Management Insights

Long-Range Planning is (almost) Dead

Remember the strategic planning process with you and a lot of other executives working furiously during an intense 3-day huddle to come out with a 5-year plan that would help the organization navigate through an uncertain future? Or you might recall the 40-page long business plan complete with spreadsheet projections for the next 30 months and pie-charts about the potential market share for your latest offering. If you are like many other people today, including former advocates of the strategic and business planning process, you are probably thinking it would have saved everyone a lot of pain if you could have just dumped those plans into the nearest dustbin the moment these were produced…

Anyone who has participated in some form of long-range planning to put together an organizational strategic plan or a product business plan knows how irrelevant and sometimes downright silly – the plan looks even after a few weeks. This is because all such plans are by definition optimistic. Can you imagine handing over a strategic plan to your bosses that indicates the organization is going to be in hot water 3 years from now? The plan therefore has to be positive, it anticipates growth, success and a bright future. SWOT analyses, competitor analysis and historical research data is used to provide validation and if the research does not fit into a rosy picture, it is discarded.

This does not happen just in organizational settings – it also happens in politics. Don’t believe me? Just think about what happened in the US elections recently despite all the forecasts about a different outcome.

It has taken the likes of serial entrepreneurs like Steve Blank and Eric Ries (author of the Lean Startup) to come up with alternative planning and modeling approaches that are being adopted both by established organizations as well as entrepreneurial startups. These approaches include “getting outside the building” to validate offerings and plans in the real market and “pivoting” that involves re-assessing and iterating strategy and tactics in a much more agile and on-going manner.

Here are some ways to plan better using such new approaches:

1 – Use a Business Model First

A Business Model is essentially a one-page representation of how a sustainable plan can come about. It is not fixed; it is dynamic. The iterations of these models can be taken to market – for example to a test customer – and tried thoroughly before assuming the model will work. The model therefore becomes an iteration exercise to de-risk the initiative by taking out all the guesswork. Once a sustainable business model appears, then and only then does it become useful to translate this into a more detailed business plan. The tools available for such modeling include the Business Model Canvas  and the Lean Canvas.

2- Do More Real-World Testing

The central “hypotheses” within the business model – for example product features or market niche – require real-world testing. What happens if Plan A does not work? We need a Plan B and then a Plan B v2. All great plans require constant adjustments and tweaking to start working smoothly.

3 – Learn to Adapt

Investing too much confidence in the initial assumptions about the business idea or proposition or having a fixed mindset about the target market is what usually leads to failure. The “we have invested too much effort already in this direction” thinking needs to be replaced with more readiness to correct course. The smartest organizations in the world know this. Apple was never preordained to produce a mobile phone. It was a willingness to re-assess overall strategy by understanding what would excite consumers that made this happen.

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