Don’t make another plan for 2024. Focus on this instead
Nothing feels more comforting to a leader than starting the New Year with the annual plan. But ironically, the more planning is done, the less progress is made.
Why? Because the only thing we can be certain of in the year ahead is uncertainty.
Elections are on the 2024 calendar in the U.S. and other major countries; AI use and misuse is on the rise, interest rate hike cycles are pausing; wars in the Middle East and Europe are raging.
Any of these unpredictable events could foil the best made plan.
So if uncertainty is the new certainty, what does that mean for our annual planning cycles, especially for those with ambitious performance goals?
Traditional strategic plans involve committing to an estimate of future results based on several best estimates of things we cannot predict such as economic growth, customer demand, and input prices. We put these into a plan, which projects results for the year, and beyond. We admit these are only assumptions, but we still commit to delivering the plan. Organizations and stakeholders reinforce this dynamic by favoring the status quo and preferring management teams that “deliver on their promises.”
Plans articulate a base option, but they’re grounded in a series of events that are not only unpredictable but also often uncontrollable. This view is not new to strategy. Prussian field marshal Helmuth von Moltke memorably challenged the traditional approach towards strategic planning in military conflict, when he stated nearly 150 years ago:
The material and moral consequences of every major battle are so far-reaching that they almost invariably create a completely different situation, a new basis for new measures. No plan of operations extends with any certainty beyond the first encounter with the enemy’s main body.
Just as von Moltke was not recommending his troops charge into battle without guidance, we have another option for leading organizations: shifting the center of gravity from planning to preparing.
In uncertainty, we cannot make perfect plans because we cannot predict what will happen. But we can prepare for what could happen.
Strict planning forces us to see change as bad, a risk to be catered for rather than a groundswell of possible new opportunity. Plans ask us to review regularly and ask the question: Are we on track? While this is a perfectly reasonable question, it assumes the plan got everything right, there is only one track, and no new information has become available. In uncertainty those assumptions are usually wrong.
Setting ourselves up for success when facing uncertainty is hard because we cannot predict the future. This makes the planning challenge one of how to master making great decisions, even though we cannot make great predictions. It is the quality of decision-making that sets apart those who lead growth from those who barely survive, so it’s time to update our approaches to build in more robust decision-making. This means we must forgo the notion we can just develop and implement a plan and instead acknowledge we should be in preparation mode for the future.
Leading your organization through uncertainty is about knowing when to apply planning versus preparing.
These are the questions to ask yourself to determine which of the two you need and when.
Are you working with beliefs or data?
When there are no reliable facts, we need to make decisions based on beliefs. This sounds scary, especially to companies that have invested in data-based systems and technologies. But we are not ignoring data. We are instead acknowledging by the time something becomes a market fact, the opportunity for developing strategic insight has passed as everyone knows the same thing.
If you want to outgrow your industry, you will at times need to make decisions based on beliefs about the emerging reality. Good beliefs are not guesses or fantasies but views about the future informed by reliable information and judgment that can be tested and changed.
Is the situation familiar or emerging?
Familiar situations tend to have data that can be analyzed, known variables, and a relatively clear path forward. These types of uncertainty lend themselves to a probabilistic approach, one that combines planning—drawing on probability theory—and a variety of analytical methodologies. But when we move to more unfamiliar ones, we are playing in environments where variables are still emerging, such as we saw with Brexit, COVID-19, or more recently AI. In these situations, we should avoid the temptation to plan.
Should you pinpoint a destination or a direction?
In 1850, Chicago journalist Horace Greeley urged America’s young men to “Go West.” He didn’t specify a destination, like San Francisco or Colorado. He didn’t have to. The West was the land of opportunity and he strongly believed there were fortunes to be made, even though it wasn’t exactly clear how the westward migration would play out. His injunction was not precise, but it was accurate. It was directionally correct. Like a ship’s captain, he set a good compass heading. When the future is unclear and you’re in exploratory mode, setting the right general direction is more important than setting a precise destination.
Are goalposts fixed or moving?
Leaders should distinguish between the times when clear endpoints and related deliverables are needed versus rolling milestones to achieve further learnings. Goalposts are important in strategy, but sometimes we can only get clearer on where they should be as we move and learn. While exploring, acknowledge variables are emerging and you will keep learning as you go. As conditions evolve and greater clarity emerges, tighten the goalposts you are aiming for and adjust your pace.
Should you be optimizing for efficiency or robustness?
In a downturn, optimizing for extreme efficiency may be the right move. We have developed a wide array of tools to help us do this, such as just-in-time production and cost-cutting methods. In uncertainty, being overly indexed on efficiency can sometimes hurt you. Instead, you want to optimize for robustness: still running lean but set up to capture the opportunities uncertainty can provide. Robustness is preparing your organization to adapt to change and perform well, continuing to produce results regardless of the situation.
We should not stop all planning, but if you want to succeed in 2024, consider shifting your focus to preparation. Preparation shifts your perception of change from a risk to protect yourself from, to a growth opportunity.
In times of uncertainty, shifting from planning to preparing helps support clearer decision-making instead of rash predictions. It involves overcoming both hubris and fear to achieve decisiveness and adaptability. It generates knowledge of what is initially unknown, and so creates learning. And, companies that learn faster, grow faster.
So balance your planning with preparation. If you do, you’ll give yourself permission to adjust, adapt, learn as you go, and win.
(12)
