The provision of adequate environmental sanitation services to all inhabitants of urban areas in developing countries will not be achieved by the market or “self-help” action alone. There is a need for planning but this planning must be strategic in nature, focusing on the most important issues and allowing for the many uncertainties that are inherent in the current situation. The paper describes the field testing of a strategic planning process in India and subsequent efforts to explore ways of institutionalising the lessons learnt from this experience. It reveals some of the key problems encountered during these activities, in particular the lack of a planning culture among local stakeholders and the consequent tendency to respond to problems in ad hoc ways. Analysis of workshops and training courses suggests that there is a need to develop a more integrated approach to capacity building, with a strong emphasis on the way in which individual activities fit into overall planning and development processes. International development agencies could do more to encourage such an integrated approach to capacity building, planning and implementation. In doing so, they should recognise that, in the absence of a strong planning culture, informed decision making is often constrained by a lack of information. Where this is the case, it is critically important to extend the preparation stage of the project cycle to enable local stakeholders time gather the information required to develop a full understanding of problems and possibilities.