Interview Summary M. G. Allen with Lou Kraar, FORTUNE May 12, 1977 _ Q. What I would like to understand and illustrate with examples are opportunities including some that proved not so promising that were pinpointed by strategic planning. A. You might start with my background... only here a few years, so I'm less home-grown. From McKinsey. Mr. Borch originally requested a study in 1969 to take a look at staff work. (Example: Remember walking into Charlie Reed's office and appauled to learn his entire staff consisted of a financial analyst.) Ultimate conclusion of the study was the fact that decentralization may have been taken too far and that there was a need to pull together over-fragmented departments into strategic business units...some 40 of them seemed appropriate building blocks. From 1962 to 1970 the Company had shown a pattern of profitless growth. While GE had been good in business planning, the Company's performance was not coming through. Investments were yielding growth but not profits. So the conclusion was there was a need for upgraded strategic planning, but with a particular focus. This is how I found myself in the watershed or beginning of this great leap forward in planning capabilities. I don't want to leave the impression that GE was not already good in planning, but this was the beginning of a new process. It was developed under Dave Dance's leadership. We've now been through six cycles. One of the well known innovations while a group planner was the matrix... now a central tool. September of 1971 remember scribbling that out in a grubby office in Bridgeport. Gutoff made the presentation and Borch said he wanted it all across the Company. Eighteen months later in mid-1973 the group did so well Reuben was promoted and made a senior vice president and brought me along. In mid-1975 he decided to leave and did leave the Company in 1976. Q. Just how does strategic planning work? Described in a summary it sounds like just common sense. There must be more to it. A. The words "strategic planning" are over-used by most people and are used by some companies to glamorize their normal activities. General Electric in 1971 gave those words a whole new set of meanings. It started with a series of perceptions that tremendous structural changes were going on in the environment. That accelerated. Explosion of discomfort index.