Tuesday, March 3, 2009

Business Planning, UR duing eet rng

Corporate business planning is broken in a wide range of ways:
  • Those who have to execute it rarely have a say
  • It is usually based off of projections that are fully divorced from reality
  • Plans use flawed estimations for completion
  • They assume resources that don't exist
  • They require assets and skill sets that the company doesn't have
  • They dramatically alter the DNA of the company
And other very valid reasons.

But there is one bigger picture issue at heart - A full calendar or fiscal year business plan is too long, too cumbersome, and allows too long for most initiatives.

This last element is called Parkinson's Law, whereby a task will take as long to accomplish as it is given.

A better timeline for plans
Six months is too short. Once planning is completed, resources are obtained and put into action it would almost be time to report on completion. Planning would be constant, burning too many resources, corporate staff and confusing employees ("What's the new strategy this month?").

Not to mention how confusing it would be to customers.

Nine months though is a near perfect fit.

Nine months is enough time to complete the planning cycle and allow for implementation of meaningful programs. Resources can be obtained, there is sufficient time to complete almost any major program and can (and should) include an interim status check based on substance.

A nine month based planning and action cycle also helps the organization create momentum by demonstrating its ability to implement meaningful change (another drawback of a shorter period would be the scale of change would be smaller).

And programs that truly need more than nine months will be broken up into multiple phases. You won't arbitrarily decide to make things 9 months, you'll make them as long as they need to be but use discrete elements (chunks of change) that fit into the 9 month period.

A future that will never be
Nine months though, will never be adopted. The year long cycle is too engrained, aligns (arbitrarily, with no real benefit) to the financial and tax reporting cycles, and fits in the mental model that we have all adopted (witness the yearly habit of people making resolutions that they don't keep).
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