I worked with a listed firm for a number of years and my old MD would say ‘David, you can Plan to Fail or Fail to Plan’ in my earlier days, I wouldn’t quite know whether she was giving me two alternative instructions or doing some sort of jedi mind trick. I’d sit there and think the better option was Plan to Fail, at least I was doing something…. Now with a few grey hairs, I can see what she was really suggesting.
Can you see over the horizon?
We would have our annual planning cycle in September-October to create the plans for the coming year. Invariably everyone was wildly optimistic or alternatively, as my boss would say to me
“Are you sandbagging David?”
I would quite quickly get into the classic paralysis of analysis (I promise this is the last business slang I’ll be using but it does describe where I was at) the problem with my approach was that it relied very heavily on how I and my management team felt at the time combined with a healthy dose of crystal ball gazing and conjecture. We would quickly go down wormholes trying to guess so far in the future. It left me feeling very exposed. Being one of 12 directors globally who would send their budget and revenue projects to HQ made for cold comfort – all the directors would hold back and have lots of conversations with each other like
“How much growth are you forecasting”
“15% growth, are you mad?”
“How will you do that with no increase in your costs…?”
and on and on.
It made for a very unsettling experience as a lot of career risk (and my and my team’s income) went into every decision supporting the annual submission. Now having spent time with my fellow directors since we have all moved on from the firm and guess what? We all felt the same and got very little out of the process and definitely in discussing it with each other. Now here is the kicker, after I submitted my numbers, I would always get a revised (up AND down) budget and target from HQ which more often than not, bore very little resemblance to what I had submitted.
Dynamic business planning
I met with a MD of a large Fit-Out business last month and he said,
“Every Monday, we have a coffee planning session at 8am with the other 3 partners. It’s part what did you do at the weekend and part planning. We agree several courses of actions and agree who owns them. I know by Friday morning, we will have thrown most of them in the bin”
It appeared a type of madness but maybe for them it might be the right dynamic planning approach for a dynamic business. It seemed to cause him headaches but he did appear very wedded to the approach.
So why bother planning? If you focus, work hard, doesn’t it all work out in the end?
I worked for a firm a few years ago whose income was the classic hockey stick growth curve. The founder, the most entrepreneurial person I have ever worked with didn’t believe in planning of any sort. It was all about top-line growth, focus on delivery and ensure you have the right people to make it happen. Coming from a plc firm to an SME organisation with no planning, was the opposite end of the scale but I learned very valuable lessons.
You can spend months refining a plan but if you don’t have income, you don’t have a business. You do need to get on with it. If you don’t focus on winning customers, great delivery and a great experience, there is no repeat business and you will spend all your days looking for new customers. It’s tiring, expensive and highly transactional. That said, a year after I left that business, it was sold for 18 times EBIT to a PE firm, it was 5 years old. His approach worked and the business worked really well.
So is this the right approach? I don’t think it is. The experience for myself as MD and for the staff was chaotic. If I tried to put in a little process and a bit of planning around the edges, it was met with push-back. It was a lot of jumping but not knowing how high.
The strategic long-term approach
I am not an avid reader of the New York Times but a fellow Leen sent me an article by Warren Buffet and Jamie Dimon, two colossus’ of the Financial world. Their short, concise and succinct article said that short-termism is killing the economy. They called for business leaders to move away from quarterly based forecasts and share earnings projections and start to establish a strategic, long-term planning approach. This flies in the face of the current uncertainty in the market but of course it is the right way to go. Planning is hard when you are not in control of your universe with things like Brexit, world leaders saying strange things and little growth in the economy. It’s tough.
That said I do love Warren Buffet and have read all his books, read his annual missives and keep close to what he’s doing. The guy is a genius. It is interesting how he approaches long-term strategic planning and thinking. What does he say about the Workspace sector? He says
“Investing in workspace could also be seen as a long-term strategy to be encouraged, particularly for your potential customers who may be sitting on the fence as to whether to invest in a plush new workplace or just plough the money into making more money – which a new workplace does but only over time and at a cost.”
Can you really create a strategic plan in the modern workplace?
So as with all these things, it is a middle-ground but what does that look like?
Eric Ries recently published an interview with Bruno Cucinelli, the founder of the fashion house that bears his name. He posed a question about planning a business, he said and I am slightly paraphrasing – do you want a business that grows very fast, with large profits or do you want a business that grows slower, has great partners relationships and everyone grows together?” Hmmmm….
I think some planning is better than no planning. The key is to review maybe more than you plan. Keep a beady eye on costs and focus on great customer delivery. Do the best around what you can control and accept that you can’t predict the impact of things like Brexit. It is just a waste of energy. Above all, keep busy.