Why don’t we just call plans what they really are: guesses. Unless you’re a fortune teller, long-term business planning is a fantasy. There are just too many factors that are out of your hands: market conditions, competitors, customers, the economy, etc. Writing a plan makes you feel in control of things you can’t actually control.
In fact, you might as well change the name of your business plans to business guesses, your financial plans to financial guesses, and your strategic planning to strategic guesses. Do that and you’ll probably start putting a lot less weight into those things.
Ian MacMillan, Wharton professor of innovation and entrepreneurship, and Rita Gunther McGrath, a professor at Columbia Business School, believe “the only plan is to learn as you go.” They say 1) conventional approaches and planning don’t work when you’re trying to get into new spaces, 2) assumptions are what get most companies into trouble, and 3) it’s not failure that companies need to avoid, but rather “failing expensively.”
Here’s an example: You want to get money for a project. You put together a PowerPoint deck of 100 slides with all these back-up details and all these spreadsheets. You go to whoever has the resources and you make this big pitch. And then they say, “Okay.”
You set off, and in two or three months you discover that the market wasn’t exactly what you thought, and the service delivery requirements aren’t exactly what you thought, and maybe the product needs to be tweaked. Now, you’ve got this huge commitment that you’re supposed to live up to. So the first dilemma that we see in companies that causes them to fail so systematically is this presumption that you can be right in a world of massive uncertainty. That leads to these kinds of dysfunctional behaviors.
Great way to put it there: Stop presuming you can be right in a world of massive uncertainty. The only plan you should make is to plan on improvising.
Nirav Shethon 05 May 09
Wise words Matt. I think it comes down to being present and adapting to what’s around you. We too often look into the future for not only business, but other things like relationships/health/careers. If we just focused on the now and as you say “improvise” to circumstances, there is no real better plan.
Jannus Meyburgon 05 May 09
... and that is why it’s important to be a small, fast moving, weightless company that’s quick to adapt to changes.
Markon 05 May 09
A concrete plan might be more of a ball and chain then a guiding light. It’s good to think about the future, but let’s not try and document what it will exactly look like.
Ryan Waggoneron 05 May 09
You really twisted their message, which is a new approach to strategy and planning, not a wholesale dismissal of it. Just because your plans are often wrong doesn’t mean that planning itself has no value.
Ben Mcon 05 May 09
A plan is a guess – who ever said it wasn’t? “It’s a plan” is a common phrase, meaning that this is what we intend to do, and what we are setting out to do with our best intentions to accomplish the goals within the plan.
Without a plan, you have absolutely no direction. It’s good to have SOME direction. Even if it’s as simple as “be in business tomorrow too”. Well, that’s the plan anyway…. beats GUESSING that I’ll be in business tomorrow and doing nothing to get there and hoping for the best.
Carl Richardson 05 May 09
I think that this same concept is why almost everyone views traditional financial planning as a joke.
Too much time and money is spent trying to nail down the exact plan. This leeds to false sense of precision, and disappointment when things don’t work out as “planned”.
The key is to set a general course [have something to aim for] and then focus on course corrections!
Garlin Gilchrist IIon 05 May 09
Seth Godin wrote about business models today too.
I think you’re both right. I agree with Godin that one should pick a direction based on his 4 points. Next, they should take Matt’s advice and plan on improvising because they’re way more wrong than they are right.
Andrew Mittonon 05 May 09
This is so right. I just finished reading The Black Swan – the Impact of the Highly Improbable by Nassim Taleb.
For many centuries people in England thought that all swans were white. Until an explorer found a black swan in Australia and blew this view out of the water. The black swans are the unknown unknowns, think 9-11 and Google and Harry Potter or an unexpected death in the family, that have an inordinate effect on history or your life. Nobody predicts them and human nature is such that everyone acts like they don’t happen. They place things in models that don’t match the real world and the black swans.
This is true with business plans. So you’re spot on when you’re talking about guesses. You can’t predict the black swans that happen in a business. All you can do is make guesses and move forward and prepare yourself for the unexpected black swan. It will or will not happen when you least expect it.
If you get a chance, read the Black Swan. I thought it was better than even Malcolm Gladwell.
NewWorldOrderon 05 May 09
I’m reminded of Steve Blank’s customer development methodology. Only guesses exists within a startup. Facts exists outside the startup.
It’s probably instructive to think about small business or starting up as an experiment. You formulate a hypothesis (or guess) based on some observation(s), and then proceed to determine the validity of that guess. If the guess turns out to be wrong, you modify your guess and run another experiment. You do this repeatedly until you figure out what works .
Jordan Dobsonon 06 May 09
Short term plans, like plans for the next week is how we work on our glue project. We just look at where the most pain is and address it accordingly.
Peter Kretzmanon 06 May 09
Agreed. I have often chuckled at the notion of a 5-year plan, particularly at an Internet company, and particularly related to technology aspects (IT, systems, products) in a rapidly swirling industry
That said, one of my favorite quotes is from Eisenhower: ””In preparing for battle, I have always found that plans are useless, but planning is indispensable.” I’ve learned (but my CEOs, not so much) to watch out for being “trapped” into plans that no longer make sense, or falling prey to a dogged drive to meet plan no matter what.
Edoon 06 May 09
Great stuff Matt; maybe you unjustly discredit the importance of knowing your surroundings in this article.
“2) assumptions are what get most companies into trouble”
Doesn’t planning help you recognize these assumptions and deal with them if they turn out to be false ?
A plan is just a summary of things you know, and things you know you don’t know. It should help, rather than hinder progress. DOn’t you think that even when you’re not planning, you are in fact planning; just not on paper.
Barry Jameson 06 May 09
I am in the process of updating my business from a freelance job to a full time business. I was always under the impression that the best way to do things was to fly by the seat of my pants. But having done that for six years now, I am realizing that not having a plan for all that time has only gotten me but so far. If I really want to land the big clients, I have to prove to them that I know my stuff.
I decided to write a business plan, and not only has it brought focus to my vision, but I was able to pull a lot of great copy from it to put on my website.
Business plans aren’t the be-all end-all. They are simply a way to lay down your goals so you have a clear path of what you’d like to accomplish. This post makes it sound like they have no use, but I have found it to be the most userful, focused thing I’ve done with my business, and now I know how to get where I want to go.
No one ever claimed that your business plan wouldn’t change over time. In fact, everything I’ve read about business plans states quite the opposite!
“A business plan should be a work-in-progress. Even successful, growing businesses should maintain a current business plan.” Small Business Administration
Paul Bartletton 06 May 09
Just a couple of random thoughts:
- the act of planning has value, often more than that of the resultant plan, but I’m not so sure that making guesses is as worthwhile an activity in it’s own right, even if the guesses are as accurate as the plan
- the way I’ve heard it put best: “the map is not the terrain”
Jameson 06 May 09
Thanks Matt; this is the best SVN post I’ve read in ages!
Jasonon 06 May 09
Make a plan, but plan to learn – identify early milestones, measurements to determine whether you are on track, and define points when the plan is expected to change based on what you learn.
I agree that committing to a long-term plan and expecting it to come out exactly as described is a pipe dream, but I feel that having no plan in place means that there is little to learn from.
Markon 06 May 09
“Plans are useless, but planning is invaluable” ~Dwight D. Eisenhower
Justin Flitteron 08 May 09
I Agree. While the end result in mind might remain the same. The path to get there is always changing. If you have a solid plan but find a head end does the plan know what to do? No. The most important aspect is to be able to critically evaluate day by day or month by month whether what you are doing fits with your business ideals and if its actually producing the desired results. Great post, Someone had to say it!
Jason Brummelson 08 May 09
I think perhaps some confuse planning with having a goal – or a big picture idea of how you see your business. Unless you have a vision of what you would like your business to be, or perhaps more accurately what you see as your role in the world, it is difficult to find success.
Basically, if you don’t know where you want to go (or at least a rough idea) you’ll never get there. (or likely anywhere)
However, as entrepreneurs, we must realize that we can’t have any more control than what is in front of us today, but when we make our decisions today we should keep in mind where we want to be tomorrow.
Evgenyon 08 May 09
Thanks Matt, this feels particularly poignant given some of the things our team is going through on our current project.
John Gallagheron 10 May 09
I love most of the 37 signals philosophy, but I have to say on “don’t plan” I disagree.
For me, a plan is essential. A plan helps me to:Recognise what I need to do next How what I’m doing now fits into the bigger picture Reduce risk by helping me to see what’s ahead Map out the future Focus on what I’m trying to achieve
You’re correct in saying that no-one can know the future. It’s true that my plans are based on loads of assumptions, some of which will turn out false. But by putting this stuff down, it means I’m thinking about what stages the project needs to go through before I complete.
Obviously, plans can come in all shapes and sizes, and it’s easy to overdo planning and for it to turn into a bureaucratic exercise in paper generation, but I’m convinced everyone who is successful has a plan, it’s just what form it takes. As Edo said, you can have a plan in your head.
Surely you all at 37 signals have some idea of what you’re going to do next with your apps? Some idea of what’s important to you all? Maybe you’ve not got it written down, but I find it difficult to believe you could operate without this shared sense of what’s next. I’d say this is a plan.
This discussion is closed.