Question

Respond to the following statement by John P Kotter (1999): “One of the most frequent mistakes that overmanaged and underled corporations make is to embrace long term planning as a panacea for their lack of direction and inability to adopt to an increasingly competitive and dynamic business environment”.

Answer 1

Due to lack of strong leadership, firms often fail to respond to short-term market changes and adapt to it. Rather, they keep planning for the long-term ignoring the short-term developments in the business. However, long-term planning often involves significant time and investment without contributing towards the success of the business as the market can be very dynamic and changes in the short-term necessities amendments to the long-term plans. The business environment is unpreditbavle and subjects with various short-term changes and disruptions, such as new technologies, legislative changes, regulatory changes, change in competitive landscape, etc. Frequent changes in the short-term require frequent modification of the long-term. Therefore, the planning horizon of firms should not be too long. Rather firms should be flexible enough to adapt to short-term changes and plan for the short-to-medium term.