Is long-term planning a waste of time?

Let’s start with a joke

There is a well-known joke in economics circles that goes something like this:

A student approaches his economics professor to challenge a low mark that he has been given on a recent assignment

“I can’t understand the low mark you’ve given me – I got the same question last year and you yourself gave me an A-grade” wails the student

“Yes I did” responds the professor “but this year the correct answer is different”

Of course somebody will get it right …

We are living in a continually changing world with few stable and absolute truths, consequently the future is at best difficult to predict. On any given day we can listen to countless economics experts debating the state of the global economy and what even the short-term future is likely to mean to nations, sectors and economies. There are dozens of different points of view and, no doubt, in two years time, somebody or other will be able to proclaim that they were right. Thing is, though, statistically, provided there are enough differing points of view, someone has to be right. But let’s not get too carried away with ourselves. No-one is always right because if such a person existed we would all know his name, because he would be king of the world. We actually live in a world of uncertainties. Deming knew this, and we’ve written on the subject a couple of times in the past. He knew that not all management information was known or even knowable, and that planning was merely an exercise in trying to shorten the odds on success – but it was no guarantee

Evolution, some rules

A while ago Channel 4 broadcast Richard Dawkins’ series “The Genius of Darwin”. During the course of the series a few striking and maybe unexpected parallels between the natural world and the business world have, well, evolved. They may be direct parallels, they may be metaphors, they may only be coincidental, but at worst they offer a new way of looking at things, which is usually a good thing in itself

Let’s start by taking a look at evolution (even if you don’t believe in it, try and stay with the argument, it’s imprtant). There are a few general truths about evolution that you need to understand before you can get your head around the way it works

1. Evolution has no goals. It just happens. Some species survive, others die out, but there is no end-game as such

2. The more successful species in the short term are those that can successfully exploit the status quo

3. The more specialised and “niche” a species is, the more vulnerable it is to environmental change

4. The more successful species in the longer term (especially in times of change) are those that can exploit a changing set of circumstances (i.e. they can learn and/or adapt)

Business is business

What does that have to do with goal-driven long-term business planning and how does that even suggest it may be a waste of time?

Well, first we must make a distinction between making provision for the future (which is eminently sensible) and trying to predict what the future may look like and then identify what will be our specific niche in that unknown
future-world. It is the latter that we propose may largely be a waste of time – simply because there are far too many unknowable variables to make any sort of rational specific predictions worthwhile. We can aim to make the most of today, certainly, as there are fewer unknowns. We can make reasonably specific short-term plans as the volume of variables in the short-term will be lower. However the longer our time horizon, the less likely it is that we will be able to plan accurately, because we are likely to get more than a few things wrong

So why do people bother with long-term, goal driven planning (because they do)? Well, maybe because it is a comfort. Like the idea of an after-life, it’s nice to think that we can develop and execute long-term plans, because the alternative may be an uncomfortable thought. Maybe

Returning to the evolutionary metaphor, if we really want to survive (and even thrive) in the longer term, and we would prefer to have some influence over our chances, it may be more practical to concentrate on developing our inherent capabilities, rather than goal or outcome driven strategies. In planning terms we may find it difficult to identify what volume of widgets we will be selling in what market and at what margin in 5 years time – although we can easily wish for it. What we can do more easily, however, is to adopt a policy of re-investment with capability driven outcomes, and to place our faith in the general statistical rule that it is the more capable that survive, grow stronger etc.

Dragons schmagons

Now, some people may counter this view with an argument along the lines of

“Well I bought this book in an airport last week written by this millionaire tycoon fellow, and he quite graphically describes how he built his empire up based on a long-term strategic vision. He may not have predicted the future, but he certainly anticipated the future AND he was right – you can get his book yourself if you don’t believe me”

OK yes, we do have our tycoons and, yes, many of them do claim to have some sort of gift of foresight. Some may even claim you can learn it (usually after reading their $19.99 book). However for every startling success there are numerous abject failures about whom no books are written. It’s like if we put 100 would-be tycoons in a room and asked them to flip a coin over and over. If we wait long enough someone will flip 20 consecutive heads. We may actually find that when we speak to our expert coin-tosser that he attributes his success to technique rather than pure chance. Maybe he too would put all that it in a book. You see statistically there has to be some successes, but some factors will be completely incidental to that success, even though in hind-sight we may be able to weave an alternative and plausible yarn. Be entertained by it by all means, but don’t be fooled

Anyway, the gist of this article is to suggest that far too much time and effort is wasted on planning for a future that never arrives, at the expense of continual and relentless investment in capability. The future contains too many unknowns

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