Saturday, June 26, 2004

Planning under the influence of change

Planning under the influence of change
By Peter de Jager

Most strategic plans are premised upon a simple question: "Where do we want our organization to be in five years; what must we do, and when, to get there?" A good question, that, and the answer will definitely have the attributes of a sound objective.

Asking, "where?" invites us to paint a picture of what we want to achieve. That represents our "vision" or "vision statement", and creates a target worthy of attention. "What must we do, and when?," paves the steps towards a rudimentary project plan. Having defined the "what" and the "when", we now have a "To Do" list for the next few years. The objectives we choose may sometimes be overly simplistic - even ambiguous, as in, "We want to be the world leader in 'X'". But they provide us something to work towards. And that's the core issue. Unless the next problem is defined in terms of some hidden assumption, such planning cannot succeed other than by luck. We run into a snag here, a problematique. We cannot answer the "smaller" organizational question "where?" unless we answer a bigger and more complex question: "Where will the world be in five years?"

Crafting a strategic plan is like aiming to get to Mars, or catch a baseball: you don't go to where it is now but to where it will be. Obvious? Of course it is. Yet most strategic plans make no attempt to determine where the world will be. They assume that the world stands still in time when it is indeed heading off in some unknown direction under the influence of Moore's Law, politics, demographics, diminishing resources, new opportunities, aging populations, shifting alliances and a thousand other trivial and humungous forces.

We target the future on our understanding of the past. For example, when transactions have been growing at 10 percent per year, we plan for the future on the assumption of similar growth. But new-and often sudden-developments can erase all credibility from such reasoning. For example the sudden rise of digital music and the ease of sharing it on the Internet. The real challenge is in answering the question, "Where will the World be in five years?" As Yogi Berra, the great philosopher king and sometime baseball player, said: "It's tough to make predictions, especially about the future."

Tough? Yes, definitely. Impossible? No. Even if we choose to ignore them, there are developments we know will affect us in the future. Here are a few worthy of consideration: The Collapse of Constraints as a result of Moore's Law: IT and telecom are going to get more powerful, faster, cheaper, more reliable, more accessible, smaller, cooler, convenient.

Implications: Are there technologies that you want to implement today but can't because of limitations? Chances are in five years, technology will remove those constraints. Then what?

Reminders and implications:

· Digital Music => Copyright => Music Industry Sales?

· Telecommunications => Offshore Outsourcing => Local White Collar Work?

· Voice over IP => Personal Communications => Phone Companies?

· RFID => Inventory Costs => Privacy & Security?

· Flat Screen TVs => Redesign of living space => Furniture Sales?

New Markets & New Competitors: (The Third World is no longer Third) One word: China. The Implications? USA has 5 per cent of the world's population and consumes 30 per cent of its resources. Imagine the buying power, consumption, and resources of 10 USAs. Can you imagine a Future where this juggernaut of a country does NOT affect your business? These are just three developments you might choose to incorporate into your strategic plan. Which ones? depends on the throw of your projection, factors of potential threat, and/or opportunity.

We cannot predict tomorrow with great accuracy. But we can get a sense of it and strategize a plan that does well against other possible scenarios.

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