Business planning

From what we want to what reality allows us to get

Story category: strategy

Story tags: strategy, business plan, scenarios, risk management

We have entered Q4, and it is the time where traditionally we look ahead and around to prepare for the next year of the strategic plan. It’s a time where questions are asked about the performance of the current strategy, the we implement the strategy, and what is next.


The environment and context in which we compete has become increasingly volatile. Covid, political instability, geo-political changes, war in Europe, and inflation to name a few things. The last two years have shown that things can change quickly, and that uncertainty is a big factor that drives risk.


Traditionally a lot of business planning is done by stating what the planner wants to achieve; and that’s it. In some cases there might be a little bit of sensitivity analysis by stating that if things go well the result will be 10% more than what is aimed for, and if things go less well there might be a result that is a bit less than what is aimed for (-10%). Information about the market is put in, and maybe some information on competitors is gathered, but it's mostly an exercise to show form, and not real substance.


When inputting token information just to check-the-box the plan becomes a statement of what the planner wants to achieve, not a plan that takes reality into consideration; reality about market conditions, the economy, customers, competitors, suppliers, substitutes, barriers to entry, and the very nature of competition within the industry. It's like going from point A to B without knowing the conditions of the terrain, where traffic is congested, where roads are blocked off, the actual route to the destination, and what to do when things don’t go as expected.


The last three years we have made scenarios, have been testing our strategy maps against those scenarios, and have made the organization a bit more capable of dealing with uncertainty and risk. This year next to scenario planning there will be a greater emphasis on  risk management and risk controls as black swans are no longer a once in a million year thing, but arive one after the other.


It's an exciting time, within the company, now that strategy mapping, scenario planning, risk management activities, and business planning are coming together to make us more robust to deal with the future successfully.

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