A few weeks ago, I found myself in a bizarre situation. As an entrepreneur—but also as a startup consultant working with a group of executives—I found myself having to defend the idea of “not planning.”
How so?
The deciding factor was a claim made by a veteran controller that simply “everything” could be planned and that every problem in the company was always the result of poor planning. “Survival of the Plan-est,” so to speak.
“Hmm,” I thought to myself. I wasn’t going to let that claim stand. For example, I can still vividly recall the situation in 2008, when all certainties in the global economy crumbled overnight.
We finally agreed that there were simply some bigger and smaller “unforeseen factors” in the planning. Fine by me, I thought to myself—if that’s what you want to call it…
But seriously: Planning is, of course, important. Still, I often find myself sitting across from founders who are frustrated by the task of having to plan their business activities in detail. “How am I supposed to know what will happen in three years? I haven’t even started yet!” they say. That’s true, of course.
So here’s my advice: redefine “planning.”
Planning has nothing to do with a crystal ball. Planning is thinking through different situations. Call it “developing scenarios.”
Let me emphasize once again that I do not mean to say anything against planning. But in the midst of all this planning, some people forget what really matters: real-world practice and their clients. That is why I am also strongly opposed to subsidy programs that reward students for months of planning without giving them the opportunity to gain practical experience.
Plan, try it out, adjust the plan, keep trying, adjust the plan again, and so on—that’s how you reach your goal. Everything else is just theory.
So go for it! Think about what might happen if… And then give it a try. Things will probably turn out quite differently than you expected, but you’ll learn which factors are important and which aren’t.
To put it a bit bluntly: the number of rolls of toilet paper needed over three years probably isn’t all that important, but it’s often (and I’m only exaggerating a little) used as an example because it’s a quantity that’s reasonably easy to estimate.
In the same plan, revenue is then depicted as a “hockey stick curve”: relatively flat at first, followed by a rapid, steep rise after just a few years. This is the result of exponential growth curves that arise purely mathematically in the business plan. And they have never—truly, NEVER—played out that way in reality.
But what are you supposed to do if you have absolutely no idea how revenue will develop? Wouldn’t an assumption of “x% annually” make sense?
No. But you can start this way, as long as you revise your plans every few months and incorporate the insights you’ve gained. This puts some overly ambitious approaches into perspective; things often turn out quite differently than planned. And most importantly, by regularly giving the matter thought, you’ll be prepared for an uncertain future and will certainly be better equipped to adapt to new situations.
I admit that this kind of approach hasn’t caught on at all banks yet, but it has at most of them. Banking professionals feel much more comfortable with realistic, continuously updated plans than with a business plan drawn up merely to fulfill a requirement, which is then never looked at again.
So instead of “Survival of the Plan-est,” it’s “Survival of the Fittest” in the very classic sense. Darwin’s idea is not that the strongest survive, but almost the opposite: that the best-adapted make it. So plan regularly so that you can adapt optimally.
With that in mind, happy planning!
Yours,
Ulrike Hudelmaier
