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The time horizons for setting out strategic plans have never been established in principle, and hence vary widely over one, two, three, five, ten, fifteen, twenty years and more. This paper presents a total system of planning horizons at one, three, seven, twelve and twenty-five years. Each time horizon is linked to a specific organizational layer. The larger the organization, the longer is the top-level planning horizon. The larger time horizons encompass the shorter, so that, for example, the CEO of a large corporation can set the corporate strategic plan in terms of a 25-year plan, with corporate strategic milestones at twelve years, seven years, three years and one year. Every subordinate function can be planned in the same way.
There are two critical problems that have persistently bedeviled attempts to arrive at sound and systematic principles for strategic planning, and for adequately linking budgeting to long term as well as short term planning. The first of these problems is more than familiar; namely, what time horizons to choose in formulating strategic plans. The second problem is less familiar, but no less troublesome for that; namely, how to integrate strategic plans laterally across various functions as well as vertically across time horizons within functions. Here is how these problems present themselves.
Present Development
The authors were working with the CEO of a pharmaceutical company, who had become interested in Kaplan and Norton's (1996) balanced scorecard approach to strategic planning. This approach set out to enable all employees not only to prepare statements of their own plans, but also to relate those plans to those of others including the CEO's corporate plans. We quickly came up against the problem of what planning time horizons to use; a problem encountered, we soon after discovered, by others attempting to apply the system. If the corporate plans are established on a long time horizon it is difficult to make a meaningful connection between those plans and plans at shop and office floor levels. If, on the other hand, corporate plans are set in a short enough time horizon to make sense at the bottom of the organization, they are not satisfactory either for corporate strategic planning or for relating to the plans of executives at the top.
These...