Why the plans of most companies fail–and yours will, too

ILLUSTRATION BY RUTH MACAPAGAL

Hope is not a strategy. Yet most companies still base their plans more on hope than any real strategy. In my experience as the “mentor of the giants” (Fortune), strategic advisor and management consultant to the world’s most famous global brands, Fortune 500 CEOs, and family business conglomerates in the region and globally, my team and I have seen first-hand that most companies do not know how to plan properly.

In this season of yearend planning, we usually get a lot of requests from clients to support them in their strategic road map planning sessions, whether they be for one, two, or even five to 10 years. Because these strategic planning sessions run for several days, it would be impossible to cover everything that is important for a good plan in a single column such as this. But I will share a few key points that are often overlooked by companies in the region and globally.

Most companies spend too little time on planning

First of all, think of a good plan like the roots of a tree: the deeper the foundation or the roots run into the ground, the stronger and taller the tree will be. And the more it can weather any storm.

While in theory this is clear to most, in practice, most companies spend ridiculously little time on planning compared with the time they spend on execution. Most companies spend too much time on work for work’s sake, on “being busy,” without having any proper, detailed plans in place. So no wonder they get blindsided and never reach their full potential.

The elements of a solid plan

The majority of companies leave out crucial components of the equation in planning, leading to plans that are impractical, unrealistic or not actionable. These include components such as: clear and measurable “stretch” goals, key actionable strategies to reach these goals, assumptions and principles behind these strategies, key tracking measures, tracking frequencies of the key performance indicators, trends analyses, contingency plans, unforeseen enemies and so forth.

If you are one of the companies that do not have ruthlessly detailed plans in place, then this is your wake-up call: You cannot change “the economy.” You cannot change “market conditions.” But you have 100 percent control over your productivity—and planning is the most important foundation for that.

Why it is always better to plan long-term

For family businesses or business owners, this is easy to answer: because they are usually in it for the long haul. But even for other types of businesses and executives, it is always wiser to plan long-term, and have a clear long-term vision and road map for what they want to accomplish. Why? Because your short-term plans will be so much better because of it. Everything you do should perfectly fit into the long-term strategy, goals and objectives of your business. This is how great companies are made.

Of course, you will need to be flexible and adapt your plans and strategies as you go along. But how can you do that effectively if you have no clear vision and road map for your long-term objectives? What “long-term” means is not universally defined because it depends on your type of business and industry.

To share an example from one of our clients: a 50-year-old multi-generational family business decided to pivot after we had done a 10-year road map strategy plan with them because the owners had realized that it would be more profitable and beneficial for them to change their overall strategy and direction.

They would not have seen that if the plan had been too short-term. Why? Because we saw that a storm was coming after we had done a clear trend analysis with them as part of their strategic plans. And that storm would have wiped out their earnings.

Trends, trends, trends

This is one of my favorite topics when it comes to planning because it is at the same time one of the most overlooked elements in strategic plans. The majority of businesses spend too little time correctly anticipating and predicting trends. This includes how these trends will affect their companies, the chances for development and expansion they will present, and how they might profit from them.

Additionally, they don’t spend enough time considering the risks these trends may bring to their business and the potentially unforeseen enemies they may produce, endangering their competitive position.

When we did a strategic road map a few years ago for what has now become one of the largest and most successful Filipino companies globally, it became clear to the owners and top management that they had never planned for what would happen if consumers changed their habits. They had never analyzed the probability of that and the trends that would be in its favor.

After a careful trend analysis, they realized that they had to change their plans to make sure they could counter the unforeseen enemies that would certainly steal market share from them if they were not correcting their course. As a result, they changed their strategy and were able to successfully secure existing territories, but most of all expand and conquer new markets.

Blind spots and bending reality

I led a group of CEOs and business owners in Asia through a strategic planning exercise a few weeks ago that was also attended by representatives of some of the country’s wealthiest families. During the planning, a CEO approached me and said, “Tom, after careful examination and taking into account what you explained to us about trends, I see that the music in our main core business is about to end in two to three years. What should we do?” We then devised a strategy that would enable them to extract maximum profits from their core business while at the same allowing them to pivot and build up a new line of business that would make use of a shift in market and consumer trends.

Assumptions and principles

Even more important than the plans you make are the assumptions behind them. What do I mean by this? When you make any important decision, especially for strategic decisions, you should write down the reasoning that governs your decision-making.

What are your assumptions? For example: “Because of trends A and trend B, we expect a diminished market growth of Y in the consumer segment Z. As a result, we will discontinue product lines C and D. We will enter a new territory E because we assume that the cash cow products of our core business will allow us to seize a market share of X percent by deadline Y because we have analyzed the products of our competition in that territory to be inferior by a margin of Z.”

You get the idea. Only by doing this, you will be able to go back later and stress-test your assumptions by analyzing where you had gone wrong. This will also allow you to uncover where you have blind spots and need more expert advice, and most of all, it will radically improve your decision-making.

The Big Five

• Spend enough time on planning.
• Cover all important elements of a good and solid plan.
• Plan long-term, then short-term.
• Analyze trends.
• Write down your assumptions. INQ

Tom Oliver, a “global management guru” (Bloomberg), is the chair of The Tom Oliver Group, the trusted advisor and counselor to many of the world’s most influential family businesses, medium-sized enterprises, market leaders and global conglomerates. For more information and inquiries: www.TomOliverGroup.com or email

[email protected].