Plan or Pivot: Finding Balance in Business Decisions

Not every business decision can be carefully planned. Sometimes managers have time to create detailed strategies, but other times they must act quickly and improvise.

In 2024, researchers Dr. Anton Fenik of Grand Valley State University, Dr. Ernest Cadotte of the University of Tennessee, and Dr. Helena Allman of the University of West Florida, used Marketplace Simulations to explore how planning and improvising shape business performance. While these two approaches may seem to work against one another, the research shows that companies with the strongest performance often balance both.

Creating a Plan vs. Having to Improvise

Planning gives companies structure. It allows leaders to set goals, analyze markets, and prepare strategies. Improvising, on the other hand, occurs when plans are no longer enough and quick decisions are required.

To understand how these two approaches work together, the researchers tested three main hypotheses:

1. How does improvisation affect firm and product performance?
   
   
2. How does entrepreneurial culture influence the link between improvisation and performance?
   
   
3. Can improvisation further improve performance beyond the effects of planning?
   

The authors examined these ideas in two studies. The first looked at managers who worked on fast moving product projects. The second study used a business simulation to track decision making under pressure.

Study One: Managers and Product Projects

The first study surveyed 218 mid and upper-level managers who had led fast-moving new product development projects. These fast-track projects were launched quickly in response to customer demand or competitive pressure. Each one had been on the market for at least six months so managers could accurately assess results.

Managers completed a survey that measured both planning and improvisation. Planning was evaluated through questions about whether project decisions followed clear strategies, established goals, and regular planning sessions. Improvisation measured the degree to which managers made decisions as situations unfolded, acted without detailed prior plans, and adapted on the spot when conditions changed. The researchers described this behavior as planning and execution converging.

They also rated their company’s entrepreneurial culture, including autonomy, risk taking, and proactivity, and assessed performance at both the firm and product level.

Key Findings:

1. Improvisation improved both firm and product performance, supporting the first hypothesis that acting and adapting in real time can enhance results.
   
   
2. Entrepreneurial culture influenced these outcomes, partially supporting the second hypothesis. Autonomy made improvisation most effective, risk-taking strengthened firm results, and proactivity improved product performance.
   

These results suggest that improvisation is most valuable in environments where employees are trusted to act independently and creatively.

Study Two: Students in a Business Simulation

The second study tested all three hypotheses using Marketplace’s Strategic Corporate Management simulation. Student teams managed virtual companies over eight business quarters, making decisions in marketing, production, human resources, and finance. Performance was measured through a balanced scorecard that combined financial results, market share, and long-term investments.

At the end of the simulation, students completed a survey similar to the one used with managers. Planning was measured by how consistently teams organized their work in advance by reviewing data, setting goals, and discussing alternative strategies before acting. Improvisation was measured by how often teams made decisions as situations unfolded, used intuition or educated guesses, and adjusted strategies while executing them.

Key Findings:

1. Both planning and improvisation improved performance, supporting the first hypothesis that each approach contributes to success.
   
   
2. Improvisation added value beyond planning, supporting the third hypothesis. Teams that blended both approaches and demonstrated entrepreneurial traits such as independence and initiative earned the highest overall performance scores.
   

Conclusion

These studies show that success in business does not come from choosing between planning and improvising but from combining them. Planning provides structure and direction, while improvising adds flexibility and responsiveness. Companies that maintain this balance often have an entrepreneurial culture where employees have the freedom to make decisions, take smart risks, and act proactively.

This kind of environment allows structure and independence to work together, helping businesses stay focused yet adaptable when new challenges or opportunities arise, building stronger and more resilient organizations.

Arden Jordan

Arden Jordan is a marketing associate at Marketplace Simulations and a graduate of the University of Tennessee’s Haslam College of Business. After experiencing Marketplace firsthand as a student, she now helps share its story to educators through marketing and creative content.