Plan to be wrong, but still plan
“What if we’re wrong?” That was the question a senior leader asked his CEO as they were discussing business strategies and plans. “We probably are,” she replied, “but let’s move forward nonetheless.”
This conversation was recounted by the CEO of an $18 billion company recently. Like every organization, they were making major corporate investment decisions based on assumptions seeded by the best available information. These were long-term strategies developed to align with forecasts of customer needs and technological innovation, based on trends and predictions, and presuming an appropriate measure of volatility. In other words, they were making an educated guess. Some people freeze, waffle or delay in the face of such massive decisions, but leaders must ultimately take a position and move forward, frequently knowing that they’ll be wrong, or they have only a partial solution. But failing to prepare for the future isn’t an option.
Long-term Planning
Accuracy of long-term planning is particularly important when companies:
- Negotiate supplier contracts to ensure parts availability for their product.
- Build or secure manufacturing capacity based on anticipated consumer demand for their product.
- Invest in and develop technology or products based on anticipated consumer interests and needs.
- Hire and train their workforce for skill sets based on specific product and services to be provided.
Yet, the longer your planning horizon, the greater your chances of being wrong about some aspect of it. The greater the volatility in your planning assumptions, the greater your chances of being wrong about some aspect of it. And the lack of core corporate values to guide your planning decisions will increase your chances of making wrong choices.
In 1985, Coca-Cola chairman and chief executive officer Roberto Goizueta took an “intelligent risk” and introduced the New Coke. This new, sweeter formula for this product was developed in response to 15 years of sales declines and lagging consumer awareness against their chief competitor, Pepsi. This decision ignited a firestorm of protests even though 200,000 people had tasted the new cola in blind tests and selected it over traditional Coke and Pepsi. Die-hard Coke drinkers bombarded the company with hundreds of thousands of complaints and stockpiled cases of old Coke. What the company missed in all their planning was how deeply Coke drinkers loved their product. So, within 3 months he reversed the decision and brought back Coca-Cola “classic.” The company still had a long-term investment of $4 million in development costs and had $30 million in New Coke concentrate that no one wanted. But sales soared, they gained a better understanding of their market positioning, and Coke continues to enjoy higher market share than Pepsi. They made a wrong decision but learned from it.
Planning Requires Boldness
Effective long-term planning requires bold leadership. Leaders must step forward and be:
- Willing to make a decision with imperfect and incomplete information. Some leaders over-rely on facts or instinct. They need a proper balance of both, and each person must understand what that looks like in terms of what information is available, what stakeholders need to understand their role and the available time horizon within which the decisions must be made.
- Comfortable with change. Leaders must ensure a culture of adaptability and innovation where systems, structures and policies shift to meet the organization’s vision and goals. They must communicate in ways that reinforce adaptability and innovation and reward employees who contribute to it.
- Flexible to shift assumptions. Leaders cannot become overly attached to a specific position, particularly when it’s based on assumptions susceptible to change. They must communicate up front with flexibility that clarifies, when additional information is available, strategies may be adjusted.
- Willing to admit they’re wrong and shift direction. When assumptions shift, it may be necessary to shift direction and change an announced strategy. It’s important to make this decision quickly and provide new direction to minimize the damage as much as possible and conserve additional time and resources.
- Able to lead others through ambiguity and uncertainty. When the path ahead is uncertain due to turbulent times, stakeholders need greater clarity to provide direction. That is the role of leaders. They must be at the forefront with as much information as is available to chart the course forward. They must communicate clearly, frequently and passionately to connect with the heads, hands and hearts of their team.
- Calm when decisions are challenged. The more controversial a decision, the greater chance it will be questioned. This often comes from someone with a different agenda or deeper perspective in a specific area but without the entire breadth of information to which the leader is privy. Anger and ego have no place in these discussions. The leader must be able to explain as clearly as possible the basis for the decision and take ownership for it.
- Clear on their goal. Goals are complex. They’re not just about winning; they’re typically value based including how leaders want customers, employees and shareholders to experience their product or service, how they want to be positioned in the market, manage the impact on the environment, improve earnings, etc. In essence, there are multiple objectives that must be considered. But leaders must clearly communicate and reiterate this so that the team can align their efforts to support the goal.
How are you planning for your organization’s future? Are you being a bold leader?
Copyright 2019 Priscilla Archangel
Photo credit: Pixabay
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