Five unexpected truths about planning in business
Nanggol, or Land diving, is a ritual performed by the men of the southern part of Pentecost Island, Vanuatu. Men jump off wooden towers around 20 to 30 meters (66 to 98 ft) high, with two tree vines wrapped around the ankles.
They believe that if they touch the ground with their head or a shoulder, they’ll be healthy for the rest of their lives. You can imagine that for some of them, the ritual works perfectly well but a little too literally.
Executives worldwide are engaged in another ritual called ‘annual planning,’ or ‘annual budgeting.’ Ask them, and many will say it is just as dangerous as Nanggol.
Corporate planning is a game where both sides cheat, both know it, and they try to outcheat each other.
It’s like a wedding but with fingers crossed behind their backs.
But this isn’t the only problem.
These five thoughts will help you plan better.
Ever-worrying mind
The human brain spends about 20% of its energy on cognitive functions, and mental simulations of future scenarios are among the key ones.
The brain takes information from past experiences and current sensory input to predict what might happen next. This process happens both consciously and unconsciously and helps us evaluate potential outcomes before they occur.
So, basically, the human brain is always planning, even when you’re asleep.
When it keeps you awake the night before your keynote, it believes it saves you from future disasters.
The brain is a natural planner. But somehow, we value the plan more than the planning. It’s like valuing acting over thinking.
1. An annual budget is not a plan.
If all you have is an annual budget, you don’t really have a plan.
A plan answers the question of who will act, when, how, and why. A plan is a set of actions we are going to take.
A budget answers other questions:
(a) What are our financial targets?
(b) How much funding are we going to allocate?
A budget consists of two parts: targets and authority.
Our target revenue, gross profit, EBITDA, etc., represent our targets.
Expense items represent the spending authority we grant employees at the budgeting stage.
This is not an action plan.
2. Why annual planning?
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.
We have an eight-hour working day only because, back in the 19th century, factories in the UK operated around the clock. Since workers couldn’t manage 12-hour shifts, the 24-hour day was divided into three eight-hour shifts.
Summer school holidays originated simply because parents wanted children to help them with farm work during the summer.
We live in a world where technological progress coexists with old traditions. You can choose a time frame for your planning.
3. Aren’t your short-term plans too short-term?
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?
In most companies I worked for, we used rolling planning. At any given moment, we had a plan for four quarters ahead.
4. Tasks are different
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.
You can have 100 tasks or projects, and each of them can have its own time frame. It won’t kill you.
5. Reward for thinking, not doing
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.
Of course, we can’t financially reward our executives for planning — otherwise, that’s all they’ll end up doing. But we can motivate and encourage them.
The goal of business development isn’t to achieve specific targets but to gain new knowledge that increases the chances of future success. And planning is a great tool for cognitive growth.
The journey over the goal. The thinking over the journey.
If your executives won’t think – who will?
Download my new mini-book The Plague of Strategic Goals for free here—a gift for my subscribers! Oh, and by the way, the same link also has free checklists (in case you haven’t grabbed them yet)!
Svyatoslav Biryulin
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I help businesses scale fast by creating new markets. Do you need expert guidance to craft a winning strategy for your business? DM me.
Read also: Suffocating In Tech – Gasping For Value
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