No one can tell the future. And yet we all need to know where we’re going. Hence the dilemma.
Planning is about deciding what to do based on what we think will likely happen in the future. If we don’t know what is going to happen, then what’s the point in planning at all? Isn’t it a futile exercise that is both time consuming and expensive? Wouldn’t it be better just to carry on business and see how things turn out and tackle them when they happen?
To that last question, I say, when things do happen, how prepared will we be to tackle them?
Business, and even life to a certain extent, is all about opportunities and threats. If an opportunity presents itself and we are not in a position to take advantage of it, then we may miss the moment and it may be gone forever. Remember the adage “strike while the iron is hot”? Well if your iron is not hot at the right time, then your strike will not work.
What if we are in the game industry and just heard that there is immediate demand for a new type of game console that allows the players to simulate a battlefield in their living room throwing the images on all the walls. A company has experimented with that and their consoles are flying off the shelves. You think this will be a great business to enter. However, you do not have the expertise, the people, the processes or the manufacturing capability to deliver that. You are therefore not be in a position to develop such a product any time soon. By the time you are set up, several of your competitors will have already entered the market and now it is an uphill battle to get any market share. You arrived too late for the party.
How did those competitors get advance warning? Well they very likely did some analysis and forecasting. They looked into the future.
What if you are in the insurance industry and just heard on the news that the government is deregulating the industry and allowing banks to sell insurance. This actually happened many years ago which is why I am mentioning it here as a good example. Over the next week, all major banks roll out extensive marketing campaigns designed to grab as many of your customers as possible and convince them to switch to their insurance policies. You can fight back by developing new attractive insurance policies. But that will take time. You need to engage your actuaries, conduct studies, package the products, develop your marketing campaign, train your insurance agents and then roll it out. That would take a lot of time. By the time you are ready, the banks will have eaten hard into your market share, leaving your company in tatters.
You see why you can’t wait and see how things turn out and then tackle them? That’s mainly because you can only tackle them if you are prepared. It’s difficult, if not impossible, to make hay in the middle of a storm.
So now I think we have established that we need to plan with an eye on the future. But who can tell the future?
The simple answer to that is “no one can”. Nobody can tell the future. So what do we do?
Our best bet is a best guess at what the future will hold for us. We can attach probabilities to those guesses. We can then plan based on what we think the likelihood is of one or another scenario. We know it won’t be perfect. But knowing something is better than knowing nothing.
We can observe what’s going on around us and how it is trending. We can analyze and anticipate. We also know what we are capable of or what new things we could teach ourselves. We don’t know when a storm will hit but over the years our capability for forecasting the weather has improved considerably. Our preparedness for such a crisis might still not be perfect. But without any preparedness, our losses would be significantly worse.
Our ability to spot trends, especially in the current age of information, also improved considerably. With that, we also improved our ability to anticipate what kind of products and services the markets are likely to want. “Likely” is the key word here. We accept that we cannot tell the future. But we may be able to state what is likely to happen, how likely it is and what we should do about it. We can use that to protect ourselves from catastrophes and to exploit opportunities.
This is where planning and especially, strategic planning, comes into play. So don’t ignore planning. In business, as in life, planning is the key to not just help you survive but also to thrive.
Thanks for reading.