Walter R. Lovejoy is a man with an unusual perspective on planning. He learned at a small business, then moved on to plan for a huge conglomerate. His advice? Leave the calculator at home.
In the late 1960s, when Lovejoy was running A-1 Tool Co., there were so many tool-and-die shops fighting for work that careful planning became a way of life. The company constantly had to develop new tools for making new products, while keeping one eye on pricing and costs, and the other on competitors. "We didn't want to go broke by accident," Lovejoy says.
Then, in 1969, the $4-million company was sold to Beatrice Foods (now Beatrice Cos.) At Beatrice, Lovejoy soon learned how meaningless planning was to most managers. First as head of the metal-products division, and later as the man in charge of 30-odd industrial companies within the conglomerate's industrial division, he came to recognize two distinct types of nonplanners: successful entrepreneurs who, after selling out, still "kept everything in their heads"; and business school-trained professionals who "thought planning was an exercise on their calculators."
Lovejoy studied the planning-procedure manuals of solid companies, such as General Electric Co. and Westinghouse Electric Corp., but found them "much too mechanical and rote." Then, during a series of conversations with business guru Peter F. Drucker, Lovejoy became convinced that his division -- with its many independent businesses -- needed a new kind of planning process, built around questions, not numbers.
"A screw-machine operation is completely different from a water-treatment business, or one that makes bicycle parts," notes Lovejoy, now 57. "But many of the questions they need to be asking are very much the same. I wanted to create an environment where key people in each of the businesses would get together and talk about what was happening. What should they be doing, for example, to reduce their costs? And should they be thinking about new products?"
He developed a system that revolved around a 39-page manual and nearly 40 pages of worksheets. There were separate sections for examining the key functional areas -- marketing, manufacturing, human resources, engineering, and finance. The questions were designed to stimulate serious thinking before any numbers got written down. Under marketing, for example, managers were asked about the age of their products, their future product mix, their competitors' strengths and costs, and what they would do if they lost their biggest account. The managers of each business were expected to review the questions, answer the relevant ones, and focus on priorities. Some might take a week; others, several years. The goal, says Lovejoy, was "to get people to question the validity of their assumptions."
How did his managers respond? "Many of them, especially the entrepreneurs who were getting ready to retire, thought it was a huge pain in the neck," Lovejoy says. But others began to spot money-losing areas and redundancies they handn't recognized before.
Lovejoy left Beatrice in 1982, but he still uses the same babis approach to planning at his own company, Lovejoy Industries Inc., a more than $75-million miniconglomerate made up of three businesses (including A-1 Tool) that he has purchased from Beatrice using leveraged buyouts. The approach generates a lot of teamwork, he says, because it gets people to see how their roles feed into other facets of the business. "It takes a while for people to believe in it," he admits, "but it sure gets people away from the psychology of calculators. We call it planning, but it's really just running a business."