Five weird facts about corporate planning

Executives worldwide engage in a ritual called ‘annual planning’ or ‘annual budgeting.’

They think bargaining for better numbers for next year will make their lives easier.

But. There are some buts:

[1] An annual budget is not a plan. A plan answers the question of who will act, when, how, and why.

A budget answers other questions:
(a) What are our financial goals?
(b) How much funding are we going to allocate?

[2] If you’re not in farming or tourism, you don’t have to stick to the calendar year for your planning – but many companies still do.

[3] If you stick to the calendar year, you have a 12-month plan in January and a 1-month plan in November. Does that make sense?

[4] For some reason, we believe that we should plan all the tasks within the same time frame – a quarter or a year. But why? Tasks are different.

[5] We reward executives for doing, but not for planning – and that’s a big mistake. Planning is the highest form of thinking in business. It builds cognitive skills and teaches executives to think strategically.

Svyatoslav Biryulin

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