Long-Term Business Planning - More of a Hindrance Than a Help?

Consultants, business gurus, university lecturers and numerous others continue to reinforce that good businesses develop a long-term strategic plan and stick to it. Not sure that this is still relevant in today's business environment.

Lets start with the basics. We all know the steps to completing one of these plans but who has proved that long term business planning is the key to success? I have read the books and done the research and from what I can find, it is quite the country. Yes, when I googled it, I had 33, 400, 000 results come up but I had a hard time finding empirical evidence to show that the outcomes are worth the effort and the time.

Most scholarly or literary reviews of the value of long term strategic business planning are produced by those consultants or intellectuals that earn their living from assisting companies to complete long term strategic business planning. Hmm. And, many of these people, when you look into their background happen to be people who have not had actual experience implementing these grand plans and strategies, which having experienced a few myself are usually painful, messy and seen as a bit of a joke by all of the those employees whos pay is not linked to the Key Performance Indicators that demonstrate success. Double Hmm.

The best summary I have seen comes from Eric Abrahamson and David H Freedman in the book A Perfect Mess – The Hidden Benefits of Disorder (2006). The authors say that in most cases long term strategic business planning (and career planning for that matter) is a waste of time and if rigidly followed a company can be locked into to faulty strategies that do not allow the take up of opportunities, with no-one willing to say anything about it in fear of being branded pessimistic or putting their bonus at risk.

There are very few businesses that started and grew because the owners' meticulously set out a 10-year, long-term business plan and didn't deviate. Once success is achieved, very few business owners and/or managers will publically admit that their success was a dash of luck combined with a lot of hard work, knowing the right people and a few nasty mistakes. This kind of confession doesn't lead to career building articles in business magazines or TV interviews, much better to take the popular line about planning and achieving key performance indicators.

I ask you this, does your long term strategic plan have the capability to deal with the fall out from volatile financial markets and the political instability the world is experiencing at the moment? Can it change to deal with a sudden technological or other innovative industry change? Can the plan allow the organisation to do a u-turn if needed? And importantly, does your management team have the balls and ability to say that the plan is wrong and is your organisation (CEO, board, senior managers) robust and humble enough to review, admit it was wrong and make a change.

I think a good approach to take is  'confusion management', which is defined by Peter Sheahan in the book Flip (2007) as the ability to deal with ambiguity and still take effective action day-to-day. That is, an organisation is best served by having a general understanding of where it is heading but have short-term planning that allows the company to react profitably to changes in market conditions, technology and cultural issues and take up emerging opportunities.

Good organisational systems and a strong culture will enable business success more than a long-term strategic business plan.