March 9, 2011

Danger, alert, watch out: update your thoughts about planning or lose out.

Why? It’s because of a trilogy with all three legs blown out. When I started with business planning, back in the 1980s, the business plan was a map, the vision was the destination, and the plan was the route. That’s so last century it hurts. And, if you’re trying to run a business, then not catching up is dangerous. You’re using old-style thinking in a very new world.

Part 1: What's obsolete. 

First, instead of a map, it’s a process. It includes the GPS to track your position on a map, and real-time information like traffic and weather, and ad-hoc information like the location of the nearest gas stations. A map alone is woefully inadequate.

Second, instead of a destination, it’s an adventure. An adventure opens itself up to new ideas it encounters along the way. Directions of travel and even the destinations themselves can change. And that’s a much better analogy today because the business landscape is creating itself in real time; the mountains are moving, rivers changing, and oceans emerging virtually overnight. Business winners stay constantly flexible and alert to the changes. How long have we had blogs? Web 2.0? Social media? News, entertainment, travel, employment, advertising, manufacturing... it’s all changing so fast that we just don’t start with a destination and then travel steadfastly in that direction until we get there.

Third, instead of a route, it’s a journey. The word “route” implies choosing roads from a map. That might have been what it felt like 30 years ago, but these days it’s as if the map were constantly changing. Roads close, new roads open up, and the underlying map, like the landscape in the previous paragraph, is modifying as we travel. We’d better hope that the journey is, as the old saying suggests, the reward. If not, then it’s a long time waiting to get there, with a frighteningly unsettled definition of “there.”

Part 2: Replace it with what you need now.

First, use planning to manage change, not prevent it. That's what turns what used to be a static concept, route, into the more robust idea of the journey. Sticking to the plan was once a good thing, but not anymore. The people who argue against planning as a lack of flexibility have it all wrong. Planning, done right, gives you flexibility. It doesn't take it away. The plan is a net that links the interdependencies together, and when there is sudden unexpected change, the plan makes reactions and revisions much faster and more efficient. For example, I know a company that turned immediately to its business plan when sales fell hard during the recent great recession. The plan gave the team knobs to turn. Relationships and interdependencies were already defined. They looked at the plan-versus-actual review and made quick changes. The plunge was unexpected, but planning helped. It didn't get in the way.

Second, stay flexible about long-term goals. Go for the adventure instead of the destination. When assumptions change, revise your goals. For example, I was involved with a business gearing up to go to market to join the dot-com boom when it suddenly became a dot-com crash. Suddenly all the exit windows closed. So they went back to their plan, revised, and hunkered down to stay alive, match burn rate to revenue, for the longer term. Now they’re looking for new investment rather than exit. Times changed, and goals reflect reality. So part of your planning is to review and revise your objectives at regular intervals.

Third, take a business plan and add back-tracking and real-time information to make it business planning. The plan includes management performance metrics such as sales, costs, and expenses plus measurements for other tasks like calls, visits, page views, conversion rates, calls per product, minutes per call, and so forth. The plan assigns responsibilities. Then the planning includes tracking plan versus actual results carefully. Reviewing your assumptions is like the real-time traffic and weather, helping you watch for changing markets, new opportunities, and threats.

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