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Effective Planning in a Period of Fiscal Stress

Budgets and Finance

Effective Planning in a Period of Fiscal Stress

Planning is often criticized in management books as well as in universities and corporations. History provides many examples of failures in planning. The Maginot Line in World War II was built to address the challenges of trench warfare and not attacks of tanks in a Blitzkrieg-style tactic. In the United States, notable failures to bring corporate planning to the federal government include Secretary of Defense Robert McNamara’s failure to bring effective use of General Motors’ planning-budgeting systems into defense budgeting expenditures and a variety of failures by others in Washington to find applicability of Texas Instruments’ concept of zero-based budgeting to control budget costs in a variety of federal welfare programs to eliminate bloat with 10 percent across-the-board cuts for a period of years. Perhaps some of the most profound failures were the five- and 10-year plans under Stalin and Mao, which distorted the Soviet and Chinese economies by assuming impossible productivity targets for products and an ease of adjusting plans to realities of both domestic demand and supply that their planning methods could not achieve. Similar failures of planning methods used in the US in its response to the pandemic are evident when compared to China, New Zealand, and some Scandinavian democracies.

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