Given the Pace of Change, Are Strategic Plans and Business Forecasts Still Useful or Even Necessary?
Given the unprecedented change that occurs in virtually all enterprises and businesses, the range of useful forecasts has narrowed from years to months to even weeks in many arenas.
Traditional three-to-five-year strategic plans, which were once the mainstay of successful enterprises, are now laughable in their lack of utility.
The pace of change in the marketplace has rendered the trends and assumptions that fuel forecasts almost meaningless over any length of time. Yet, forecasts and predictions about the future remain the mainstay of the planning and allocation of resources that businesses rely on to thrive and take full advantage of the opportunities in the marketplace.
Are leaders kidding themselves? Is strategic planning and forecasting in today’s world a wasteful exercise?
For the best teams and organizations, strategic planning continues to be an essential process for reasons of clarity, not certainty. Planning creates clarity and allows leaders to test, explore, and challenge their working assumptions about the future, no matter what the timeframe.
In addition to setting priorities based on forecasts, contemporary planning explores possible scenarios regarding multiple plausible futures. This gives leaders the best chance to plan successfully without denying the likelihood that the marketplace will change more quickly than they anticipate.
While it likely no longer makes much sense to create forecasts and engage in strategic or scenario planning beyond a year, that doesn’t prevent leaders from crafting a vision that gives the organization something to shoot for in the future.
Most visions are lofty and broad enough to flex to meet the shifting challenges that emerge in the short term. Good visions depend less on forecasts and predictions and more on what the organization desires to become regardless of the environment.
In a world of fast change, checking in and revisiting any plan or forecast more frequently is essential. What this means for leaders and organizations is an ongoing planning process that occurs quarterly or even monthly. Anything less suggests a plan that will likely become obsolete before leaders can catch up.
Long-term planning is now very long-term. While there are exceptions to this new rule, crafting three-to-five-year plans seems fruitless for most organizations. Those who maintain their commitment to a longer plan do so for learning and clarity, not for certainty and precision. Those who expect more will make fortune tellers and palm readers look good.
It's true that the speed of change can render long-term forecasts less practical, but as you rightly point out, the purpose of planning is evolving. I continue to see value in strategic planning, as long as there is organizational understanding that plans evolve, and are not set in stone.
Typically, in my past experience, rigidity around "the plan" sets in, and despite changing market conditions, there is reluctance to change course. This may due partly to consistency bias, vs previous actions. I have found that incorporating a "north star" concept, and empowering people to course adjust along the way, works much better.
Do you think that ‘unprecedented change’ might possibly be an illusion or bias? And that most of the changes we witness are superficial and that nothing of substance has changed much if at all?