The evolutionary nature of the planning process is demonstrated by the facts that: •
the initial planning process combined (and consequently underemphasized) steps 1, 2, and 3; and
•
the original process required 4 months compared with a present 10-month cycle.
•
• the 'proper' balance of operational activities, e.g.,inspections vs standard-setting; and • jurisdictionalboundaries of various line and stafforganizations.
STEP O N E : C O N S I D E R A T I O N OF S T R A T E G I C I S S U E S
An additional benefit of the technique is that it avoids many of the frustrations of more formalized, structured techniques which attempt to identify each of the factors which will influence the future, predict how each of these factors will change, and then forecast the resulting state of the organization. The simple description of the expected future provides all of the needed information without subjecting the participants to a time-consuming albeit apparently logical 'determination' of the future.
Strategic planning is designed to ferret out and
resolve fundamental issues of agency-wide importance. T w o mechanisms are now in use to identify and analyze strategic issues: the development of long-range scenarios by each operating unit; and the adaptation of the Delphi process to issue resolution. Important issues are firstidentified by means of long-range scenarios~ developed by each operating unit. These scenarios describe how the units
I,
I
the 'proper' balance of functional activities such as regulatory activities, research, and consumer education;
I
I
t
Consideration of Strategic Issues
I Determining Agency Priorities Establishing Resource Levels and Tentative Resource Allocation Communication with Higher Headquarters Aug.
Sept.
Oct.
Nov. !
Dec.
Jan. II I
'
Feb.
March
III
Figure 1. The Planning Process Schedule. FEBRUARY, 1976
61
Although all operating units now participate fully in the scenario comparison process, it should be noted that a potential problem initially existed which had to be worked out before the technique could become effective. Mid-level managers recognized that a planning system which exposed their perceptions (and desires) for the future and which contained a number of mechanisms for open discussion of their present and future activities had the capacity of becoming a punitive, embarrassing, or coercive instrument in the hands of malicious or predatory staff people. Although this fear was not generally openly expressed, it became apparent that some organizational units were playing it 'dose to the chest' and were not participating in the 'spirit' of the planning activities. To solve the problem, the planning staff tried a strategy which included: • expanding the personal contact between members of the planning team and the concerned mid-level managers to demonstrate that the planners were not 'bad guys'; • implementing mechanisms to expose all opinions (including those of the more aggressive staff functions) so that none of the participants were at a disadvantage; and • demonstrating how the open planning process could be used by the line organization to compete for scarce resources. These activities were effective in reducing the fear of openness and virtually all operating units are now using the openness of the planning process to give and gain information. The second important mechanism used in the strategic planning process is an adaptation of the Delphi process. 7 The top executives of the agency, including bureau directors and key staff directors, are asked to respond anonymously to a series of issue questions (some of which are gleaned from the comparison of scenarios). The questions are highly structured in the form of multiple choice or 'fill in the blanks'. However, the executives are encouraged to add their own choice of answers and to suggest different questions they believe are important. In addition, they are asked to judge the relative importance of each issue. The individual 'votes' of the executives are merged, analyzed, and returned to them with a second list of questions. The feedback of the merged responses allows the executives to compare their own opinions with the combined opinion of their peers. The second set of questions further develops the issues. Results of these questions are also merged and returned to the participants. No individual opinions are ever reported or exposed. In fact, the planning staff makes a concerted effort to ensure the anonymous nature of the entire process. The data obtained through the Delphi type process are carefully analyzed to identify areas of disagreement, i.e., unresolved agency issues. The planning staff further develops the issues and uses 62
them as the key agenda items for one or more management conferences. The management conferences serve as an open forum (chaired by the chief executive) for resolving the remaining issues or determining what mechanisms should be used to resolve them. The initial strategic planning activities (19711972) did not include the Delphi process and all issues were brought to the open forum. This proved extremely inefficient because substantial time and energy were expended in recognizing that the executives were in 'violent agreement' on many of the subjects. Much scarce management time was also wasted on 'non-issues'; furthermore, it became apparent that the more vocal and aggressive participants unduly influenced issue resolution. The adapted Delphi process has proved to be a very effective and efficient screening mechanism for isolating important, unresolved issues and for providing an opportunity for more equitable participation. STEP TWO: DETERMINING AGENCY PRIORITIES Determining the priority of various agency activities is basic and prerequisite to a number of plan-
ning and operating activities, such as resource allocation and operational planning. It became obvious early in the design of the planning process that three things were needed to permit an understandable, open discussion of priorities: (I) the organization of all agency programmatic activities into a meaningful structure or chart of accounts; (2) the development and agreement on a set of criteria for ranking the activities in priority order; and (3) the design and implementation of a mechanism which would assure the open airing of all viewpoints. The chart of accounts used in the FDA planning process is the Program Management Structure (PMS). PMS consists of approximately nine programs broken down into more than 40 'projects' which encompass all agency programmatic (operating) activities. The PMS program/project structure is not constrained by the organizational structure of FDA. In some cases all the resources needed to carry out a particular PMS project are contained in one operating unit. In many cases, however, PMS projects cut across organization lines. Although the PMS was originally designed to support the planning process, it has become the common denominator tying together planning, budgeting, reporting and performance evaluation. The structure is subjected to an annual challenge which typically produces changes in i0 per cent of the projects and assures that PMS continues to be an accurate model of the agency. Initial attempts to develop criteria for ranking or prioritizing the PMS projects proved overly LONG RANGE PLANNING
complex and sophisticated. Twelve criteria were developed originally and some attempts were made to apply these to the 40-plus PMS projects. This effort failed because it produced a mass of data much too complex to be used, and because it was very difficult to keep the precise meanings of the 12 criteria clear and usable. A second effort focusing on just three broad criteria has proved to be very workable. The three criteria were developed through an analysis of the arguments previously used in support of programs. In other words, the planning process made explicit the criteria already in use. The three criteria finally adopted and still being used are: • Risk--the loss or injury experienced by the public, i.e., the extent of the problem to be eliminated. Risk includes the dimensions of severity, incidence, and imminence. • Potential effectivenessmthe expected riskreducing impact of additional resources. Potential effectiveness is influenced by a number of factors such as the source (poor design versus inappropriate use), technical state-of-the-art to measure and control, and agency legislative authority. • Sensitivity--the intensity of interest expressed by the agency's 'publics' (consumers, Congress, the administration, and industry). Sensitivity is frequently a function of consumer vulnerability (e.g., children's products), product necessity (e.g., insulin) or the economic impact of the product on the public. Some attempts were made to produce an overall ranking of projects by combining the three criteria. These attempts proved counter-productive and dysfunctional because they tended to focus discussions on the relative importance of the criteria rather than the relative priority of the projects. These efforts were finally abandoned without apparent harm to the effectiveness of the prioritysetting process. The PMS projects and the three criteria des~'ibed above are used in several planning activities designed to exchange information about (and reach consensus on) project priorities. Agency executives are asked to select projects they believe have high risk. They also identify projects they believe have low risk. In addition, they identify projects with high (and low) potential effectiveness and sensitivity. All of this information is analyzed, displayed in an easy-to-read format, and used as a basis for a series of meetings which involve the appropriate line manager, the chief executive of the agency, and his staff. The meetings focus on differences in perspectives on priorities and attempt to determine 'what's important'. In the spirit of openness, all 'votes' on relative priorities are tallied and exchanged prior to the meetings. The initial (1972) planning system did not separate this priority-setting activity from the resource allocation activity (described as step 3 FEBRUARY, 1976
below). It became obvious that the two subjects had to be discussed separately since it was impossible for agency managers to discuss priorities in an unbiased, analytical way when they perceived that resources were directly involved. STEP THREE: ESTABLISH RESOURCE LEVELS AND TENTATIVE RESOURCE ALLOCATIONS
Two important decisions must be made at the conclusion of the planning process: (I) the level of resources to be requested; and (2) the internal distribution of the resources. This part of the planning process must be fully integrated with and supportive of the budgeting activities that follow. The planning process develops a 'first cut' at the resource requirements and distribution and provides information for subsequent budgeting decisions which must often be made under severe time constraints. The most valuable aspect of this step is thatit assures that a large number of'what if' questions about funding levels and resource allocation have been considered in a methodical, unhurried way prior to the subsequent hectic and occasionally random budgeting activities. The establishment of resource levels and tentative resource allocations include the following planning mechanisms: •
the selection of some 'possible' levels of resources which can be expected under varying economic conditions and administration initiatives;
•
the development of specific accomplishments which could be achieved at the various funding levels, s In most eases these accomplishmerits are quantified (and measurable)e.g. 'inspect all low-acid food processing plants';
•
relating these proposed accomplishments to similar activities of previous years. This adds perspective by showing changes and assures continuity; and
•
encouraging each line manager to support, explain, and defend the importance of the proposed accomplishments. This is done by the line managers in a series of presentations to the agency top executives.
STEP FOUR: C O M M U N I C A T I O N WITH HIGHER HEADQUARTERS
Communicating resource requirements, priorities, and proposed accomplishments to higher headquarters and other interested parties is largely an ad hoc, 'as requested', activity. There are, of course, a number of perennial requests, including: •
a 'Forward Plan' for the Department of Health, Education, and Welfare (HEW);
•
a budget justification for HEW; 63
•
a budget justification for the Management and Budget; and
Office of
•
a budget justification for the Congressional appropriations hearings.
The format, scope, purpose, content, and level of detail of these documents is dictated by the requesting organization, and each dimension has changed one or more times during the past three planning cycles. Although not specifically designed to do so, the F D A planning process and the related budgeting activities have proved to be comprehensive and flexible enough to respond to the changing requests and ad hoc inquiries.
EVALUATING THE AGENCY PLANNING PROCESS The agency planning process undergoes an annual review. This review was initiated(and continued) to force a more rapid evolution of the planning system and to shorten the 'normal' 5-year start-up time for a new planning system. The review has been conducted in a number of differentways: 1972--An industry planning executives and members of the planning staff conducted interviews with all the agency's key executives. The review was designed to determine if the top executives understood the planning process and knew the purpose of each step. In essence, the planning staff played devil's advocate and asked the planning participants to explain and defend the planning process. 1973--Members of the agency's planning staff conducted interviews with planning participants without 'outside' assistance. The review focused on the cost effectiveness of the planning process and carefully examined each step to assure that it had contributed to the effort. 1974--An academic-based consultant x° specializing in planning/budgeting processes conducted a series of small group discussions among planning participants. It The review focused on the completeness or incompleteness of the planning process. In addition, an ad hoc team of planners from different operating levels of the agency conducted a supplemental evaluation using input from various planning staffs. The past three reviews concluded that the fundamental steps of the process are understood and considered important by the planning participants. In addition, the specific mechanisms used to accomplish each step are generally thought to be effective and efficient. Each year, however, a n u m b e r of specific planning activities need additional attention. Some excerpts from the most recent (1974) evaluation demonstrate this 'some bad news, some good news' characteristic. A m o n g the 'good news' were these observations: Most officials perceived the planning process as providing positive contributions to their managerial efforts. They believed the planning process provided a stimulus to productive thinking about their current and future activities, increased their awareness of other FDA functions, and offered an honest opportunity to participate in shaping the future direction of the agency. . . . These officials felt comfortable with the approach to planning currently employed . . . They also expressed a
64
high degree of satisfaction with the working relationships they had developed with the Commissioner's planning staff. . . . More positive support exists for the planning process in the FDA than tends to exist for planning in other asencies. The line managers in FDA axe more integrally involved in the total planning process than is usually the case in other agencies. The 'bad news' included: While supportive of current planning efforts, most critique participants believed the strategic p~nning process should and could be more directly linked to the priority setting and fund allocation activities. Participants expressed frustration at the lack of feedback by the Commissioner's office on their future plans and funding proposals. A general frustration was felt by many participants over the lack of follow-up in pursuing the strategic planning topics raised at the management conference. On balance, it appears that the planning process has a strong base and is maturing in a positive way. However, the agency's planners are painfully aware that some problems remain unsolved. The three 'bad news' items will be dealt with through a number of mechanisms and ad hoc efforts. Improving the 'feedback' from the chief executive will require setting aside some time during scheduled management meetings and providing the necessary analytical staff support to the chief executive. Capturing, resolving, and linking strategic issues to subsequent planning and operational activities is more difficult. Initial efforts will focus on mechanisms (such as simple tracking or M B O ) t o assure that responsibility for each strategic issue is assigned and resolution is monitored.
LESSONS LEARNED FROM THREE YEARS" EXPERIENCE A number of lessons have been learned from 3 years
of experience which indicate that the initial planning philosophy was fundamentally sound at the time it was developed but that it and the resulting planning activities must change over time. The significant changes are shown in italics in the following restatement of several concepts of the original planning philosophy: •
The new planning process must fit the existing ' m a n a g e m e n t style' of the agency rather than attempt to change it. An effective planning
process will, however, change some management activities and planners should be sensitive to these 'second order' changes. •
The role of the planning staff is to design the planning system and to facilitate, precipitate, and support planning rather than to actually do planning. Executive expectations of the
planning staff will increase as the planning process matures and is successful. Planners will be expected to increase their contribution in areas such as issue clarification and resolution, technological forecasting and resource recommendations. LONG RANGE PLANNING
•
The planning process will have to be tailormade to fit the agency but this process can largely be constructed from combinations and permutations of existing planning tools. Some additional concepts were developed during the 3 years. 'If we knew then, what we know now', the original planning philosophy would include these additional points: • The planning process is often more important than the plan. It is, therefore, important to capture decisions, insights, agreements, etc., whenever they occur. Effectively changing the emphasis from 'the plan' to Planning will substantially help eliminate many executive frustrations. • Allowing operating units and their planning staffsto participatein the critiqueand design of the agency's planning process, and encouraging them to design their own processes rather than imposing planning processes on them, dramatically increases interest and participation and produces a better process. • All forms of communication, from highly formatted reports to small group 'encounters' and one-on-one informal discussions,can make unique contributions to the planning process. These types of communication should be mixed and matched to produce variety and to keep the process dynamic and effective. • The planning process will continue to change and mechanisms should be put in place to encourage and direct the change. • The natural tendency of planners is to make the planning process more formal, more sophisticated, and more complex. Safeguards (including a hard-nosed annual evaluation) must be put in place to assure its continuing e~icienc% • One effective mechanism for dealing with the 'routine activities push out planning' syndrome of management is to break up planning into smaller, 'routine' activities. •
REFERENCES
(I) National Industrial Conference Board, No 216, The Chief Executive and His Job-Studies in Personnel Policy. (2) Sam Fine, Associate Commissioner for Compliance. (3) John Craig, senior member of the planning staff in 1970-1971. (4)/A similar planning life cycle starting with development of philosophy and extending to systems refinement is described in The Corporate Plqnning Life Cycle--An International Point of View,jDr. K. A. Ringbekk, Long Range Planning, S=ptemSer (1972). (5) This view of the planner's role is widely held. James K. Brown and Rochelle O'Conner observe (in Planning and the Corporate Planning Director), the corporate executive does not as a rule plan; he
FEBRUARY, 1976
j .
contributes to the smooth functioning of the planning process by helping corporate and operating-unit ~anagement plan.
(6)l~he use of scenarios in planning have taken a number ~o( forms including the so-called counter-planning technique developed at the University of California at Berkeley and the University of California at Los Angeles. ~ m~thodology for generating scenarios is describcdJ~./A G_¢ide to Practical TechnologicatT~ Foreca~'[ngJ~James R~Bright, Milton Shoernan (ed.) j Prentice Hall, Englawood Cliffs, New Jersey (1973). (7) The Delphi process is usually applied to technological forecasting and has become one of the most widely used techniques for that purpose. Joseph Martino in his book, Technological Forecasting for Decision Making, describes the Delphi process in detail. He writes, 'A procedure known as Delphi, originally developed by researchers at the Rand Corporation, now makes it possible to obtain many of the advantages of groups while eliminating most of the disadvantages. The Delphi Procedure is characterized by three features which distinguish it from the usual methods of group interaction. These are : (a) anonymity; (b) iteration with controlled feedback; and (c) statistical group response. The statistical group response refers to mechanisms in the Delphi Procedure which report the range of group views rather than a simple yes or no decision.' (8) These accomplishments later become the raw material for a qumber of budgeting activities, thus helping to assure full integration of the planning/ budgeting processes. (S) Joseph Seidel, Assistant Vice President for Corporate Planning, Singer Corporation. (10) Stephen Chitwood, Associate Professor of Public Administration, George Washington University, Washington, D.C. (11) These small group discussions focused executive attention on specific planning activities and proved to be extremely productive, efficient and positive. Consequently, the small group mechanism will be used in subsequent planning activities to come to grips with strategic and programmatic issues. BIBLIOGRAPHY
Bright, James R., and Schoemen, Milton (ed.). A Guide to Practical Technological Forecasting, Prentice-Hall, Englewood Cliffs, New Jersey (1973). Brown, James IC, and O'Conner, Rochelle, Planning and the Corporate Planning Director, Conference Board Report No. 571, New York (1972). Faludi, Andrees (ed.). A Reader in Planning Theory, Pergamon Press, Oxford (1973). Martino, Joseph. Technological Forecasting for Decision Making. Elsevier, New York (1972). National Industrial Conference Board. Report No. 216.
The Chief Executive--and His Job Studies in Personnel Policy. New York (1974). Page, Harry Robert. The integration and Systematization of Planning, Programming, and Budgeting, Federal Contributions to Management, Praeger Publishers, Inc., (1971 ). Ringbakk, K. A. The Corporate Planning Life Cycle--An International Point of View, Long Range Planning, New York, January-February (1974). Steiner, George, Top Management Planning, The Macmillan Company, New York (1969). Wildavsky, Aaron. The Politics of the Budgetary Process. Little, Brown Et Company, Boston (1964).
65
The special considerations of planning in the public area have exercised many minds during the last decade, in this article the author reports on the particular experience of the (U.S.) Food and Drug Administration (FDA) from the initiation of a new planning system in 1972 to 1975. The lessons learned and the conclusions drawn from this experience are described in the article, many of which wi// have relevance to public sector planning in other environments.
INTRODUCTION
O
NE OF MANAGEMENT'S MOST SOUGHT-AFTER~
and elusive--goals is effective long range planning. A 1969 survey s of 300 business executives indicated that two-thirds of them considered planning to be their most important activity. The public sector pursues effective planning with equal intensity, as evidenced by the enthusiastic rush of many federal agencies to PPBS (Planning-Programming-Budgeting System) in the mid- to late 1960s. Despite the attention paid to it, most planning turns out to be far from effective. Results are often disappointing, as shown in the following list of common 'planning frustrations' distilled from the literature and from personal discussions with professional planners and top operation executives. Some of the most universal pitfalls are: • The plan and planning lack credibility. • The plan is not actionable. • Planning activities are defeated by the tyranny of tradition. • Producing a plan is a sterile exercise. • Planners try to decide too much too soon. FEBRUARY, 1976
Q The plan does not deal with what is really important. Planners have the difficult task of trying to satisfy executive expectations while avoiding the numerous pitfalls and frustrations inherent in the planning process. The 'nearly complete success story' described in this article demonstrates that it is possible to meet many of the expectations while avoiding a large part of the frustration. It further suggests that a heuristic approach to planning will improve the ratio of satisfied expectations to engendered frustrations. The case study described in this article deals with the experience of one agency--the Food and Drug Administration (FDA)---from the initiation of a new planning system in 1972 to the present. The FDA's successes and failures in designing and implementing a planning process, and some of the unique permutations and combinations of planning techniques which were used, may serve as useful lessons and guidelines to other planners. The agency's experience is relevant to business planning because of two factors: (1) The increasing concern of business planning with multiple, hard-to-measure objectives similar to those which affect the public sector. Business planning is no longer directed simply at profit or cash flow maximization, but at the often competing objectives demanded by interest groups such as consumer activists, stockholders, employees and the government. The public sector, as exemplified by the FDA in this case study, has long been struggling with multiple and often contradictory objectives imposed by various influential groups ranging from congressional committees to consumer advocates. (2) The growing tendency for corporations to initiate planning for their more important 59
functional activities, such as computer operations and research. These functional activities are similar to many government operations since budget levels must often be decided on an arbitrary basis. In addition, these functional activities must often plan and record their performance through a variety of surrogate measures rather than through a direct measurement of contribution to profit. The planning activities of the public sector often deal with arbitrary funding levels and indirect measures of performance and consequently can serve as prototypes for functional business planning. T H E P H I L O S O P H I C A L B A S E OF T H E NEW PLANNING PROCESS
A history of frustration preceded the development of the FDA's new planning process. From the mid1960s to early 1971, agency-wide planning had been attempted several times with mixed, but generally poor, results. The state of planning in early 1971 could be described as: •
not contributing to the decision-making processes and management activities of the agency;
•
consisting largely of 'planners talking to planners' with little or no executive involvement;
•
•
•
completely independent of (and occasionally counter-productive to) the mandatory budgeting activities; undergoing constant change with annual or more frequent changes in the planning people, goals, and mechanisms; and
T h e Planner a
We never really knew what happened to the information once it left heremexcept that it would get printed out by the computer and sent back to us for 'checking and correcting'. Fortunately, the atmosphere in the agency in 1971 was not entirely anti-planning in spite of the years of non-productive and negative experience. A number of organizational and personnel changes were made in 1971 to give a new emphasis to agency-wide planning. Top management restated its desire to have a cost effective planning process which contributed to, and was an integral part of, the management process. The new planning teani was given almost complete freedom to determine the mechanisms and activities to be used in the planning process, the time table for planning, and the specific goals to be achieved. As a first step, the team conducted a careful review of the state (and reputation) of the existing planning process, the resources immediately available to the planning team, and most importanfly, the short- and long-term goals of the agency. On the basis of this information, the team then developed and articulated a planning philosophy to guide the. design of the planning mechanisms and activities. The philosophy expressed the following concepts:
•
The new planning process must fit the existing 'management style' of the agency rather than attempt to change it.
•
An opportunistic use of existing systems, knowledge, and management activities will expedite the acceptance and effectiveness of planning.
•
A comprehensive planning process will take up to 5 years to implement and debug. 4 Therefore, intermediate goals and objectives must be included in the plan for planning. Top management must be advised that some attractive and desirable planning activities will have to be deferred until some of the basic activities are in place and working.
•
The role of the planning staff is to design the planning system and to facilitate, precipitate and support planning, rather than to actually do planning. 5 It is apparent that the operating and line executives believe that planning is an important part of their job, and that they alone have the program knowledge necessary for effective planning. However, they do not have the time or inclination to personally design and 'operate' the planning system.
•
The planning process will have to be tailormade to fit the agency,
•
The question, 'Why are we doing this?' should never have to be asked by the participants. The planning process will have to be simple and understood by everyone involved.
generating a number of negative reactions among top and middle managers ranging from apathy to frustration and hostility.
The 1970 planning activities were largely designed to satisfy requests from higher headquarters for voluminous data on activities and 'outputs'. Substantial amounts of time were spent at various levels of the agency accumulating or creating information and transferring it to computer input sheets which were sent forward to the next higher headquarters. Reaction at the lower levels was negative, as these comments from an agency executive and an agency planner indicate: The Executive =
The planning process we had in 1970 and early 1971 was really independent of what was actually happening in FDA. I remember we spent a lot of time collecting data about unimportant things. The data collection and printout system was very elaborate. It appeared that the whole purpose of the exercise was to measure things.., anything.
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LONG RANGE PLANNING
THE PLANNING
PROCESS
believe things will be in 5 years. In developing them, the operating units are encouraged to consider expected changes in important variables such as technology, legislation, and consumer expectations. The scenarios are supplemented by a series of meetings between line managers, key staff directors, and the chief executive. The meetings are designed to assure that the top executives understand each others' perceptions of the future and the forecasts which support these perceptions. The various scenarios, and the minutes of the meetings, are carefully compared and contrasted by the planning staff to identify differences in predictions and perspectives. Additional planning attention is then focused on these differences. This 'comparison of perceived futures' technique has surfaced strategic issues in a number of essential and controversial areas, including:
Based on the philosophy outlined above, the new FDA planning process was designed by mid-1971 and 'activated' late in 1971 to produce a plan for fiscal year 1974. The basic framework of the process has subsequently been used during two additional cycles. However, a number of mechanisms and activities have been added, altered, or deleted. Following is a description of the existing planning process with comments on earlier versions. The planning process is divided into four separate but complementary steps, which are accomplished over a 10-month period as shown in Figure 1. The evolutionary nature of the planning process is demonstrated by the facts that: •
the initial planning process combined (and consequently underemphasized) steps 1, 2, and 3; and
•
the original process required 4 months compared with a present 10-month cycle.
•
• the 'proper' balance of operational activities, e.g.,inspections vs standard-setting; and • jurisdictionalboundaries of various line and stafforganizations.
STEP O N E : C O N S I D E R A T I O N OF S T R A T E G I C I S S U E S
An additional benefit of the technique is that it avoids many of the frustrations of more formalized, structured techniques which attempt to identify each of the factors which will influence the future, predict how each of these factors will change, and then forecast the resulting state of the organization. The simple description of the expected future provides all of the needed information without subjecting the participants to a time-consuming albeit apparently logical 'determination' of the future.
Strategic planning is designed to ferret out and
resolve fundamental issues of agency-wide importance. T w o mechanisms are now in use to identify and analyze strategic issues: the development of long-range scenarios by each operating unit; and the adaptation of the Delphi process to issue resolution. Important issues are firstidentified by means of long-range scenarios~ developed by each operating unit. These scenarios describe how the units
I,
I
the 'proper' balance of functional activities such as regulatory activities, research, and consumer education;
I
I
t
Consideration of Strategic Issues
I Determining Agency Priorities Establishing Resource Levels and Tentative Resource Allocation Communication with Higher Headquarters Aug.
Sept.
Oct.
Nov. !
Dec.
Jan. II I
'
Feb.
March
III
Figure 1. The Planning Process Schedule. FEBRUARY, 1976
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Although all operating units now participate fully in the scenario comparison process, it should be noted that a potential problem initially existed which had to be worked out before the technique could become effective. Mid-level managers recognized that a planning system which exposed their perceptions (and desires) for the future and which contained a number of mechanisms for open discussion of their present and future activities had the capacity of becoming a punitive, embarrassing, or coercive instrument in the hands of malicious or predatory staff people. Although this fear was not generally openly expressed, it became apparent that some organizational units were playing it 'dose to the chest' and were not participating in the 'spirit' of the planning activities. To solve the problem, the planning staff tried a strategy which included: • expanding the personal contact between members of the planning team and the concerned mid-level managers to demonstrate that the planners were not 'bad guys'; • implementing mechanisms to expose all opinions (including those of the more aggressive staff functions) so that none of the participants were at a disadvantage; and • demonstrating how the open planning process could be used by the line organization to compete for scarce resources. These activities were effective in reducing the fear of openness and virtually all operating units are now using the openness of the planning process to give and gain information. The second important mechanism used in the strategic planning process is an adaptation of the Delphi process. 7 The top executives of the agency, including bureau directors and key staff directors, are asked to respond anonymously to a series of issue questions (some of which are gleaned from the comparison of scenarios). The questions are highly structured in the form of multiple choice or 'fill in the blanks'. However, the executives are encouraged to add their own choice of answers and to suggest different questions they believe are important. In addition, they are asked to judge the relative importance of each issue. The individual 'votes' of the executives are merged, analyzed, and returned to them with a second list of questions. The feedback of the merged responses allows the executives to compare their own opinions with the combined opinion of their peers. The second set of questions further develops the issues. Results of these questions are also merged and returned to the participants. No individual opinions are ever reported or exposed. In fact, the planning staff makes a concerted effort to ensure the anonymous nature of the entire process. The data obtained through the Delphi type process are carefully analyzed to identify areas of disagreement, i.e., unresolved agency issues. The planning staff further develops the issues and uses 62
them as the key agenda items for one or more management conferences. The management conferences serve as an open forum (chaired by the chief executive) for resolving the remaining issues or determining what mechanisms should be used to resolve them. The initial strategic planning activities (19711972) did not include the Delphi process and all issues were brought to the open forum. This proved extremely inefficient because substantial time and energy were expended in recognizing that the executives were in 'violent agreement' on many of the subjects. Much scarce management time was also wasted on 'non-issues'; furthermore, it became apparent that the more vocal and aggressive participants unduly influenced issue resolution. The adapted Delphi process has proved to be a very effective and efficient screening mechanism for isolating important, unresolved issues and for providing an opportunity for more equitable participation. STEP TWO: DETERMINING AGENCY PRIORITIES Determining the priority of various agency activities is basic and prerequisite to a number of plan-
ning and operating activities, such as resource allocation and operational planning. It became obvious early in the design of the planning process that three things were needed to permit an understandable, open discussion of priorities: (I) the organization of all agency programmatic activities into a meaningful structure or chart of accounts; (2) the development and agreement on a set of criteria for ranking the activities in priority order; and (3) the design and implementation of a mechanism which would assure the open airing of all viewpoints. The chart of accounts used in the FDA planning process is the Program Management Structure (PMS). PMS consists of approximately nine programs broken down into more than 40 'projects' which encompass all agency programmatic (operating) activities. The PMS program/project structure is not constrained by the organizational structure of FDA. In some cases all the resources needed to carry out a particular PMS project are contained in one operating unit. In many cases, however, PMS projects cut across organization lines. Although the PMS was originally designed to support the planning process, it has become the common denominator tying together planning, budgeting, reporting and performance evaluation. The structure is subjected to an annual challenge which typically produces changes in i0 per cent of the projects and assures that PMS continues to be an accurate model of the agency. Initial attempts to develop criteria for ranking or prioritizing the PMS projects proved overly LONG RANGE PLANNING
complex and sophisticated. Twelve criteria were developed originally and some attempts were made to apply these to the 40-plus PMS projects. This effort failed because it produced a mass of data much too complex to be used, and because it was very difficult to keep the precise meanings of the 12 criteria clear and usable. A second effort focusing on just three broad criteria has proved to be very workable. The three criteria were developed through an analysis of the arguments previously used in support of programs. In other words, the planning process made explicit the criteria already in use. The three criteria finally adopted and still being used are: • Risk--the loss or injury experienced by the public, i.e., the extent of the problem to be eliminated. Risk includes the dimensions of severity, incidence, and imminence. • Potential effectivenessmthe expected riskreducing impact of additional resources. Potential effectiveness is influenced by a number of factors such as the source (poor design versus inappropriate use), technical state-of-the-art to measure and control, and agency legislative authority. • Sensitivity--the intensity of interest expressed by the agency's 'publics' (consumers, Congress, the administration, and industry). Sensitivity is frequently a function of consumer vulnerability (e.g., children's products), product necessity (e.g., insulin) or the economic impact of the product on the public. Some attempts were made to produce an overall ranking of projects by combining the three criteria. These attempts proved counter-productive and dysfunctional because they tended to focus discussions on the relative importance of the criteria rather than the relative priority of the projects. These efforts were finally abandoned without apparent harm to the effectiveness of the prioritysetting process. The PMS projects and the three criteria des~'ibed above are used in several planning activities designed to exchange information about (and reach consensus on) project priorities. Agency executives are asked to select projects they believe have high risk. They also identify projects they believe have low risk. In addition, they identify projects with high (and low) potential effectiveness and sensitivity. All of this information is analyzed, displayed in an easy-to-read format, and used as a basis for a series of meetings which involve the appropriate line manager, the chief executive of the agency, and his staff. The meetings focus on differences in perspectives on priorities and attempt to determine 'what's important'. In the spirit of openness, all 'votes' on relative priorities are tallied and exchanged prior to the meetings. The initial (1972) planning system did not separate this priority-setting activity from the resource allocation activity (described as step 3 FEBRUARY, 1976
below). It became obvious that the two subjects had to be discussed separately since it was impossible for agency managers to discuss priorities in an unbiased, analytical way when they perceived that resources were directly involved. STEP THREE: ESTABLISH RESOURCE LEVELS AND TENTATIVE RESOURCE ALLOCATIONS
Two important decisions must be made at the conclusion of the planning process: (I) the level of resources to be requested; and (2) the internal distribution of the resources. This part of the planning process must be fully integrated with and supportive of the budgeting activities that follow. The planning process develops a 'first cut' at the resource requirements and distribution and provides information for subsequent budgeting decisions which must often be made under severe time constraints. The most valuable aspect of this step is thatit assures that a large number of'what if' questions about funding levels and resource allocation have been considered in a methodical, unhurried way prior to the subsequent hectic and occasionally random budgeting activities. The establishment of resource levels and tentative resource allocations include the following planning mechanisms: •
the selection of some 'possible' levels of resources which can be expected under varying economic conditions and administration initiatives;
•
the development of specific accomplishments which could be achieved at the various funding levels, s In most eases these accomplishmerits are quantified (and measurable)e.g. 'inspect all low-acid food processing plants';
•
relating these proposed accomplishments to similar activities of previous years. This adds perspective by showing changes and assures continuity; and
•
encouraging each line manager to support, explain, and defend the importance of the proposed accomplishments. This is done by the line managers in a series of presentations to the agency top executives.
STEP FOUR: C O M M U N I C A T I O N WITH HIGHER HEADQUARTERS
Communicating resource requirements, priorities, and proposed accomplishments to higher headquarters and other interested parties is largely an ad hoc, 'as requested', activity. There are, of course, a number of perennial requests, including: •
a 'Forward Plan' for the Department of Health, Education, and Welfare (HEW);
•
a budget justification for HEW; 63
•
a budget justification for the Management and Budget; and
Office of
•
a budget justification for the Congressional appropriations hearings.
The format, scope, purpose, content, and level of detail of these documents is dictated by the requesting organization, and each dimension has changed one or more times during the past three planning cycles. Although not specifically designed to do so, the F D A planning process and the related budgeting activities have proved to be comprehensive and flexible enough to respond to the changing requests and ad hoc inquiries.
EVALUATING THE AGENCY PLANNING PROCESS The agency planning process undergoes an annual review. This review was initiated(and continued) to force a more rapid evolution of the planning system and to shorten the 'normal' 5-year start-up time for a new planning system. The review has been conducted in a number of differentways: 1972--An industry planning executives and members of the planning staff conducted interviews with all the agency's key executives. The review was designed to determine if the top executives understood the planning process and knew the purpose of each step. In essence, the planning staff played devil's advocate and asked the planning participants to explain and defend the planning process. 1973--Members of the agency's planning staff conducted interviews with planning participants without 'outside' assistance. The review focused on the cost effectiveness of the planning process and carefully examined each step to assure that it had contributed to the effort. 1974--An academic-based consultant x° specializing in planning/budgeting processes conducted a series of small group discussions among planning participants. It The review focused on the completeness or incompleteness of the planning process. In addition, an ad hoc team of planners from different operating levels of the agency conducted a supplemental evaluation using input from various planning staffs. The past three reviews concluded that the fundamental steps of the process are understood and considered important by the planning participants. In addition, the specific mechanisms used to accomplish each step are generally thought to be effective and efficient. Each year, however, a n u m b e r of specific planning activities need additional attention. Some excerpts from the most recent (1974) evaluation demonstrate this 'some bad news, some good news' characteristic. A m o n g the 'good news' were these observations: Most officials perceived the planning process as providing positive contributions to their managerial efforts. They believed the planning process provided a stimulus to productive thinking about their current and future activities, increased their awareness of other FDA functions, and offered an honest opportunity to participate in shaping the future direction of the agency. . . . These officials felt comfortable with the approach to planning currently employed . . . They also expressed a
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high degree of satisfaction with the working relationships they had developed with the Commissioner's planning staff. . . . More positive support exists for the planning process in the FDA than tends to exist for planning in other asencies. The line managers in FDA axe more integrally involved in the total planning process than is usually the case in other agencies. The 'bad news' included: While supportive of current planning efforts, most critique participants believed the strategic p~nning process should and could be more directly linked to the priority setting and fund allocation activities. Participants expressed frustration at the lack of feedback by the Commissioner's office on their future plans and funding proposals. A general frustration was felt by many participants over the lack of follow-up in pursuing the strategic planning topics raised at the management conference. On balance, it appears that the planning process has a strong base and is maturing in a positive way. However, the agency's planners are painfully aware that some problems remain unsolved. The three 'bad news' items will be dealt with through a number of mechanisms and ad hoc efforts. Improving the 'feedback' from the chief executive will require setting aside some time during scheduled management meetings and providing the necessary analytical staff support to the chief executive. Capturing, resolving, and linking strategic issues to subsequent planning and operational activities is more difficult. Initial efforts will focus on mechanisms (such as simple tracking or M B O ) t o assure that responsibility for each strategic issue is assigned and resolution is monitored.
LESSONS LEARNED FROM THREE YEARS" EXPERIENCE A number of lessons have been learned from 3 years
of experience which indicate that the initial planning philosophy was fundamentally sound at the time it was developed but that it and the resulting planning activities must change over time. The significant changes are shown in italics in the following restatement of several concepts of the original planning philosophy: •
The new planning process must fit the existing ' m a n a g e m e n t style' of the agency rather than attempt to change it. An effective planning
process will, however, change some management activities and planners should be sensitive to these 'second order' changes. •
The role of the planning staff is to design the planning system and to facilitate, precipitate, and support planning rather than to actually do planning. Executive expectations of the
planning staff will increase as the planning process matures and is successful. Planners will be expected to increase their contribution in areas such as issue clarification and resolution, technological forecasting and resource recommendations. LONG RANGE PLANNING
•
The planning process will have to be tailormade to fit the agency but this process can largely be constructed from combinations and permutations of existing planning tools. Some additional concepts were developed during the 3 years. 'If we knew then, what we know now', the original planning philosophy would include these additional points: • The planning process is often more important than the plan. It is, therefore, important to capture decisions, insights, agreements, etc., whenever they occur. Effectively changing the emphasis from 'the plan' to Planning will substantially help eliminate many executive frustrations. • Allowing operating units and their planning staffsto participatein the critiqueand design of the agency's planning process, and encouraging them to design their own processes rather than imposing planning processes on them, dramatically increases interest and participation and produces a better process. • All forms of communication, from highly formatted reports to small group 'encounters' and one-on-one informal discussions,can make unique contributions to the planning process. These types of communication should be mixed and matched to produce variety and to keep the process dynamic and effective. • The planning process will continue to change and mechanisms should be put in place to encourage and direct the change. • The natural tendency of planners is to make the planning process more formal, more sophisticated, and more complex. Safeguards (including a hard-nosed annual evaluation) must be put in place to assure its continuing e~icienc% • One effective mechanism for dealing with the 'routine activities push out planning' syndrome of management is to break up planning into smaller, 'routine' activities. •
REFERENCES
(I) National Industrial Conference Board, No 216, The Chief Executive and His Job-Studies in Personnel Policy. (2) Sam Fine, Associate Commissioner for Compliance. (3) John Craig, senior member of the planning staff in 1970-1971. (4)/A similar planning life cycle starting with development of philosophy and extending to systems refinement is described in The Corporate Plqnning Life Cycle--An International Point of View,jDr. K. A. Ringbekk, Long Range Planning, S=ptemSer (1972). (5) This view of the planner's role is widely held. James K. Brown and Rochelle O'Conner observe (in Planning and the Corporate Planning Director), the corporate executive does not as a rule plan; he
FEBRUARY, 1976
j .
contributes to the smooth functioning of the planning process by helping corporate and operating-unit ~anagement plan.
(6)l~he use of scenarios in planning have taken a number ~o( forms including the so-called counter-planning technique developed at the University of California at Berkeley and the University of California at Los Angeles. ~ m~thodology for generating scenarios is describcdJ~./A G_¢ide to Practical TechnologicatT~ Foreca~'[ngJ~James R~Bright, Milton Shoernan (ed.) j Prentice Hall, Englawood Cliffs, New Jersey (1973). (7) The Delphi process is usually applied to technological forecasting and has become one of the most widely used techniques for that purpose. Joseph Martino in his book, Technological Forecasting for Decision Making, describes the Delphi process in detail. He writes, 'A procedure known as Delphi, originally developed by researchers at the Rand Corporation, now makes it possible to obtain many of the advantages of groups while eliminating most of the disadvantages. The Delphi Procedure is characterized by three features which distinguish it from the usual methods of group interaction. These are : (a) anonymity; (b) iteration with controlled feedback; and (c) statistical group response. The statistical group response refers to mechanisms in the Delphi Procedure which report the range of group views rather than a simple yes or no decision.' (8) These accomplishments later become the raw material for a qumber of budgeting activities, thus helping to assure full integration of the planning/ budgeting processes. (S) Joseph Seidel, Assistant Vice President for Corporate Planning, Singer Corporation. (10) Stephen Chitwood, Associate Professor of Public Administration, George Washington University, Washington, D.C. (11) These small group discussions focused executive attention on specific planning activities and proved to be extremely productive, efficient and positive. Consequently, the small group mechanism will be used in subsequent planning activities to come to grips with strategic and programmatic issues. BIBLIOGRAPHY
Bright, James R., and Schoemen, Milton (ed.). A Guide to Practical Technological Forecasting, Prentice-Hall, Englewood Cliffs, New Jersey (1973). Brown, James IC, and O'Conner, Rochelle, Planning and the Corporate Planning Director, Conference Board Report No. 571, New York (1972). Faludi, Andrees (ed.). A Reader in Planning Theory, Pergamon Press, Oxford (1973). Martino, Joseph. Technological Forecasting for Decision Making. Elsevier, New York (1972). National Industrial Conference Board. Report No. 216.
The Chief Executive--and His Job Studies in Personnel Policy. New York (1974). Page, Harry Robert. The integration and Systematization of Planning, Programming, and Budgeting, Federal Contributions to Management, Praeger Publishers, Inc., (1971 ). Ringbakk, K. A. The Corporate Planning Life Cycle--An International Point of View, Long Range Planning, New York, January-February (1974). Steiner, George, Top Management Planning, The Macmillan Company, New York (1969). Wildavsky, Aaron. The Politics of the Budgetary Process. Little, Brown Et Company, Boston (1964).
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