Business planning: how to make the process work! - Brief Article

Modern Brewery Age, Sept 9, 2002 by Karl Edmunds

Weren't VCRs supposed to kill the movie industry? Hardly Television was supposed to kill the book industry and so was Amazon.com, but mega bookstores still proliferate. A few years ago, eggs were killers. Now some say eat them to your heart's content. And of course, beer was unhealthy but now it may save your life if you drink the right quality and quantity combined with the right attitude!

Predicting people's attitudes and behaviors, trying to foresee a competitor's response, or simply staying one step ahead of retailers is tough. For all the talk about supply chain efficiencies, self-serving attitudes prevail. Perhaps Einstein was right when he said, "The universe is not only queerer than we suppose. It is queerer than we can suppose."

Thousands of hours of management cave time (behind closed doors) will be spent over the next several weeks as beer industry owners and managers conduct the annual business planning ritual. Sometime this planning ritual is worthwhile, but for some it is a rote exercise in compliance to supplier whims. Is the concept of business planning built on a solid foundation or is this attempt to predict the future and figure out how to make it happen just a house of cards waiting to fall?

Here are a few tips to keep your feet on the ground as you review your 2002 year-to-date performance and devise your 2003 strategies.

First, recognize that the most valuable outcome of the planning process is not necessarily the plan itself. The thinking involved, the various scenarios considered, the interaction of the team are often much more important. In addition, smart people armed with good information will tend to make good decisions even without a plan. But be warned, we have seen many intelligent people and even experts squash good ideas. Good ideas don't always logically follow one another in a rational way. Think sideways and don't throw out the "dumb" ideas too early.

Second, strategy is not always king. Good strategies can fail by not recognizing the intimate link between strategies and daily execution. Grand strategic plans often wither under the heat of daily tactical decisions in the beer industry. Daily execution provides an information-gathering mechanism from which we validate, and in many cases alter, our strategies. In reality, the firm who wins the war is often the firm who learns from experience in the heat of daily tactical battles. We must empower our managers and supervisors to make decisions and learn from them. Sometimes "Ready, Fire, Aim" is the right strategy.

Third, nothing will keep a lousy business strategy in place longer than a bunch of dumb statistics that apparently support it. How the facts are presented can be a key. For example, a Sales Manager's assertion during an annual planning meeting that "most customers want a pre-salesperson to call on them" may be readily discounted by the management team. However, if the Sales Manager suggests that seven out of eight customers want pre-sell, everyone sits up. But if he claims "our research shows 87.5% of our customers want pre-sell," it often becomes an undisputed fact.

Armed with this claim, the management team immediately begins to implement pre-sell even though an across-the-board pre-sell system is the last-thing really needed in most instances. The bottom line is to maintain a healthy mistrust of the data. Go into the market Talk to large and small customers. Ask them what is important Examine your competitor's behavior at street level. Then see if the data supports what you hear and see.

Finally, never rely exclusively on your own personal experience as the last word for how the world truly operates. Personal experience is often colored by broad generalizations about specific issues, When a customer complains about poor service, he or she usually says the service is always bad. What we experience often proves far less than we think.

Studies have been conducted with people who were considered to be authorities on specific topics. On answers to questions they were 100% certain of, they were actually right only 85% of the time. Think of it, 15% of the time you may be absolutely wrong about something at which you are absolutely certain. How does that impact your business? Widespread certainties you have may represent significant opportunities for improvement. Dig them out during the planning process. If appropriate, hire a facilitator to lead your strategic planning session. This is a good way to challenge cut-dated thinking and the tendency to repeat old behavior patterns even when the market calls for change.

Also, just as personal experience is not always accurate, don't assume that ideas generated in your planning session follow good thinking. Often, the "best" ideas come from the people who have the power of personality and politics, even if they are bad ideas. So if you are the one armed with power and politics, sometimes it's best to keep quiet and listen. The obscure voice may have a powerful solution.

Remember the planning process is not a quest for perfection. Many strategic visionaries are paralyzed by their fear of executing the plan. This can lead to procrastination of a key strategy that needs to be implemented now! Don't let the desire for a perfect plan ruin a good plan.