What you are thinking is not what will happen
Tuesday, September 4, 2012 at 10:00AM
The problems with planning.
Do businesses turn out exactly like the business plan? None of mine did. Even my most sophisticated spreadsheets never produced anything like the numbers I forecast. Personal plans were not much different.
Some have gone worse, some have gone better, but none mirrored the profile I had so carefully constructed. The late John Lennon was not far off the mark: “Life is what happens while you are busy making other plans.”
Does that mean planning is a wasted exercise?
I don’t know whether Lennon lived by that quote or was just making an observation. He was, however, massively productive. He wrote or co-wrote several hundred songs, produced dozens of albums and undertook hugely successful global tours.
But albums don’t create themselves and tours have to be managed. While Lennon’s career might appear random, there was clearly some planning in there somewhere. So why should we treat it with caution?
Three things to remember about plans
Firstly, forecasts, by definition, are always wrong. Business plans require lots of them: input costs, overtime, market share, logistics, sales targets, margin assumptions, not to mention the state of the economy, interest rates and having the right people at the right time who do the right thing when it has to be done. You are not going to nail them all.
There’s nothing wrong with making forecasts. They make it clear what’s got to happen to get where you want to go. They are like smoke detectors that warn you before the fire is out of control.
Secondly, for all those reasons, plans can’t be static. The use-by date of any plan starts ticking the day it is signed off. It’s essential to have a structured review process that regularly asks, “Is this working?” You need flexibility.
If it’s not working, accept that some decisions are wrong; the environment has shifted. Management action is what makes a plan work. The biographies of most successful managers include moments of great doubt when critical decisions were made to change direction. Being open to change has an added advantage: you are less likely to miss opportunities. You need to stay in the now.
Thirdly, and staying in the now, planning is a present time activity. It is not about the outcome. It’s about how you are going to get there.
This is integral to motivation. If you want to kill off your passion for something, start thinking about how great it will be when you get there. Two things will happen:
- You start focusing only on “there”, when “there” may not turn out to be where you are going. You miss the detour that may take you somewhere better.
- Worse, you begin enjoying the reward of getting “there” when you haven’t left “here”. Milking those good feelings before you’ve achieved the goal leaves you nothing to go for. Gradually, passion erodes. When it comes to motivation, there’s a lot to be said for delayed gratification.
John Lennon may have meant much the same. But so did Warren Buffet when asked about the modus operandi of his famous investment firm. His answer: “we enjoy the process far more than the proceeds.”
It seems to have worked for him.
budgeting, business plan, management, strategy
Reader Comments (5)
One of your best posts Alan. Most of the best entrepreneurs I know always had a plan, but it was their ability to seize other ideas along the way that made them really successful.
Not sure that ALL forecasts are wrong. You have to make some. I always do best, likely and worst. It's usually somewhere in there.
Just cause your forecasts are wrong doesn't mean the idea is. The challenge is often how to shift your operations to make it work anyway. I alwasy liked the Winston Churchill quote. "When you are going through hell, keep going".
That's true, but Churchill also said "However beautiful the strategy, you should occasionally look at the results".
John Lennon also wrote a song called Whatever Gets You Through The Night. That's how executing my business plan feels most days.