Long-Term Planning? In this Economy?

Long-Term Planning? In this Economy?

In times of high uncertainty, it is even more important to have a POV of the future.

In fall, the average person’s mind turns to back to school, changing leaves and pumpkin spice. If you are one of our clients (or someone who should be), you’re more likely thinking about 2024 planning.

In the past few years, the popularity of long-term planning has fallen away, because:

  1. A frothy investment market made planning less important.

Companies were flush with cheap cash and were being told by investors to spend it quickly. Planning felt tiresome when all problems could be solved with spending. Not enough headcount to achieve all your goals? Just hire more. Not enough money to execute on all your plans? Borrow it or raise it!

  1. Moving from crisis to crisis made planning feel irrelevant.

The shopowner who couldn’t keep their shelves stocked between 2020 and 2022 might now be wondering if they should bother spending time thinking about what’ll happen three years out.

  1. Organizations privileged being nimble over being future-ready.

While we can empathize with these perspectives, it’s nonetheless true that the black swan has left the building. Supply chain pressures have eased. Pandemic restrictions have been lifted. We seem to have side-stepped a recession. A shifting investment environment and rising interest rates are now forcing you to consider how to best utilize your current resources and capabilities to drive growth.

Long-term planning ensures you are best positioned to grow when markets change.

You may have not even realized you have stopped planning for the long-term. You may have just decided to be thinking more realistically or conservatively. But long-term planning is not about flying cars. It is about developing a point of view of what the operating environment will be in the future and how you will adapt.

If the last three years have taught us anything, it’s that the future can always bring something we’re not able to plan for—but we still need to run our businesses. Long-term planning ensures you are best positioned to grow when markets change.

Have we moved beyond long-term planning?

Isn’t “living in the moment” what ’90s movies have conditioned us all to desire? Unfortunately, for an established organization like yours, living in the moment—and only in the moment—is not an option. Here is why you need planning:

  1. Changes take time. You can’t build a new plant overnight. But even more subtle changes can take time to materialize. You may walk out of a planning session energized about a new corporate direction, but the rest of your organization will still need time to operationalize it. Things as seemingly simple as changing your marketing message can take quarters to do right.

  2. Teams need to know where they are going. You can’t have the final say on every decision. What do you want someone to understand when choosing between a set of options? Optimizing for the short term is people’s natural state—have you ever tried to save a snack for later? People need a reason to make long-term decisions, and a plan gives them one. A well-crafted and well-understood POV of the future and your business’s role in it can ensure that employees do what they can to make that future come into being.

  3. Inspiring vision recruits and motivates inspiring talent. You know that the best people can choose where to work. What keeps the best people around are the right challenges—and the resources and time to achieve them. Choosing between a role in which you’re creating a new market or one in which you’d be growing market share by 2%, which would you choose? Long term plans help people to find themselves inside of your goals. You want the kind of people that feel confident in their abilities to bring about your vision of the future.

I want to long-term plan! How do I do it?

The most common mistake of planning is failing to account for multiple futures. When the underlying assumptions shift, the plan gets abandoned. The truth is that many possible futures will co-exist for different parts of your business and markets—and you can plan for all of them.

The most common mistake of planning is failing to account for multiple futures. When the underlying assumptions shift, the plan gets abandoned.

Planning for multiple futures is not about setting different performance targets. Rather, it’s about setting different sets of assumptions that undermine your plan. For example, in scenario 1, you might forecast that customers are burnt out on digital discovery and are choosing to patronize brands with physical stores. In scenario 2, you assume that customers are placing increasing influence on tightly-knit online communities in which they can reinforce their loyalty, so you’re now selling more to smaller numbers people.

Building plans on each of those assumptions will get you to very different places. Now that you have diverse scenarios, determine: what do they have in common? Are there decisions you can make and actions you can take that allow you to win, regardless of which behaviour becomes dominant?

How often do I need to be planning?

Planning cycles naturally fall to the calendar (curse you Gregorians!)—but the most effective plans don’t rely entirely on timed check-in intervals. Your customers and markets rarely think in quarters. Instead, you need to determine the key inflection points in your plan. These might include:

  1. Enabling technology reaching critical mass
  2. Demographic shifts (percentage of boomers out of the workforce, etc)
  3. Competitor actions, new market entrants, and investor funding
  4. Customer sentiments around key issues

You can track all these items yourself or engage in timed research activities like scanning, ethnographic research, and hack days, which can give you an early warning signal when something you prepared for is about to happen.

Long-term planning is important. Companies grow and succeed by being in the right place at the right time. If you put too much emphasis on being nimble, you’ll be stuck in reaction mode—which means you’ll always get there second.

Need to rebuild your long-term planning muscle? Get in touch.

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