This article was originally published by Forbes here.
There is an old adage that no battle plan survives contact with the enemy. Or, as Mike Tyson is famously known to have said, “Everybody has a game plan until they get punched in the face.”
I don’t know about you, but I feel like all my plans for the past two years were punched. It’s that time of year again where so many businesses are kicking off the New Year with fresh plans and budgets. I have written a lot of business plans over the years and created many, many financial forecasts. There was one thing that was consistent about all of them: They were all wrong.
Here’s the thing: Plans are based on assumptions. I make plans for dinner based on the assumption that my family will eat with me. Then I learn my teenage kids have made other plans to hang out with their friends. I made an incorrect assumption. Now, what do I do with all these groceries?
Business leaders have never faced as many unknowns as they have during the pandemic. Just when we think we are starting to get some certainty back, we add inflation, supply chain issues and Covid-19 variants. As a result, planning is harder than ever.
You might be tempted, as I have been lately, to just throw planning out the window completely. Why take the time to do a financial forecast when changes in the pandemic could make it irrelevant in 30 days?
But I would argue the answer is not to stop planning; it is to do more planning.
Put aside for a moment that plans and budgets can be necessary for pesky things like resource allocation. The real value of planning lies in the questions you must consider when creating the plan. Who is your customer? What are their needs? How can you best solve their problems? What should you be paying attention to in the market? What can you learn from your latest successes and failures?
The business plans I’ve written in the past weren’t wrong because I’m not good at my job or because I had bad ideas or reached bad conclusions. They were wrong because the information I had when creating the plan was limited and sometimes incorrect. I had hypotheses about how the market would react but not proof. I made an assumption that the way a small group of customers behaved was representative of the way the rest of the market would behave. I thought I could hire people with certain skills at a specific time but had not yet done so.
As leaders, we are sometimes lulled by the notion that we can run our businesses as though we can forecast the year ahead with complete accuracy. We create business plans assuming we know everything about the market, exactly what the solutions are to the market problem we want to solve, and exactly how our people and processes will act in delivering those solutions. Then we take this plan and put it on a shelf to collect dust until perhaps we pull it out to reference in next year’s plan. Or, worse, we actually operate the company using it.
Perhaps you’ve had a conversation that goes something like this: “Hey, we’ve got this great new product that will really boost sales. Can we hire this person to help us get it to market faster?” And you find the answer is, “No, sorry; we created a budget 14 months ago and that position isn’t in there. Wait another three months for your meeting with the CFO, and maybe you can get it approved.”
I believe the most important part of writing a business plan is the process, not the plan itself. Planning shouldn’t happen once a year; it should happen all year long. The questions one attempts to answer in strategic planning should be asked and answered as often as you have new information.
A big part of leaders’ job is to build a rhythm of learning in their organizations. Make sure you are instilling disciplines that force you to regularly work on the business — versus working in the business — in a way that helps you identify and challenge the assumptions behind your decisions. What has changed in the market or in your ability to deliver? You built this plan thinking one thing, but then discovered that something else actually happened. Now, how do you react?
The ripple effect of the pandemic has created an environment that forced all of us to become more agile. Let’s codify that agility into our businesses and all become better planners, all year long.