Column by Richard Randall
Who thinks they know what our world will look like in three years? It wasn’t that long ago that many organizations were creating five-year strategic plans. As the economy became more global and technological change more rapid, the strategic horizon shifted to three years. Today we have markets and technology evolving at an unprecedented pace. Add political polarization with our parties having nearly opposite priorities to the mix. How can anyone make long-term predictions?
I’m not suggesting that we don’t try to plan with a three-year horizon, but I am suggesting we need to adapt both our planning and execution processes to our rapidly changing environment. We have to force our organizations to be nimbler and more adaptable than ever before.
Strategic plans are always built on a foundation of assumptions. They may not be explicitly stated in the plan, but they are there nonetheless. We assume what the world will look like throughout our planning period economically, politically and technologically. We make assumptions about government funding, regulations and taxes. We make assumptions about access to markets and currency exchange rates. We make assumptions about borrowing costs.
When no assumptions are stated in a plan, then the default assumption is that nothing important in the environment will change throughout the life of the plan. That’s unrealistic. I suggest that you spend quality time discussing what assumptions you are making and how you will know, during the plan period, if those assumptions are playing out as predicted. If you know what they are, you can check them regularly and adapt if conditions begin to change in unexpected ways.
A second way to build adaptability into your plan is to identify leading indicators for your goals and initiatives. For example, if your goal is to increase revenue – sales for a business, contributions for a nonprofit – by improving your marketing through social media, the revenue is a lagging indicator. It comes after something else, a leading indicator, happens. If you can identify and measure that leading indicator you can get an early warning if the plan isn’t working. If you expect to get more revenue because you are generating more followers, views or website visits, make sure you are measuring those leading indicators.
A third way to build adaptability is to break your plan down into yearly increments and review progress at least once a month. Create an annual operating plan that includes all the action items in your strategic plan scheduled for activity this year. Include metrics that will tell you if the action items are on schedule and if they are working.
Meet with your leadership team monthly. Have the owner of each strategic initiative report on its progress. Discuss the planning assumptions. Are they still holding true? Where applicable discuss the leading indicators. Is the plan producing what was expected?
When assumptions start to prove wrong, or when your metrics start telling you a strategic initiative isn’t working, it’s time to have a deep discussion about your strategy. Can it still work? Are we just throwing good money after bad? What alternative strategies are there?
The real danger is not planning three years ahead; it is doing so on autopilot. Organizations that succeed in today’s environment treat strategy as dynamic. They make assumptions explicit, track leading indicators, execute in short cycles and review relentlessly. In a world defined by rapid change, adaptability is no longer a competitive advantage. It is a requirement.
Richard Randall is founder and president of management consulting firm New Level Advisors in Springettsbury Township, York County. Email him at [email protected].
Executive Insights is a recurring feature from biznewsPA that provides local business executives and leaders a platform for sharing advice and perspective with the business community of Central Pennsylvania. If you are interested in contributing an executive insight, email [email protected].
