Introduction

We often engage in planning, even if we don’t explicitly label it as such. For instance, when organizing a family trip, we decide on the flight details, duration, hotel accommodations, and destinations. This process of specifying trip details essentially aims to maximize benefits—whether it’s pleasure, recreation, experiences, or new knowledge—within the constraints of our budget and time. In essence, this is planning, wherein we seek to maximize benefits within resource limitations, such as time and money.

Almost every professional, particularly every manager, is involved in planning, including military commanders. Surprisingly, however, the State of Israel operates without any planning, particularly lacking long-term planning. This occurs despite the significant price we pay for it, with minimal reflection in the media, academic articles, or political discourse. In this article, I will explore, among other things, the distinctions between budgeting and genuine planning, emphasizing the bold claim that the Israeli government functions without planning.

It’s essential to note that this article was written before the events of October 7, 2023 and the subsequent war. Nevertheless, it is likely to remain valid and even more pertinent, especially in the current period of uncertainty. Nearly every issue analyzed in this article becomes more pronounced given our current situation, and the anticipated costs of the lack of planning are expected to be particularly high.

Short-Term Planning – Military Planning

Short-term planning typically assumes that we possess sufficient knowledge to undertake optimization. We are familiar with our technology, including even that in the developmental stage; we are cognizant of the resources at our disposal; we comprehend the strategic or business environment; and we have a grasp of the laws, regulations, and trends in the relevant field.

Considering all these factors, our aim is to plan in a manner that maximizes our benefit. When tasked with defining my role in one sentence as the head of the Planning Directorate (Hebrew acronym AGAT) in the IDF (2001-2003), I used to say: “My role is to assist the Chief of Staff in achieving maximum security within a given resource basket.” Indeed, the IDF, being a public organization, has honed a consistent methodology over the years to fulfill this same aspiration: maximizing security within resource constraints.

Traditionally, the military tends to formulate a five-year plan, relying primarily on three key resources: the budget, which includes assistance budgeted in dollars, mandatory manpower, and infrastructure (referred to as the Hebrew acronym “TUP” – structure and spread by the IDF). Furthermore, there are supplemental resources such as surplus ammunition sold abroad, communication frequencies convertible into monetary value, and more.

Transforming the abstract concept of “maximum security” into tangible decisions is a considerably intricate task. In fact, there exist hundreds or even more needs and desires, the fulfillment of which would enhance security. The challenge lies in pinpointing the delicate balance point that maximizes benefits among competing desires.

The IDF’s methodology is based on four stages:
In the initial stage, an effort is made to assess the cost or viability of each action. This encompasses not only developmental projects but also evaluating the annual operational cost of entities like a tank battalion, artillery, infantry and engineering regiment on active duty, the operational cost of a reserve division, the operational cost of an air force squadron with a specific type of aircraft, and numerous other potential decision variables.

Moving on to the second stage, an attempt is undertaken to scrutinize the cost versus benefit ratio of the expansion or reduction in each decision variable. Consider the Airborne Warning and Control System (AWACS), for instance. It is evident that increasing the number of AWACS in the sky enhances visual intelligence. Furthermore, having not only daytime AWACS but also Search and Rescue (SAR) AWACS capable of nighttime and all-weather operations is preferable. Similarly, the larger the AWACS, the better their resolution. To comprehend the operational and intelligence benefit of each expansion, a graph is generated reflecting the additional cost versus additional benefit.

Upon concluding such discussions, a deeper understanding of the matter is attained. However, a decision cannot be reached merely at the end of these discussions because while the cost of a maximum AWACS plan is known, the alternative cost remains unknown. If the maximum number of AWACS and the largest ones available are chosen, a smaller budget must be allocated for other essential needs.

Moving to the third stage, following numerous discussions, typically led by the head of AGAT or the Deputy Chief of Staff, a comprehensive “General Staff Workshop” unfolds. The most straightforward way to illustrate what transpires in this workshop is to draw a parallel with a scenario where someone plans a three-week winter trip abroad. They lay out clothes, coats, boots, and additional equipment on the bed, intending to fit them into the suitcase. Despite the prepared equipment weighing 50 kg, the traveler is only allowed to take 20 kg in the suitcase. Hence, the traveler must decide what to forego and ultimately include in the suitcase the equipment that, in their view, will yield the maximum benefit within the 20 kg limit. Similarly, the Chief of Staff, after hearing various expert opinions, is tasked with deciding what will be part of the plan, what will not be included at all, and what will be included partially.

Proceeding to the fourth stage, the head of AGAT translates the Chief of Staff’s decisions into “planning guidelines” and mandates the branches to present, within a short timeframe, their plans for implementing the Chief of Staff’s decisions over the next five years. Following approval of the plans, AGAT compiles the summary booklet, which constitutes the multi-annual plan of the IDF (in Hebrew, referred to by the acronym TAR”SH).

While the IDF’s methodology may not be the only one viable and certainly not suitable for all organizations, it stands out as a robust methodology for public bodies. As we will contend shortly, a planning process akin to the IDF’s is not commonly found in large and significant organizations.

Authority and Responsibility

The State of Israel currently lacks any comprehensive planning. Although certain public bodies, and to some extent, government ministries, make efforts to strategize their actions, this endeavor faces insurmountable challenges due to two primary reasons:

Firstly, effective planning necessitates a “top-down” approach. While lower levels can engage in planning “within their jurisdiction,” the initiation must stem from directives received from higher authorities. To illustrate, a war plan cannot commence by determining the actions of a specific unit like Golani Brigade 13; it must instead emanate from tasks assigned to smaller units, unfolding in a cascading fashion from higher echelons. Consequently, the planning process commences at the pinnacle, at higher levels, before disseminating to lower echelons.

Secondly, the prevailing dominance and centralization at the top level, notably the Ministry of Finance, impedes lower levels, such as government ministries, from effectively engaging in planning. As an illustration, during my tenure as the head of the Planning Directorate in the military, an individual from the education sector—a high school principal—approached me. Limor Livnat, then the Minister of Education, had tasked him with establishing a planning division within the Ministry of Education. Seeking insights into the role of a planning division, he sought guidance from me. In response, I inquired about his authority over the budget of the Ministry of Education in his proposed role. His negative reply clarified that the budget would be overseen by the Treasury’s accountant within the Ministry of Education—an official directly linked to the Ministry of Finance. Given this lack of control over resources, I advised him against accepting the position, emphasizing that planning devoid of resource control is inherently futile.

The primary mechanism through which the government, sanctioned by the Knesset, outlines national priorities is the state budget. Although, ostensibly, the budget, with its diverse line items and designated amounts, might be assumed to result from meticulous planning, the reality diverges significantly. The budget for a specific year is shaped by three predominant factors:

  1. The “automatic pilot” factor: The allocation designated to a specific category in the previous year tends to persist in the current year. Even if a professional evaluation justified the allocation in the past, it might not accurately reflect the present needs.
  2. New Legislation: Updating the budget according to new laws enacted between the previous and current year.
  3. Coalition Agreements: These agreements often lead to increases for specific items or the creation of “coalition funds” utilized to advance the agendas of individuals or parties.

The upshot of this process is the budget—a distribution of funds across various categories. The critical distinction between budgeting and planning is profound. In the planning process, earnest attempts are made to strike an optimal balance among diverse needs. Conversely, budgeting in Israel essentially involves the apportionment of funds devoid of any mechanism geared towards optimization.

It becomes evident that predominantly relying on previous years’ allocations is flawed, especially given the considerable changes in our current circumstances. The anticipated costs resulting from this lack of planning are expected to be exceptionally steep.

The inadequacies of the process are further underscored by three additional characteristics:

  1. Multiplicity of Budget Items: The state budget comprises thousands of items (approximately 8,000 lines). Given that there are only around thirty government ministries – realistically closer to twenty – it becomes apparent that the Treasury’s budgeting division dictates to each minister how and toward what items to allocate funds. Even if a minister aspires to meticulously plan the budget for their ministry, the essential flexibility is lacking. Consequently, effective planning is virtually absent even at the level of government ministries.
  2. Procedural Constraints: The second characteristic pertains to the procedural aspect. The annual state budget, defined as “legislation”, necessitates approval from the Knesset. Should a minister wish to transfer funds within their ministry from one item to another, approval is given from two entities: the Treasury and the Knesset Finance Committee. Politically, this implies that Knesset members will only support such transfers if their individual requests are also sanctioned. Consequently, throughout the year, funds undergo rapid and discrete shifts beneath the surface, altering the budget law’s intended nature. These changes can reach 30% or more compared to the original budget, often without reflecting any attempt to optimize from a national perspective.
  3. Spending Size: The third characteristic pertains to the size of spending. Since the annual budget is based on the previous year’s budget with a certain increase, it appears that the spending size is predetermined. Although the government does need to establish priorities based on political pressures rather than comprehensive planning, there is never an inclination to assess whether the spending size is genuinely necessary. Assuming that tax laws will remain unchanged and, therefore, the country’s income is predictable, it is presumed that the spending size should also be fixed.

For example, the current government (2023) committed to lowering the cost of living. A straightforward way to achieve this is by reducing the value-added tax (VAT). VAT is the least socially progressive tax, as it impacts all income levels uniformly. While the affluent spend a smaller portion of their income on VAT, the less affluent bear a larger burden relative to their income. Although Israel’s VAT is relatively low at 17%, it is essential to note that there is no VAT exemption on food, unlike in some OECD countries. It’s worth recalling that until the 1970s, Israel had no VAT. When it was first introduced, the rate was 8%, a figure I believe is still appropriate today. Reducing it to this rate would result in a significant drop in the cost of living by more than 8%. This reduction would not only alleviate the cost of living but also narrow societal disparities.

At first glance, this may seem like a severe blow to the state budget and its ability to serve the citizens, considering that each percentage of VAT contributes approximately 8.8 billion shekels to the government’s revenue (according to Treasury data for 2022). A reduction to 8% would imply a cut of 79.2 billion shekels. However, two possible responses to this scenario exist:

Firstly, such a cut would compel the government to plan its expenditure rather than automatically budgeting it. Secondly, the actual cut would likely be less severe for a simple reason: households and businesses benefiting from the VAT cut would translate it into increased purchasing power, leading to more spending. As their spending increases, so does the income from VAT. While the VAT rate drops from 17% to 8%, the substantial growth in purchases would offset some of the revenue loss from the VAT cut.

The Ideal Situation

In an ideal world, planning extends beyond mere allocations; hence, there is a imperative to embrace a method structured around six stages:

  1. Renaming the budget division as the “Planning Division” would mandate it to focus not only on budgeting but also on strategic planning.
  2. Implementing “Zero-Based Budgeting” involves scrutinizing the true costs of each action, the existence of any governmental body, or the implementation of any law, from a fresh perspective that requires justifying its cost anew, without ascribing value to status quo or budget inertia.
  3. Conducting a thorough evaluation of cost versus benefit for each department independently. For instance, with approximately 30 ministries (not exceeding 25 operational ministries), averaging four divisions per ministry and about three departments per division, there are roughly 300 departments within government ministries. A comprehensive review, assessing the necessity of each department, potential redundancies with others, and weighing the benefit against the cost, would likely reveal that eliminating 20% of these departments would not adversely affect the well-being of the country’s citizens. Notably, additional redundancies with other public systems, such as the Israel Lands Authority and the Settlement Division, were not previously mentioned.
  4. Instituting prioritization, the “Planning Division” allocates resources to each ministry. Instead of grappling with 8,000 items in the budget, the focus shifts to around 25 items, aligning with the number of government ministries. Furthermore, major decisions may warrant an additional 50 items, earmarking dedicated budgets for national projects like the railway line to Eilat.
  5. Within a month, each minister receives their global budget and must devise a plan aiming to maximize benefits within their sphere of responsibility. For instance, the Minister of Health is tasked with formulating a plan for “maximum health” within budget constraints. Debates may arise on how to allocate the last million shekels, whether to invest in another MRI machine, hire ten additional nurses, or add twenty beds. However, all decisions must adhere to the same methodology—maximizing benefits to citizens within resource constraints.
  6. Following approval of the plan by all ministers, the budget is finalized for presentation and approval by the Knesset.

Increasing the Autonomy of Intermediate Ranks

At first glance, the notion of centralized planning “from top to bottom” may seem to curtail autonomy in planning and decision-making at lower levels. However, the practical reality is quite the opposite. To illustrate, the Chief of Staff’s control over branch expenditures on a fixed personnel basis relies on a clear distinction between three key components: ceiling, standard, and allocation. The ceiling is the maximum salary allowed for a specific rank in a given month, the standard defines a role, and allocation determines the individual occupying that role.

For instance, if the Chief of Staff sets the ceiling for a Major General in the Air Force at 100 and the Air Force plans for 90 (including squadron commanders and heads of branches in headquarters), the difference between the ceiling (100) and the total number (90) permits the Air Force Commander to allocate salaries to 10 additional personnel not in those roles. This could include a project officer for an ad hoc mission, a rotation between two individuals, payment to an injured and replaced sergeant, someone dismissed from a position, personnel grade adjustments, and the like. Importantly, the Chief of Staff doesn’t micromanage standards within the Air Force, delegating the authority to set, cancel, or add standards to the Air Force Commander.

The Chief of Staff’s primary concern is ensuring that the Air Force doesn’t exceed paying salaries to more than 100 sergeants in a month. Thus, every month, the Head of the General Staff checks with officers overseeing personnel matters in the Personnel Directorate and the Chief Planning Officer, as well as with officers in the Manpower Branch of the Air Force, to confirm that the limitation is maintained. This dual outcome allows maximum control by the Chief of Staff over what matters most to him, with minimal intervention in the decisions of the Air Force Commander, both regarding the number of positions (90 or more) and the determination of standardized roles and allocations.

This method of controlling personnel on a fixed basis serves not only as an effective means of present control but, more importantly, as a tool for future planning. If a specific reduction is mandated in the multi-year plan, the Chief of Staff instructs the Air Force Commander accordingly: “Your current ceiling is 100, but it will decrease by one each year until reaching 95 in the fifth year. Plan your appointments and allocations accordingly, ensuring that each year’s salaries do not exceed the ceiling for that year.”

What is Long-Term?

In both business and public systems, there’s a consensus that short-term planning covers a year, medium-term planning spans 4-5 years, and long-term planning extends to 10-20 years. While the methodologies for one-year and five-year planning are essentially the same, long-term planning, especially over 20 years, adopts a distinct approach. In this extended timeframe, the key principle is to set aside assumptions and constraints and focus solely on one fundamental question: what do we aim to achieve?

Unlike shorter planning horizons, long-term planning operates on the optimistic premise that a state can accomplish nearly anything it desires if it clearly defines its aspirations, prioritizes them in resource allocation, and maintains consistency over the extended period. A compelling example is President Kennedy’s commitment in 1961 to land a man on the moon by the end of that decade—an ambitious goal that materialized.

The true challenge in long-term planning is not the capability to achieve desired outcomes but rather the decision-making process of selecting specific goals. Among the myriad possibilities, the task is to identify singular objectives that hold utmost importance, and for their realization, one must be prepared to forgo many other competing priorities.

What can we achieve by 2043?

Envisioning the next two decades and deliberately setting aside pressing political and security challenges, such as the Israeli-Palestinian conflict, we can outline at least seven potential goals:

  1. Elevating the average income per person.
  2. Mitigating income disparities, measured by the Gini index or another recognized inequality metric, or establishing a minimum wealth threshold for citizens. Alternatively, setting a “poverty line” below which no citizens will reside.
  3. Achieving optimal population dispersion, characterized by minimal variation in population density across the entire country.
  4. Attaining a maximum “green” state, manifesting in reduced reliance on fossil fuels (coal, gas, and oil), minimal pollution of water, air, and soil, and an abundance of “green lungs.”
  5. Securing maximum economic self-sufficiency, demonstrated by the state’s capability to provide essential needs like food, water, and energy without relying on imports.
  6. Expanding the area, irrespective of the Israeli-Palestinian conflict and other border disputes, by extending the coastal plain westward through the reclamation of sea areas.
  7. Facilitating the maximum growth of the Jewish population in Israel.

Prior to governmental deliberations on prioritizing these seven goals, recognizing that additional goals may emerge, it is crucial to identify the decision variables and allocate them quantitatively. This approach will facilitate a more informed comparison between national objectives.

Possible Decision Variables

Continuing with the same approach, let’s refine the text:

A. Building Approval Policy: Present Situation: Currently, the authority for building approvals predominantly rests with regional or local planning committees, with limited national involvement from the Planning Administration. This approach, even when national considerations come into play, tends to be restrictive, hindering efforts to release more land for housing.
Proposed Adjustment: Recommend a shift in decision-making authority for building approvals to a national level, possibly via a centralized Planning Committee. While this realignment aligns with Goal A (maximization of average income per person), it may potentially contradict Goals C, D, and E (population dispersion, environmental sustainability, and economic self-sufficiency).

B. Fertility Encouragement Policy: Historical Background: Since the inception of the State of Israel, there has been a pro-fertility policy driven by historical factors such as the Holocaust and War of Independence losses. The existing policy incentivizes childbirth through various means.
Reevaluation: Given the rapid population growth, particularly in densely populated areas, there is a need to reassess the fertility encouragement policy. Although it aligns with Goal G (maximum growth of the Jewish population in Israel), potential contradictions may arise with Goals C, D, and E (population dispersion, environmental sustainability, and economic self-sufficiency).

C. Long-Term Tax Policy: Immediate Impact: Taxes significantly contribute to short-term government income and service provision. However, prolonged high taxes may impede economic growth, foster a black market, and lead to emigration.
Proposed Adjustment: Establish long-term tax objectives aligned with Goal A (maximization of average income per person) and potentially Goal G (maximum growth of the Jewish population). Striking a balance between essential services and economic growth is crucial.

D. Investment in Unique Technologies: Current Status: Technological breakthroughs have occurred, but widespread adoption hinges on economic viability. The government can promote technologies supporting primary national goals.
Proposed Initiative: Allocate resources and incentives to technologies aligning with key national goals, such as sustainable food production and energy from unconventional sources.

E. Tunnels Infrastructure: Ongoing Challenge: Israel’s small and densely populated nature, coupled with projections of increased population density, suggests that developing underground infrastructure could alleviate above-ground congestion.
Proposed Change: Advocate for investments in tunnel infrastructure for transportation and utilities to efficiently utilize the subterranean space. This initiative could address issues related to traffic, infrastructure, and security concerns.

These decision variables require careful consideration, as changes in one area may impact the ability to achieve other national goals. The government must assess and prioritize these variables based on their alignment with the overarching vision for the country.

The Desired Methodology

A comprehensive spreadsheet is formulated, where the national goals (such as the seven outlined in this example) are listed along the columns. On the rows, all potential decision variables are documented. While I’ve presented five in this document as an illustration, it’s evident that there are numerous others.

In each cell within the matrix – the intersection of a goal and a decision variable – a score is assigned on a scale ranging from -3 to +3 (with zero in the middle). A negative score indicates that the decision variable contradicts the specific goal, and the strength of this contradiction is reflected in a number (1-3). Conversely, a positive number signifies the extent to which the variable aligns with achieving the goal, with the level of alignment or positive impact expressed numerically from 1 to 3.

Summing up the scores horizontally (the cumulative impact of each decision variable) provides insights into which actions contribute more or less to achieving the national goals set at the outset. However, a comparison between different goals becomes inevitable. Ultimately, it entails a value-based decision or a determination of the envisioned future, as perceived by the government over a 20-year span – not something that lends itself to a purely mathematical solution. On the contrary, it necessitates a protracted dialogue, numerous discussions, culminating in a pivotal decision – how the current government envisions Israel in two decades.

Decision-Makers Hierarchy

Intuitively, the more important the subject, the higher the rank should be deciding on it. This principle applies to both formal protocols and common-sense understandings. For instance, in the IDF’s basic law, the Chief of Staff holds extensive authority to make decisions within the army. The Chief of Staff can unilaterally decide on matters as specific as selecting brigade cooks. The scope of his authority is within his purview to define, with the Chief of Staff determining which responsibilities he retains and which he delegates downward. Consequently, it seems more pragmatic to propose advising the Chief of Staff to focus on and decide upon more critical matters, leaving decisions like these to lower-ranking officers.

In the Israeli government, the hierarchy of decision-making is less clear-cut. Numerous factors, tied to the state’s behavior, the political system, and the associated pressures, contribute to this ambiguity. Numerous instances exemplify this challenge – observations from various government meetings reveal that a substantial portion of discussions revolve around trivial matters, or at best, disseminates information. Conversely, issues of profound national significance are occasionally determined almost arbitrarily by officials, even without due consultation.

For instance, when the Tamar gas field was discovered in 2012, it became evident that major consumers in Israel, including the electricity company, would want to procure gas from this field. The primary driver was the cessation of gas supply from Egypt to Israel in 2011, prompted by regime change, terrorist attacks on the gas pipeline, and the opportunity to purchase natural gas in the local currency. Despite the higher cost, Israeli consumers were compelled to use diesel or solar alternatives. Professor David Gilo, overseeing competition in the Ministry of Finance at that time, opted not to intervene for the sake of competition. Instead, he permitted the “Delek” and “Noble Energy” companies, owners of the “Tamar” field, to negotiate gas prices separately with each consumer in Israel. This decision, made by one official, significantly impacted national interests, creating a scenario where one gas monopoly controlled the “Tamar” reservoir, and consumers, including the electricity company, competed individually. The resulting gas prices were inflated, missing an opportunity for Israel to save billions and support numerous industrial companies. This example underscores the peculiar situation wherein a single official decides on a matter of broad national importance, bypassing the government’s deliberations on alternatives, ranging from comprehensive price supervision to centralized purchasing and distribution at different prices to various consumers.

The evaluation of an efficient organization is contingent upon three criteria: a transparent hierarchy corresponding to assorted tasks, a judicious distribution of powers across the pyramid to delegate more critical decisions to higher ranks, and a well-structured decision-making process employing a matrix format.

While conducting effective long-term planning, whether for a short or extended duration, the conditions for efficient implementation, aiming to maximize benefits within resource constraints, necessitate the existence of an efficient organization. Therefore, alongside the long-term planning process, a dedicated team should be instituted to scrutinize the power allocation in Israel. This involves assessing the collective powers of the government and ministries, led by ministers, as well as the distribution of powers among different ministers, the authority bestowed by the central government to local authorities, distinctions from ministerial to official ranks, the interface between senior ranks and legal advisory functions, and more. The outcome should include, among other things, liberating the government from bogging down on trivial matters, redirecting focus toward significantly more critical issues. These crucial matters should transcend political or personal gains, demanding detachment from excessive involvement in daily social network interactions.

In essence, short-term planning (five years) relies on a combination of constraints and experience to maximize organizational benefits, emphasizing optimization in specific situations. Conversely, long-term planning dismisses constraints and is grounded in a visionary perspective: what do we envision? This approach operates under an optimistic yet realistic assumption that achieving a critical national goal in 20 years is feasible, provided the requisite effort is invested and the associated (primarily political) costs are accepted. However, realizing the desired reality is contingent upon harboring the aspiration to reach it. The political echelon should not immerse itself in constructing the matrix that juxtaposes national goals against relevant decision variables. This task is undeniably the domain of lower-ranking professionals. Still, the substantive discourse, decision-making among viable alternatives, and their documentation must be orchestrated by the government. This stands in contrast to the current decision-making landscape in Israel.