Death by Assumption:
Why Great Planning Strategies Fail
By Bryan Feller
A key to
effective planning in today’s hyperlinked world is reducing “time to
action”—gaining new knowledge and making it actionable so that you
can make your move ahead of the competition and before market shifts
put you behind the curve.
a vacation, a new house, or next year’s revenues—any plan for future
action is based on assumptions. Some assumptions—for example, “no
one will get sick,” “the building will be sound,” or “this year’s
revenues are the baseline”—are so basic that they don’t need to be
recorded or discussed. Other assumptions, however, must be
articulated and recorded so that the plan makes sense and can be
evaluated as it is put into play. Too often, these assumptions are
not clearly identified or managed, so that when a plan goes south,
there is no way to go back and reevaluate or manage the original
absence of “assumption management” is a common cause of the death of
many strategic plans. All planning is based on imperfect knowledge
and involves assumptions about the future that are based on
available data, combined with the experience of the planning team.
Most strategic plans assume a certain future, which is a dangerous
misconception. The future is always subject to change in crazy,
chaotic ways no one could have ever anticipated. Add to this the
competitive pace of change in your market and uncertainty increases
even more. Unless the planning team has the willingness and
flexibility to redefine the assumptions when more knowledge becomes
available, its plan is not likely to deliver the expected results.
Assumptions must be stated, debated, and continually reevaluated as
the plan goes forward. Here are a few practical steps you can take
to manage your planning assumptions. Understand what kind of
assumptions you are making. There are four general types of planning
Cause-effect: If we
increase sales training, our close rate will increase. (Or, We
do not believe more training will have a measurable impact on
expectations: We expect to get a 3 percent response on our
direct mail campaigns based on what we know about similar
situations. (Or, We expect to close 15 percent of the leads we
generate at a tradeshow, or, We expect our average order value
to be $600.)
Theories: We believe that CFOs care more about reliability over
cost in our competitive market space.
Trends: We believe it
will take 120 days to close a sale in this new market. (Or, Our
marketing costs will spike at $100K for the first 6 months, then
decrease to $50K per month for the rest of the year.)
of your key assumptions in the appendix of the strategic plan. Rank
the strength of each one and estimate how much of the plan is riding
on each assumption. Make this list a part of your final planning
document so it can be debriefed later.
and review available metrics that will shed light on the validity of
the assumptions. Debrief regularly to identify what went right, what
went wrong and why.
real-world experiments for the biggest risks that can prove or
disprove the key assumptions.
intelligence about what you may not be seeing in your environment
before you throw more resources at the problem.
contingencies that you can implement if course corrections are
your awareness and knowledge in areas that address vital
fundamental mistake planners often make when dealing with time and
uncertainty is forecasting events too far into the future. By
definition, planning is future-oriented, and the future is
uncertain. We can rarely expect to accurately foresee outcomes or
precisely control developments in our environment, especially over
long horizons of time.
a tendency among many planners to precisely script out a course of
action and the results. Rather that put our faith blindly in our
planning assumptions, and as a result, think we are more in control
of our environment than we actually are, it is best to plan for
contingencies. Here are some practical tips for contingency
Make your plan modular.
Identify the greatest threats to the plan, or key assumptions
that, if proved invalid, will nullify the plan. Develop
alternative strategies that address these risks and that can be
implemented without going back to the drawing board. Do not
attempt to plan for every eventuality, only the most important.
Planning for too many contingencies adds to the planning burden
and reduces focus on the objectives.
Create triggers that
will indicate the need to adapt or abandon the current plan. At
a minimum, identify triggers that require the planning team to
convene on an emergency basis to make key decisions.
Design courses of
action that permit multiple options in execution. For example,
you may create specific planned alternatives or follow-on phases
for likely contingencies.
Always maintain the
flexibility to pursue other options that are not planned.
best to think of your strategic plan as an open architecture that
lets you to consider and pursue multiple possibilities. Assumptions
are the foundation of any strategic plan, and if they are flawed,
the whole plan is flawed. A good plan will recognize the volatility
of assumptions and will maximize freedom of action for the future by
incorporating plans for contingencies.
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