This is the Best Time to do your Corporate Planning Differently
Guest Post by Patrick Ow (first posted on CERM ® RISK INSIGHTS – reposted here with permission)
Steve Jobs envisioned a future state with computers on every worker’s desk. It will be a progressive culture where technology creates more opportunities for employees and a workplace without secretaries.
The future-state for Jobs was about “building tools that amplify a human ability”. He used the word “tools”, not “computers”, at the start of Apple’s life, which became hugely successful.
That is why Apple came up with the iPod, iPhone, and iTunes. These tools revolutionised the way we listen to music. Many people didn’t know they wanted an iPad until Apple showed them these tools.
What would have happened if Jobs used the term “computer” instead of “tools”? Would that change the course of history?
The starting point from which you develop your vision, strategy and the corporate plan is the key to your future success and growth.
Jobs worked outside the confines of present-day assumptions, boundaries and thinking. It gave him a different future state perspective that made Apple into a success story. Unfortunately, many corporate leaders don’t start with a grand future state ‘vision’ that guides their strategy and focuses their daily actions.
There are two corporate planning options that you can take when developing your strategic plan:
- Start with a clean sheet of paper. Envision and develop a future state vision. Then work your way back from the future to the present. This is the future-present approach, which Steve Jobs used successfully.
- Start with your present-day circumstances. Then extend that into the future by creating different alternative versions of possible future states. This is the present-future approach. The approach takes your existing structure and processes and rules and norms of today and extends that forwardinto the future. Many organisations are using this approach for their corporate planning especially when they use scenario planning.
The present-day planning processes are often just a mechanistic budgeting exercise, unfortunately. The current state of the business dominates the discussion.
The corporate plans that emerge focus largely on incrementally improving the core business. Resources are allocated and removed within existing circumstances and structures of the business. The organisation is caught in the straightjacket of the present.
Let us compare Steve Job’s vision for the future with the vision statement written by Tim Cook, the CEO of Apple:
“We believe that we are on the face of the earth to make great products and that’s not changing. We are constantly focusing on innovating. We believe in the simple not the complex. We believe that we need to own and control the primary technologies behind the products that we make, and participate only in markets where we can make a significant contribution. We believe in saying no to thousands of projects, so that we can really focus on the few that are truly important and meaningful to us. We believe in deep collaboration and cross-pollination of our groups, which allow us to innovate in a way that others cannot. And frankly, we don’t settle for anything less than excellence in every group in the company, and we have the self-honesty to admit when we’re wrong and the courage to change. And I think regardless of who is in what job those values are so embedded in this company that Apple will do extremely well.”
Do you see how innovation is killed in such a detailed vision statement?
The future-present approach
The future-present approach requires you to look out to the future by imagining how your customer needs would and could be different in 5 to 10 years. You then determine how your services or products will fit into this envisioned ‘future state’ of the consumer world.
Thereafter, you develop a future state vision statement. (This is not a traditional vision and mission as we know it.)
This future state vision statement seeks to this question, What does success look like?
For Steve Jobs, it was “tools that amplify a human ability”. Short and sweet.
Shifting customer behaviour creates opportunities
This pandemic and economic crisis have fundamentally shifted consumer behaviour. New patterns and preferences are being established which will guide consumer behaviour for many years to come.
There are opportunities to convert this crisis into new growth opportunities for your business.
To get ahead, start with recasting or developing a general direction towards your ideal future. There needs to be a greater focus on and clarity about your future.
This crisis will pass. Move swiftly to take advantage of the window of opportunity. Make bold changes. Take strategic moves and risks that will leapfrog your growth and progress.
It is very easy to drift away from your ideal future when you are so busy fighting daily fires. Focusing on the near-term crisis cannot be at the expense of your longer-term growth.
Without a vision of where markets and customers are heading, and without a map for anticipating disruptions that lie ahead, corporate executives are essentially flying blind in today’s uncertain world.
Scenario planning with a twist
Scenario planning typically makes assumptions on what the future is going to be and how your business environment will change over time in light of that future. It identifies a specific set of uncertainties, different “realities” or scenarios of what might happen in the future of your business.
Scenarios are stories about the future designed to create and support better decision-making today.
But without a single future destination to aspire to, scenario planning exercises can generate different versions of possible futures that may not be helpful to the organisation.
This is where the future state vision comes in. Make key assumptions about your future customers rather than your business environment.
Understand how your business environment will change in one, two and three years, but always fixing your eyes on your future customers.
The constant changes to your business environment will always have an impact on your ability to meet your future customer’s needs. Knowing these changes and risks upfront will enable the right course corrections along the way to arrive at the final destination.
If the pandemic has reduced consumer confidence and even cause an economic depression, determine what actions you need to make now to mitigate the impact of that potential scenario. This will enable you to keep on track to deliver on your future state vision.
Seizing on the opportunity
To seize on the opportunities presented by the pandemic and economic downturn, use the rapid-cycle planning-and-execution to:
- Understand how the pandemic crisis and economic recession have impacted your customers’ preferences.
- Use detailed customer analysis done in the context of industry trends and scenarios to point to how value will be created in the future for your customers. (I have written about the changing customer preferences due to the pandemic crisis here and here.)
- Imagine the customers of the future and their anticipated requirements and needs. Perhaps start with a blank piece of paper. Use blue sky thinking.
- Determine your future state vision based on the future needs and requirements of your customers. This is your general direction toward your ideal future. Encapsulate that into a short statement.
- Work your way back from the future to the present. Use your future state vision as the starting point for your corporate planning exercise.
- Assess whether your existing products and services can meet the changing customer preferences. Be brutal and honest. Discontinue non-performing products and services. Discard non-value adding services and employees.
- Determine your new set of customer growth options.
- Identify barriers or risks that may stop you from delivering on these new customer growth options. These risks may stop you from achieving your future state vision and meeting your changing customer preferences. These are things that will keep you awake at night. (I have written about how to use risk management effective, relevant and value-adding.)
- Pivot your strategies and plans to meet the changing customer behaviour and preferences in bite-size planning horizon periods.
- Break down your future-focused actions into short, medium and long term actions that will be encapsulated in your corporate and operational plans.
- Build flexibility into your planning and operational cycles.
- Constantly redefine your new product and service offering over time based on evolving customer behaviour and preferences, while keeping focused on your future state vision.
- Focus on creating new sets of offerings that will take advantage of new consumer preferences. Execute your strategies and plans ruthlessly.
- Use rolling but dynamic forecast that will be modified weekly, monthly, and quarterly as various business, economic and public health scenarios unfold.
- Managed to the future-focused forecast instead of the backwards-looking budget. Adjust inputs as conditions change.
- Build a portfolio of moves that will support the achieving of your future state vision.
- Constantly challenge the assumptions, assumptions, initiatives, strategies. Regularly ask what has changed.
- Push the boundaries of your thinking and translate uncertainties to dynamic strategies and plans. It is a dynamic model of management.
No matter how far you look out, many people don’t know what is on the other side of the long dark tunnel. This is where your future state vision comes in. It is especially urgent during this crisis and economic recession.
The world would be very different today if Steve Jobs limited his vision by using the word “computers” instead of “tools”.
Start preparing for growth and success now. To do it right, you need to have a future-state vision of what you aspire to become in five or even 10 years in the eyes of your customers. This will focus and help shape your thinking about the short and the mid-term. It will also guide the ruthless execution of your strategies and actions.
Use your future state vision as a north star that gives hope and inspiration. You have to bring that narrative to life by revisiting it often.
This is also your tool for learning and experiment with different things. It creates an agenda for learning, innovation and experimentation. They are adjusted as time goes on as the rest of the world changes.
Take a long term view.
Once the crisis is under control, reposition yourself to capture any lost value and regain share and growth while continuously redesigning your offerings to win in a new environment.
Patrick Ow is a strategy execution specialist, corporate facilitator, personal coach, educator, and Chartered Accountant with over 25 years of international risk management experience.
He helps corporate executives and individuals execute their strategies and personal plans to get breakthrough results using The 7 Habits of Successful Strategy Execution. Visit https://executeastrategy.com or email firstname.lastname@example.org for details.
Patrick has authored several eBooks including When Strategy Execution Marries Risk Management – A Practical Guide to Manage Strategy-to-Execution Risk (available in Amazon).
In addition to his professional work, Patrick has a personal passion for preparing individuals for the future of work.