How long a horizon does your company use when it develops its strategic plan?
In a recent article in the Jamaica Sunday Gleaner, I make the point the there’s tremendous value in looking at a planning horizon of 20-30 years.
Here’s the article: Taking the Very Long View in Strategic Planning.
For more details about this approach that the firm uses with strategic planning clients, see the book written by a former employee of Framework Consulting, Amie Devero — Powered by Principle.
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As companies set up their annual strategic-planning retreats, there is a natural temptation to forget about the future, and focus on today. While the recession has driven us to examine daily cash flow, it is a mistake to think that the long-term future doesn’t matter.
It certainly does, and here are the reasons why I encourage my clients to consider a 25- to 30-year future.
Vision statements are fine tools for ensuring that an executive team – and an entire company – are focused on the same things; however, they are often used badly.
Before a team sits down to define the future, it is safe to assume that each person comes with two different understandings: the exact year ‘the future’ refers to; and what constitutes his/her vision for that year.
Too many companies jump right into statement building only to discover after consensus is achieved that half the team is in 2021 while the other half is in 2012. Some never discover this fact and suffer when discord breaks out as budgets, targets, and interim measures need to be defined.
Good future statements are based on specific years, like the one that our own Government has defined: Vision 2030 Jamaica.
Coming to agreement on the ‘planning year’, such as 2030, is a critical first task in any retreat.
LOOKING FAR AHEAD
When I work with top teams in their strategic planning retreats I urge them to pick planning years that are 25-30 years in the future. Their first reaction is one of shock, and there is usually resistance. Some argue that they can’t think that far ahead. Others say that business conditions change so much each year that such planning is unrealistic.
I draw an analogy to what Columbus had to endure when he committed his first voyagers to travel to lands that were ‘over the horizon’ – beyond their capacity to see.
This was no easy undertaking at a time when many believed that the Earth was flat and that one could fall off the edge by travelling too far out of sight. He was able to paint a vision of a land that he had never seen that existed ‘over the horizon’.
The fact is, it is impossible to accomplish big goals unless you are able to see that far in your mind’s eye.
Jeff Bezos of Amazon.com fame puts it well: “We are willing to plant seeds that take five to seven years to grow into reasonable things. You can’t do big, clean-sheet invention unless you are willing to invest for long periods of time.”
Another interesting thing happens when executives look far enough into the future. They stop focusing on themselves, and their personal goals. An over-the-horizon future is one that is not about them, but instead must focus on the next generation as most executives won’t be around. As they plan for a future that excludes them, they start to ask themselves what they really want for the company: its shareholders, employees, customers, and other stakeholders.
Bad news
At first they discover some bad news: they want very different things.
This is a sobering discovery as they realise that they have been working at cross-purposes for some time, pulling towards different destinations. However, once they come to a new consensus, they can work together for the first time.
What prevents these 20- and 30-year visions from turning into random fantasies is the next step: laying out the details of what happens in the planning year. Once the team completes the prior two steps, they can describe the destination in measurable details.
Revenues, profits, financial ratios, headcounts, physical locations, geographic locations, bi-lingual abilities, these are all examples of the metrics that are used to convert a far-away future into a coherent, measurable goal.
The last step is the so-called Merlin Process in which the future targets are connected to today’s actuals in a single matrix. Many adjustments take place at this step as the team ensures that there is a feasible pathway from the present to the planning year. Unfortunately, this is usually the point at which some nice-to-haves must be discarded as the true essence of the plan emerges.
For the past 10 years, I have witnessed teams take the long view and the results are usually inspiring.
A new world emerges as they lift themselves above daily pressures to craft a unified vision that is well over the horizon.