ZBB, MBO, PPB and Their Effectiveness Within the Planning Marketing Process

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ZBB, MBO, PPB and Their Effectiveness Within the Planning/Marketing ProcessAuthor(s): Michael F. DuffySource: Strategic Management Journal, Vol. 10, No. 2 (Mar. - Apr., 1989), pp. 163-173Published by: WileyStable URL: http://www.jstor.org/stable/2486508 .

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Strategic

Management Journal, Vol. 10, 163-173

(1989)

ZBB, MBO, PPB AND THEIREFFECTIVENESSWITHIN

THE

PLANNING/MARKETING

ROCESS

MICHAEL

.

DUFFY

University of Otago,

Dunedin,

New Zealand

Substantial attention

has

recently

been

focused

on the

reported ailures of

zero-base

budgeting

(ZBB), management by objectives (MBO), and planning, programming, and budgeting

(PPB)

as

management techniques

for corporations

as

well as

governmental agencies.

This

writer has determined that

these

failures

occur because the

ZBB, MBO,

and PPB

techniques

are

used in lieu

of

an

integratedplanninglmarketing process

and

fail

to

recognize

the

process

or

the limitations and

scope of

these

techniques.

The

techniques

can

and

do work

well

where

they

are

treated

as

part of,

rather than

as a substitute

for,

the

planninglmarketing

process,

and

are

modified

to

function efficiently

within

the

process.

All

elements

of

the

planning/marketing process

must be

given

a

fair

share

of

attention

if

the

profit

or

non-profit

enterprise

is

to succeed.

INTRODUCTION

The essence of

zero-base budgeting (ZBB),

management by objectives (MBO), and planning,

programming and

budgeting (PPB),

is

that these

techniques

will allow enterprises to actively

search for, learn from, and adapt to changing

environments. The supporters of the techniques

often claim

that integrated approaches to total

management

are

provided.

Each

approach

intends

to provide a

means of communication, objective-

setting, and decision-making which is suitable

across all

hierarchical levels

of an

organization.

PPB was the first of these three

management

techniques introduced, followed by MBO and

then ZBB. Each

successive technique included

elements of the

preceding technique,

and added

clarification and

varying capabilities. Briefly,

PPB

was designed to

support

a

previously defined

organizational mission

with

a

top-down

infor-

mation

flow.

The

organization

is

sensitized to

the

environment,

and

is

chiefly

concerned

with

resource allocation. A well-defined, cost-related

0143-2095/89/020163-1$05.50

(? 1989

by

John

Wiley

& Sons,

Ltd.

decision structure is developed, and provides for

selecting

target

programs.

In contrast,

MBO uses

either a

bottom-up

or

bilateral

information flow, and

encourages

feedback as

well as

co-determination of

objec-

tives,

goals,

schedules, measurement

variables,

and

control means

by all

affected

management

levels.

A

capability for

prioritizing

alternatives

by

objective

means is

provided.

ZBB

adds a

requirement to

review

program

justification on a

regular

basis. ZBB

actively

creates alternatives, and provides a ranking

and

selection process

by

panels which consider

subjective

as

well as

objective

variables.

Addition-

ally,

interrelationships

or synergy

between pro-

grams is

considered.

Unfortunately,

ZBB, MBO,

and

PPB

have

often been

introduced

into

organizations without

considering the

viability and

appropriateness

of

each

technique, and

without

support

and

understanding

across

affected

management

levels.

To

provide a better

understanding

of

the

deficiencies of these techniques a typical planning

Received 26

August

1986

Revised 18 December 1987







164

M. F. Duffy

marketing process will

be described. This will be

followed by an analysis

of each technique, a

comparison

of the three techniques with the

elements

of the

planning/marketing

process, and

a determination of how well the elements are

satisfied.

THE PLANNING/MARKETING

PROCESS

Typical structure

The planning/marketing

process allows an organi-

zation to optimize its

design, implementation,

and control

of

tactics and strategies.

The

process

typically

consists of

integrated

elements including

organizational purpose, mission statement, objec-

tives and goals, strategy, developing

a

portfolio

plan, opportunity

analysis, target selection,

posi-

tioning strategy, marketing

systems and plan

development, performance

factor development,

and

finally, implementation

and control. Both

marketing

and

planning

may

be included

in

the

same

process

since

both

marketing processes

and

planning processes

exhibit

a

high degree

of

overlap

and exhibit many commonalities (Wind

and

Robertson, 1983).

Essentially,

the

planning/marketing

process

consists

of two distinct phases: strategic

and

tactical.

The

strategic

phase

is concerned

with

integrated planning,

implementation,

and control

with

long-term corporate

environmental consider-

ations. The short-term tactical phase, normally

one

year

or

less,

incorporates strategic goals

but

is of sufficient detail

to allow development

of

action

plans

and

performance

factors

for the

immediate future. Day

and

Wensley

(1983)

have

called for

increased attention

by marketing

theorists

in

strategic

issues.

They

stress the

relationships

between

marketing

and

strategy

and

the

need to close the

gap

between

them.

Each element

may

share characteristics

of

other

elements,

and

changes

in

individual

elements

may

result

from

modifications

to other

elements

preceding

or

following

it in the

process.

Though

the

process

is considered

by

most

to

move

in a linear

direction,

it can also

move in

the reverse direction.

In

some cases

multiple,

non-adjoining

elements

can

be

considered

simul-

taneously

or out of

'normal'

sequence.

Flexibility

in

movement throughout

the

process,

and

inte-

gration among

elements

is desirable

since

'[i]n

some

subsequent period

the

firm will find

that

the

evolutionary path

of

this

market is

such that

it can

no

longer

be effective

and efficient in

serving

this market' (Kotler, 1980:

3).

At all

times during the process,

environmental

context and corporate context related to the firm

are affecting

the design, needs,

and effectiveness

of the

process

and

each element.

'An

organi-

zation's performance

in the

marketplace depends

on the degree

of creative

alignment between

the

organization

and the environment.

The ideal

organization

examines its

environment

. . . to

support the

organization's

ability to carry

out its

strategy' (Kotler,

1980:

2).

A top-down

approach

reflects the need to

understand

the

limitations

of capacity

and

resources in an organization, but fails to identify

threats from competitors

outside

the present

market.

A bottom-up

approach

emphasizes

mar-

ket

analysis

from

the

consumer's prospective,

but

may ignore

crucial

economic factors and

distort

perceptions

of

opportunities

and threats

(Day,

1981).

An

interactive

or dual

approach

to market

analysis

and definition

is

required,

combining

the

virtues

of

top-down

and bottom-up approaches.

Typical

elements

The

first element

of the

management

planning

process

is in

defining

or

recognizing

the purpose

of

the organization.

Although

the purpose

is

frequently

formalized,

it is often inadvertently

confused

with the mission

of

an

organization.

The

purpose

is more

correctly

the

real,

often

unstated,

aims of an

organization.

For this

reason

the

purpose may

differ

from the mission

or

mission

statement,

which is a

formalized

document,

often

intended

for public release.

If

the mission

successfully

mirrors the purpose,

it

will

ask: 'What

is our

business?

Who

is

the

customer?

What is the value to

the

customer?

What

will our business

be? What should our

business

be?

(Kotler,

1980:

4).

The mission

must sometimes

change

as

the

organization

changes

in size or

modifies

its

product

and

service

lines.

However,

the

mission

should

not

be

changed prematurely,

in

response

to

negligible

changes

in

corporate

or

environmental

factors.

Instead,

the mission

should

change

as

necessary

to ensure

that the

other

process

elements

function

effectively.

The

objectives

and

goals

expand

the

mission

as

appropriate

for each

level of

management.







ZBB, MBO,

PPB

and

the

Planning/Marketing

Process 165

These should

include long-range targets, and

should

express 'in specific terms how fast top

management wants that business to grow, what

products

should be emphasized, what kinds of

businesses

to avoid, and what profit terms are

acceptable'

(Ames, 1968: 104).

Objectives

and

goals

should be hierarchical, quantitative,

realistic, and

consistent.

The

strategy should reveal the

major direction

of an organization and how to

best achieve the

objectives

and

goals. Common examples of these

are the

adoption

of

intensive

growth, integrative

growth,

or

diversificative

growth strategies.

A

portfolio

plan

is then

developed, often with

the aid

of

such

resource

allocation models as

Boston

Consulting Group (BCG),

Profit

Impact

of

Marketing Strategy (PIMS),

Directional

Policy

Matrix

(DPM),

or

Capital

Asset

Pricing

Model

(CAPM).

Enis

(1980),

Wind

and Robertson

(1983)

and

Wensley (1981)

warn

us

of

the

limitations

of

these models.

They

are

best used

as

a

supplement

to,

rather than as a

substitute

for, human judgement.

Hulbert

and

Toy (1977)

feel

these

models are

useful

for

aiding

in

analysis

of

key strategic

variables such

as price, market share, and market

size,

but warn of

the error in

avoiding managerial

judgement.

Hedley proposes balancing

the

port-

folio

to

ensure relative

competitive position

and

growth,

which he considers the two fundamental

parameters

for

strategy. Day

(1977)

also

encour-

ages portfolio balancing,

which

he states

will

result in a

great

source of

strategy balancing.

Wind and Robertson

(1983) argue

that the

various

resource allocation models

assume

'inde-

pendence

for

each unit of

analysis

and

[ignore]

the

likely

synergy among

the

portfolios' (p.

14).

Wensley (1982)

declares that

'[t]he

PIMS

approach

fails to

distinguish

between

results of

strategic

significance

and those that

merely

reflect

a

risky process.

The

BCG

approach

often

assumes

very

unrealistic

competitive

responses

and

will

over-emphasize

the

importance

of cost

advantages

as

opposed

to

those based

on

consumer

prefer-

ence'

(p.

147). Wensley (1981)

believes that more

emphasis

must

be

paid

to factors such as

imitability,

flexibility, positional advantages,

as

well as

specific

cost effects

provided by

CAPM.

In

the

marketing planning process, marketing

opportunities

are

identified,

analyzed, chosen,

and

exploited. Opportunity

analysis

is

the

process

of

locating, creating,

evaluating,

and

selecting

opportunities.

1 These opportunities are often

applicable for only

limited periods of time to any

organization, and

a strategic window concept

(Abell, 1978) may

be useful in handling this

constraint.

Target selection

is the process where an

organization defines

which customer groups or

needs it should attempt to satisfy.

Examples are

product/market concentration, product

specializa-

tion, market specialization, and full

coverage.

A

positioning strategy

then aligns an organization's

resources to 'attack'

the selected targets.

In

planning

for the tactical

phase

an

organi-

zational structure

should

be

designed

which best

supports

all

process

elements.

An

information/

planning/control system should then

be formu-

lated. Marketing systems development

should then

take

place,

and a management system

to

support

marketing efforts

should be created.

This is in

turn

followed

by marketing plan

development,

where the control

and information

systems

are

introduced.

It is now

possible

to consider the

implemen-

tation area

of the tactical

phase.

If

implementation

is not properly

undertaken at this point,

the

entire

process

will

probably

fail

(Bonoma, 1984).

Each

manager,

and the

entire organization,

must

know what the

required

tasks

are,

and how to

report

and handle difficulties.

To make the

implementation

element

workable,

measurable

indicators of the effectiveness

of an

organization

must

be

detemined.

This is done

in

the element

referred

to as

performance factor

development,

which is

theoretically

determined

in

ZBB, MBO,

and PPB.

It

is then

possible

to

apply

control

over the

planning/marketing

process. This

should include

both

a

top-down

and

bottom-up

flow

of infor-

mation so that all management

levels

can

reveal,

report,

and

react to

problems.

The

appropriate

level

of

management

can

then modify

certain

or

all elements

of

the

process.

Hulbert

and

Toy

(1977)

have outlined

a

framework

for

marketing

control which

utilizes factors such

as market

share and

growth.

An

effective control

system

must

allow and

encourage interactive

communi-

cation between

all

personnel, and

should be

able

to

relate

any

or all of the

process

elements as

needed.

Without

proper control, any plan

is

I

See Wind and Robertson (1983) for a detailed methodology.







166 M. F. Duffy

destined

to

stagnate, become uncompetitive,

and

ultimately fail.

MANAGEMENT TECHNIQUES

Now that the necessary

steps in the planning/

marketing process have been outlined, it

is

possible to present each

of

the subject manage-

ment techniques. The basic structure

and

pro-

cedures

for each

technique embody many

of the

same principles, yet

exhibit notable

differences.

The intent, claims, and limitations as professed

by the proponents of

each

technique

also

differ

in

certain

areas.

Zero base budgeting

ZBB was

introduced

as

a

means

for

organizations

to

adapt

to

a

changing

environment where

resources

are

becoming scarce, profits

are

being

threatened,

and

changes

are

occurring

with

increasing frquency.

Two reasons

frequently

exist

for

considering implementation

of ZBB:

'(1)

a

formal

recognition

of the notion

that

the current

state

of affairs is to be

treated

in

planning

for

the future as one of

the

alternatives

. . . and

(2)

the structure

of

Zero-Base Budgeting

is

by

itself

a

device

whose

consistent implementation

contributes

to

the effectiveness

of such an

effort.'

(Patillo,

1977:

iii). Organizations

have

traditionally accepted existing plans

and

expendi-

tures

as

necessary,

without examination

(Pyhrr,

1970).

Implementation

of ZBB for

private

and

govern-

mental

organizations

is

similar,

with

only

minor

differences

in the mechanics needed. 'The

process

requires each manager

to justify

his

entire budget

request

in

detail,

and

puts

the burden

of

proof

on him to

justify why

he

should

spend any

money' (Pyhrr,

1973:

xi).

A

decision

package

is

prepared

for each

activity showing costs, pur-

poses, alternatives, performance measurements,

and

benefits.

The

manager

is forced

to

develop

a wide

range

of

creative alternatives.

Minimum

levels of

expenditures

for

projects

are

then identified,

normally

at

75 percent

of

existing

levels. Alternative

expeniditure levels,

each

reflecting progressively higher spending

levels, are identified along

with

anticipated

incremental benefits.

All levels for all

projects

are screened

and

judged simultaneously, by being

lumped together and rank-ordered by

rating

teams

composed

of

personnel selected

from

diverse parts

of

the organization.

Each

proposal then goes through

a

series of

ranking panels, each with representatives

of

succeedingly higher

management.

Lower-level

managers usually have no direct

input into the

final

package

selection.

To be successfully

implemented, ZBB requires

'(1) support from

top management, (2) effective

design of the system to meet the needs of

the

user

organizations,

and

(3)

effective

management

of

the system' (Pyhrr, 1973: 25). ZBB

was

claimed

to

be best applied to

administrative,

technical,

and commercial

portions

of

a budget.

It

was not considered to be

applicable to

direct

production and

manufacturing costs since no cost/

benefit

relationship

exists in these

areas.

Management by objectives

(MBO)

MBO was

conceived

as a

closed-loop process

which

would ensure that results resemble

the

established

objectives.

The

process requires the

manager

to

focus his efforts on

results

rather

than activities, based

on

organizational strengths

and experience

as well as

managerial judgement

(Morrisey, 1977).

Interactive communication

between

all

elements

of the

process

would

be

encouraged.

Migliore (1977)

declared that

'communication

is the

key

to the

success

of

the

management-by-objective process

.

.

.

[and

between

management levels]

if

there is no

negotiation,

there will be

negative

reinforcement

[of

the

goals]' (p.

49).

'In

general,

we

develop

stronger

commitments to

ideas

and

ideals that

we

have

a hand in

formulating

than to those that

we do not'

(Ackoff,

1981:

119).

The

process

entails a number of

steps, begin-

ning

with a

definition

of

roles

and missions

by

the

organization

and

each level of

management.

A

mutually agreed

overall role

and

mission is

then

negotiated

between

all

parties. 'Key

result

areas'

are

then

determined,

as

are the five to ten

major

areas

requiring

the most

attention

in

the

immediate future.

These,

as well as

all

other

elements

of

MBO,

are

theoretically agreed

to

by

all

effected

areas of

management.

Measurable

indicators of

effectiveness in

satisfying

the

objec-

tives are then

determined.

Objectives

which

state the results to be

achieved

are

then selected

and

set. These

will







ZBB,

MBO,

PPB

and the

Planning/Marketing

Process 167

include

specific

measurable results

within a

specified

time frame. The

different

objectives are

then prioritized

in what is

considered the

order

of

importance.

Each objective is broken down in the action

plan. A plan is

developed,

tested and

reviewed,

implemented,

and

then a

follow-up ensues.

Actual

program step

determination is

delegated

whenever

possible

to the

subordinates

who will

carry

out

the plans.

A

time

framework is

established but can be

modified as

necessary.

This is

followed by

establishment of a

control

system. The

variable

to

be

measured is deter-

mined,

along

with

levels of

effective

performance.

Measurements are

then

selected, and the

system

is instituted. Finally, the appropriate type of

corrective

action

is

determined

(Morrisey,

1977).

The

proponents

of

MBO declare

that

MBO

requires

effective

two-way communication and

sharing

of

management power to be

successful.

A

program that lacks

commitment,

involvement,

appropriate

implementation, and

coaching

and

assistance will

inevitably

fail.

Failure will also

be

the result

in

the

system that does not

follow

up

implementation,

that hands

objectives to

subordinates,

or

one which

stifles creative

goals

(Migliore, 1977).

Planning,

programming and

budgeting (PPB)

PPB is a

system for

continuously updating,

revising, and

preparing

programs

and

possible

alternatives which will

achieve stated

objectives.

The

program

results are evaluated in

light

of

anticipated outcomes

and

costs

so

that

programs

and

objectives

may

be

altered

(Dirsmith

et

al.,

1980).

Three staggered but overlapping phases occur

in

PPB:

planning,

programming,

and

budgeting.

The

cycle may last for more

than one

year,

but

a

new

cycle

is

normally introduced

annually

to

match

the standard

budget

cycle.

The

planning phase considers the mission of

an

organization and

determines

requirements.

The

products

of

this phase

may include the

establishment of a

multi-year

budget

as well as

a

general

schedule

of

desired

products

and

services for a

number of

years.

The programming phase is where annual

organizational

requirements

are established

and

maintained. This

phase

bridges

the

gap

between

the

planning

and

budgeting

phases,

and

provides

the necessary information for the annual

budget

as output.

The budgeting phase includes actual

formu-

lation of an annual budget, including a

detailed

cost breakout of all programs. Included will be

program lists, production schedules, lead times,

pricing, funds status, and other relevant

subjects

(Benton

and

Martinez, 1978).

COMPARISON

AND FIT

OF

THREE

METHODS

WITH

MARKETING/

PLANNING PROCESS

Wetherbe

and

Montanari

(1981) point

out that

one of the causes of ZBB implementation failure

is the lack

of

integration of ZBB into

the

overall

planning process. They find little consideration

of the entire

process by proponents

of ZBB.

The

same lack

of

integration affects

the

performance

of MBO,

PPB,

and

other management

techniques

as well.

Methodology

In order

to determine how well the

subject

management techniques were expected to, and

ultimately did, satisfy

each element of

the

planning/marketing process, self-administered

questionnaires

were delivered to individuals with

experience

in

ZBB, MBO,

and PPB. A total

of

150

questionnaires were addressed

to

individuals

who

were

found to have a

significant

role in

managing,

or

otherwise extensively

used a

single

technique.

These

individuals were

identified

by

organizational charts, the recommendations

of

others,

and were

verified by personal

interview

or telephone contact.

The

individuals selected

included members of

senior, middle-level,

and

junior management

to

reduce

the effect

of organizational bias.

The

respondents

were in a

variety

of functional

segments

of

an

organization, including

manage-

ment, marketing, finance, accounting

and

data

processing. Although

the

questionnaire

was

designed

to be

self-administered, many

respond-

ents were

given

verbal

assistance

in

completing

the

questionnaire.

Each

respondent

was

contacted

in person or by telephone to explain the purpose

of

the research and to

offer assistance. Because

three

techniques

were

being considered,

450

questionnaires

were utilized.

Only responses

from







168 M. F. Duffy

individuals

who were

involved in the

planning

stages of each

technique

were

accepted,

and

the

technique

had to be

in use

for

a

period

of

two

years or more.

The organizations

sampled included

portions

of the Department of Defense, NASA, and a

number

of

government

contractors and subcon-

tractors.

The

specific

organizations

are not

listed,

since

anonymity

was

overwhelmingly requested

by the respondents.

In most cases, information

was

only provided

by

a

respondent

when

a

guarantee

of confidentiality

was made.

The sample

is

interesting

because it includes

government and private enterprises, profit

and

non-profit organizations, and varying degrees

of

concentration in manufacturing and

services. A

number of the organizations approached had

experience

in

more

than

one

management

tech-

nique.

This

accordingly

affected

the

response

rates.

There were 87

responses regarding ZBB,

116

for MBO, and 94

for PPB. The response rates

were 58 percent,

77 percent, and 63 percent

respectively. Considering

the politically sensitive

nature of these

management techniques,

with

their use frequently being mandated,

the

response

rate is

quite

satisfactory.

Perceptions of the respondents were recorded

on an

eleven-point

Likert scale from

'no fit' to

'complete fit'.

A

value

of 10 is

applied

where

a

complete

fit between the element

of

the technique

is

perceived

and feedback

drives

changes

in

element

design;

0

where no fit is

perceived;

and

5

indicates satisfaction of the element,

but no

contribution to the

design

of the element.

The

respondents were essentially asked

to complete

two

separate questionnaires regarding

a

particular

management technique. The respondents

were

first asked to reveal their expectations in regardto

fit, producing

a

'theoretical' fit.

The

respondents

then were asked

to

reveal

what

they perceived

as the

'actual'

fit,

based on actual

implementation

of the

management

techniques.

This

should

allows

comparison

of the

'promises'

of

the

techniques,

and their actual contributions

to

the

planning/marketing process.

Findings

Tables 1-3 indicate how well the three subject

management techniques satisfy

each

element of

the

planning/marketing process,

in

theory

and

in

practice as 'theoretical fit' and 'actual fit',

respectively. The number at the right of each

entry within the columns identified as theoretical

and actual fit is the average value from the

questionnaire Likert

scales.

The letter indicates

the degree of uniformity or variability in

responses. This

methodology, previously used by

Brunner and Taoka (1977),

points out where the

respondents are in

agreement

or

disagreement

with respect to their attitudes. An 'L' indicates

a

slight or little range

on

differences of opinions,

an

'M' a modest

range,

and

an

'H'

a high degree

of

difference.

Although many proponents

of these

manage-

ment

techniques

claim that

the entire planning

process

is

satisfied, when implementation pro-

cedures for each element are described, it is

readily apparent that not all

elements receive

sufficient attention.

This is

especially true when

considering

the actual

fit,

but

is

also true even

when considering the

theoretical fit. It is

easy

to

see that these

processes

were never

designed

to

serve as

an

entire

planning process.

A

wholesale

replacement

of

an existing

or

planned planning

process by

one of these

techniques

would result

in disaster.

Dirsmith et al. (1980)

believe that these

techniques primarily failed because of conceptual

defects

arising

from man's

preference

for cer-

tainty,

or at least the

appearance

of

preference

(p. 304). They

feel that the

techniques

were

therefore introduced more for

political purposes

than

for

management purposes.

Another

possible

reason

for

management's ready acceptance,

with

certain

failure as an

inevitable

result,

is

that

they

adopted

these

techniques

as a

panacea

or

'quick

fix' for

management

ailments without

a

total

commitment

to

the

process

or a

complete

understandingof management processes involved

in successful

implementation

of the

technique.

PPB

appears

to

satisfy

few of the

elements

except

when

decisions are cost-related.

In

these

cases

the

technique

can be

extremely

useful as

a tool

for

supporting

the

planning/marketing

process. Although

some of its

proponents

claim

otherwise,

it

appears

that

PPB

was

designed

solely

as a

supportive

technique.

It has

limited

value

in

establishing objectives, goals, strategies,

portfolio plans,

and

performance

factors when

decisions are cost-related. However, it fails for

other

objective

decisions and for all

subjective

decisions.

Finally,

PPB

only

works in a

directive,







ZBB, MBO,

PPB

and the

Planning/Marketing

Process

169

Table 1. Zero-base

budgeting

Theoretical Fit Actual Fit

Information flow

Bottom-up Top-down

Purpose Satisfies;

some feedback

6 Satisfies with objective decisions 4

M

only

M

Mission

Supports;

some

modification

6

Supports

if

objective; rarely

4

L modifies

L

Objectives and goals

Sets

objectives; prioritizes;

10 Sets & modifies if

objective 7

ranks

L

M

Strategy

Supports;

some

modification

7

Supports;

little

modification 6

L

L

Portfolio plans

Considers

synergy

8

Limited

synergy consideration 7

L

L

Marketing opportunity Helps analyze, choose, exploit/ 8 Helps analyze; does not select, if 5

Analysis/target selection select targets

L

objective only H

Positioning strategy

Allocates

resources panel

10

Supports objective positioning only

5

ranking

L M

Marketing systems

Helps design systems

8

Does

little for

systems design

6

development

L

M

Marketing plan Helps develop plan

8

Does little for

plan

6

development

L

L

Implementation Procedures almost

universal;

7

Too

rigid,

not

accepted;

little 6

some feedback

M

feedback

M

Performance factor

Creates; analyses

10

Identifies objective cost-benefit

8

development L factors M

Control

Major objective;

evaluates

9

Control

limited;

feedback 6

programs

L

unrecognized

M

Process satisfaction Affects entire

process;

contributes

8

Satisfies

analytical needs;

adds 6

much

L

little M

top-down

organization, and

bilateral or bottom-

up communications

interfere with the effectiveness

of the technique

(Dirsmith

etal., 1980).

Ironically,

PPB received

somewhat better

marks from

implementing managers

than did either

MBO or

ZBB.

This

might

be the result of less

ambitious

claims and of lower expectations

about the

capabilities

of PPB.

Both

MBO and ZBB satisfy

more elements

of

the

process

than

PPB,

but to a

limited extent

at

best. Both do little

for

the

key

elements of

purpose,

mission, marketing

opportunity analysis,

target

selection, and

positioning strategy,

and are

particularlyweak

in marketingplanning.

If either

MBO or ZBB

are incorporated in

lieu of

a complete planning/marketing

process,

their

implementation

will inevitably

be ineffective.

This is because all

elements must be satisfied

for

any

technique

to be successful.

As

with

PPB, both

ZBB and

MBO have

historically been

successful

only

in

organizations

where

decision-making is

centralized (Dirsmith et

al.,

1980).

Their

efforts at

establishing

interactive

communication have

usually been

unsuccessful,

unless

the

corporate

ethic

supports

such

communi-

cation in

practice

as well

as

in

theory.

Since

MBO is

based

upon

bottom-up or

interactive

communication,

top-down

communi-

cation in

a

directive

organization will

prevent

successful

implementation of

the

technique. In

ZBB

the

same

condition

will

prevent

ranking

panels from

effectively

selecting

those

projects

which will

best

serve the

organization's

purpose

and mission.

Corporate

needs

as

perceived

by

lower

management

are

characteristically

diluted

or

ignored

entirely.







170 M. F. Duffy

Table 2. Management by objectives

Theoretical fit Actual fit

Information flow Bottom-up

or bilateral

Usually top-down

Purpose Satisfies;

some

feedback

7

Satisfies with objective

decisions 4

L

only

L

Mission

Supports;

some

modification

6

Supports

if

objective;

rarely

4

L

modifies M

Objectives

and

goals

Focuses

on

objectives

10

Supports

&

modifies if

objective

7

prioritizes; ranks L H

Strategy Supports;

some

modification 7

Supports;

little modification

6

L L

Portfolio plans Sometimes considers synergy

7

Very limited synergy consideration

6

L M

Marketing opportunity Helps analyze, choose, exploit/ 8 Helps analyze; does not select, if 5

Analysis/target

selection

select

targets

L

objective only

M

Positioning strategy Implied positioning capability

9


5

L M

Marketing systems Helps design systems 8

Does little for

systems design

6

development

M M

Marketing plan Helps develop plan

8

Does little for

plan development

6

development

L M

Implementation

Standardized

procedures;

some 7 Too

rigid,

not

accepted

little 6

feedback

M

feedback H

Performance

factor

Creates;

assesses

variables

10

Identifies

objective,

cost-benefit

8

development L factors L

Control

Feedback as

control; measures;

10

Control

limited;

little feedback

6

allocates

responsibility

L

given or

accepted

M

Process

satisfaction Affects entire

process; 8

Satisfies

analytical needs;

adds

6

contributes

much M little

M

Interestingly, the degree of

uniformity

in

responses was different for

each of the three

techniques

and was

dramaticallydifferent before

implementation, and

after

implementation of the

techniques. These responses are outlined in Table

4.

The values indicate the number

of elements

in

Tables

1

through 3, exhibiting

low, moderate

or

high degrees

of

uniformity

in

responses.

Both

before

and

after

implementation,

ZBB

and MBO

respondents

were

more

likely to

agree,

having

a

higher

degree

of

response

uniformity

than PPB

respondents.

It

would

seem that

opinions

about

technique capabilities were

initially

more consistent

with

ZBB

and

MBO,

than with

PPB, particularlv

where the

opinions

were positive or optimistic. This indicates a

moderate

degree of

disagreement regarding the

value of PPB,

even before its introduction.

PPB

seems to

be doomed

in

many organizations

because of opposition from its users.

Even

more dramatic was the change

in

uniform-

ity between

the theoretical and actual responses.

For all

three

techniques,

uniformity

in

opinions

was

dramatically reduced after the techniques

had been in use for an extended period. This is

particularly

true for PPB, which seems to

lack

strong

adherents among its

users. It should

be

pointed

out

that in no case

did the degree

of

uniformity increase over time,

for any element.

If there was any change it

was always for the

worse.

It would

appear that among those invididuals

who

actually

run or

use these techniques,

there

is

a great

deal of disagreement as

to their

management

value. Even within the same organi-

zations much disagreement was common. It is

unfortunate that,

in

many organizations, the

users

are extremely

dissatisfied with the management

techniques.

The

techniques

invariablyare ignored

or underutilized, and become

just another form







ZBB, MBO,

PPB and the

Planning/Marketing

Process

171

Table 3.

Planning, programming

and

budgeting

Theoretical fit

Actual

fit

Information flow Top-down Top-down

Purpose Satisfies; no feedback

5

Satisfies

with

objective decisions 4

M

only

M

Mission

Supports;

no feedback

5

Supports

if

objective;

no

feedback

4

L or

modification

M

Objectives

and

goals

Some

attention

to

objectives

if

6 Successful where cost-related; can 6

cost

related; implied ranking

M

modify

M

Strategy Supports; rare modification

6

Supports; rare modification

6

M M

Portfolio plans Does not consider synergy 6 Supports, does not modify 5

H H

Marketing opportunity Helps analyze, choose, exploit/ 8 Helps analyze; choose, exploit/ 4

Analysis/target selection select targets L select targets L

Positioning strategy Implied

concern

for

resource

8


4

allocation

M

H

Marketing systems

Reacts to

design;

no contribution

5

Reacts to

design;

no contribution

5

development

H

H

Marketing plan

Reacts to

plan;

no contribution

5

Reacts to

plan;

no

contribution

5

development

M

H

Implementation

Standardized but limited

concern;

6 Too

rigid,

not

accepted

little

6

feedbacks

few

M

feedback

H

Performance

factor

Cost-analysis concern; analytical

10 Identifies some cost related factors

6

development assessment L H

Control

Direction as

control;

cost-related

8

Directive

control;

sufficient

if

cost

6

methods

M

related

M

Process satisfaction

Sensitizes

organization

to cost-

6

Satisfies

analytical needs;

adds

6

related issues

M

little

M

Table

4.

Change

in

uniformity

of

responses

Response

ZBB MBO

PPB

uniformity

degree Theoretical Actual Theoretical Actual Theoretical Actual

Low

(L)

11 4 10

3 3 1

Moderate

(M)

2

8

3 8

8

6

High (H)

0 1 0

2

2

6

of paperwork retained

because they

are either

mandated

or

because they

have been around

in

use

for

a long time.

RECOMMENDATIONS

ZBB, MBO, and

PPB are only useful if their

many limitations are

recognized and compensated

for by placing additional

emphasis and resources

in the elements not

satisfactorily served by

the

management

techniques.

A viable

planning/

marketing process

must exist,

and the three

techniques can be effectively used as tools to

support

the process. The process

must

be

capable

of developing

and

optimizing purpose,

mission,

opportunity

analysis, positioning

strategy,

mar-

keting systems,

marketing planning,

and







172 M. F. Duffy

implementation. These are the areas where the

subjective techniques

fail

miserably. On the

other hand the techniques

can

make significant

contributions

to the

development

of

objectives,

goals, strategies, portfolio plans, performance

factor development, and control processes.

ZBB, MBO,

and PPB can

be successfully

implemented where top management support is

strong, where decision-making is centralized, and

where decisions are of

an

analytical nature. The

corporate culture must

be

receptive to any

technique,

and to

change itself,

if

implementation

is to be successful. Ackoff (1981) determined

that

the

major constraint

of

organizational growth

is found within the organization itself, and that

there

is a

big difference

between what is

preached

and what

is

practiced,

in

terms of

goals, objectives

and ideals.

When

implemented,

the

techniques

should

receive sufficient attention so that they can be

modified as necessary

to work well

in

any

organization.

This

recognizes

that each

organi-

zation requires

a

planning/marketingprocess

and

techniques

which are

uniquely

tailored for

individ-

ual conditions.

Corporate

commitment

must

be

long-term.

Short-term

or

'quick-fix'

solutions should be

avoided. This

will

give

the

process

and

techniques

a fair chance to

succeed,

and

will

encourage

making any changes required

to

adapt

to a

dynamic

environment.

Under

these circumstances

ZBB,

MBO and PPB

can

effectively

contribute

to a

successful

marketing/planning process.

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