Business planning…. should you do it?Posted: April 15, 2011
People who work with me, get tired of me talking about the “who rather than the what.’ It’s a line Jim Collins made famous and is at the core of his series of management books. His analysis shows that it is way more important to have the right people than the right plan. It makes sense. If you have the wrong people, then it doesn’t matter how good your plan is, it will likely fail. Great people, on the other hand, will likely do the right thing. This is fabulous but it suggests that business planning may be a waste of time. It suggests you just hire smart people, give them the right role and let them get on with it. It’s awfully tempting to try and run a business that way but frankly I’m not sure I have the nerve. I still find the process of getting people in a room to share their plans and ideas for the future to be fascinating, motivational and generally useful. Now that’s not to suggest that they actually end up delivering on those plans. Far from it. In fact I have only one business in eight that will deliver the plan they said they would this time last year. The rest are either ahead or behind in some way or another. Does that matter? For public companies it can if they are about to miss their forecasts but for most private companies missing plan isn’t that big a deal.
Going back a step, what all this, so called, planning does is not give you a sense of what is really going to happen but rather what you need to worry about, invest in and stop doing. Most of us can’t ‘control’ our customers. But we can can control whether we deliver the best product/service to them and deliver a great experience in the process. But if they run out of money, have poor judgement (which we all have form time to time) or find something they think is better then there’s little we can do. This means that even really well run companies will get surprises on the downside and upside leaving their detailed plan of six months ago, looking largely academic. So, as someone about to start the business planning process, I’ve been thinking a lot about how should we approach this ‘season’. My conclusions are simple:
1. Use data so that we can learn from the last year, two years etc. Then write down those learnings and spend time analyzing them.
2. Talk to your customers to make sure you are doing what they want you to do. It sounds really obvious but too many times people ‘assume’ they know what the customer wants based on meetings they’ve held on subjects that were related to planning. Customers love to give feedback, just look at all the social content that’s out there!
3. Talk to your staff. Again it sounds obvious but I often find that junior or new staff have no clue what the business plan is they are working to. They simply know their small part of the puzzle. Yet these people often have a great perspective on what you could do better and what needs to change.
4. Create a culture where people feel like they can ask for anything. OK, maybe not anything. But you do need a culture where people feel like they can ask for investment, ask to start a new business, ask that you buy a business etc.
5. Plans are more than numbers. This is the really hard part. Business plans can often just be a set of spreadsheets. This data is very helpful but it’s not a plan. It’s one output of the plan. It doesn’t tell you who is doing what, when and how.
6. Keep doing it. Make the questioning, brainstorming, insights and innovation that comes from planning a continual part of how you do business.
All that said, I still go back to the Jim Collins philosophy and say that if you have a choice between great planning and great employees, choose employees every time. They might not always produce accurate plans but they will build a great business.