It’s in almost every business text book, it’s shouted from business rooftops, and it will be drummed into you by business mentors and lecturers alike - You need a business plan. You should predict what you will be doing in 5 years. You need charts - pretty, non-lumpy, perfectly linear charts that project year-on-year growth across the board in a systematic way. Every year should be like the last. Cash flow will be perfectly managed. Sales will grow as customers remain perfectly happy. You will continue to do in 5 years what you have dreamed up today. And you will know this and develop this with such precision that even the most business plan loving jargon speaker will find no flaw in it. Congratulations, all will be a formality from here, you have your business plan.
Can you predict if it will rain next week? Even with sophisticated mathematical models we are often far off the mark. Can you tell me the next set of lottery numbers? I thought not. Can you even tell me how many sales you will make next quarter? Check your “prediction” against actuals and shock yourself.
You see, we suck at prediction. It’s too damn hard. There are so many variables at play, so much complexity. There is so much information we don’t know that we couldn’t possibly create accurate models or plans. So give it up. It’s an illusion. Go over every business plan you’ve ever written and see if it turned out that way. In fact, ask any preacher to show you their business plans versus what actually happened. Look at any major business and see if they do what they set out to do when writing their business plans. Nokia started as a pulp mill. Tiffany & Co sold stationary. Colgate manufactured soap and candles. I repeat - Tiffany sold stationary – stationary! Do you think in their 5 year plan, they predicted that in year 3 they would shift their company focus and diversify into new markets, namely high-end jewellery? No! They sensed opportunity, they adapted and they acted on new information.
You need vision, yes. You need a sense of direction. You need to have a model, an idea, that you can get down simply, broken into its component parts, that you can figure out how to test. If you are already up and running, you need to be communicating with customers. You need to test your assumptions. Is it working properly? Can I do it better? Is my revenue model right? Can I reduce costs without compromising quality? Will this short term gain actually hurt me in the long term? Will this produce a sustainable return? Am I targeting the right customers? Am I creating incredible value?
All of this is hard enough without having to develop the ability of foresight. Forget next year, focus on next week. Focus on what you can test now, what you can act on, what can bring value to your customers and your business.
Forget 100 page documents, PowerPoint slides and neatly formatted prophecies. Get it on paper. Use simple language. Use pictures. Get the point across. As Einstein said, “If you can’t explain it simply, you don’t understand it well enough.” And if you can’t understand it, don’t expect your customers to.
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