Is Long-Term Planning Dead And Buried?
Long-term planning was born out of the chaos of the economic, social and political chaos arising from the end of World War Two and was the brainchild of mainly American organisations that recognised the need to plan for the future. This was a difficult task for many because it meant having to carefully and scientifically think about organisational objectives, something that had not really been tackled with rigour until 1945.
Writing objectives, setting up plans and then allocating objectives was something that had been piecemeal and largely uncoordinated. Things just happened and organisations hoped for the best!
A key driver here was to close the gap between the level of demand that a firm expected, and had planned for, and the level of demand that occurred. Long-term planning was a method of looking at the actions needed to meet anticipated growth targets and meeting forthcoming trends.
A noble approach, making sense of the future, and planning for it.
Pity it failed, shame and disappointing for many organisations, then and now.
So, ultimately, why does long-term planning fail?
- Internally, planning was just a revisiting of sales performance figures and extrapolating some vague trend analysis. Think wet finger in the air and very little appreciation of the wider external environments of economic, technical or social changes. As the 1960’s came the days of regular and reliable high market share began to evaporate, creating increased competition as more competitive market conditions became the norm. Suddenly growth could not be taken for granted as it began to slow down, pick up and fluctuate at alarming levels. Unforeseen threats and opportunities began to present themselves that effectively made, and still make, long-term planning a very uncertain science.
- Environmental turbulence limits the validity of long-term planning techniques. This makes accuracy almost impossible to achieve combined with the trend of large national producers being overtaken by international providers of goods and services. This has caused managers to have to become skilled at managing multiple portfolios just to survive. The Monopoly position that many companies enjoyed, where there was only limited value in contemplating long-term strategy, has gone forever.
- Strategic management is now at the forefront of business development: a focus on market trends that managers understand can shift, change and buckle at alarming regularity. The long-term assumption of adequate growth cannot be relied upon.
- Survival is now all about winning market share from competitors and not assuming that markets can be expanded and harvested for the benefit of the organisation. Businesses need to be ranked at either Number 1 or Number 2 in any market to stand any real chance of success in the long-term. If the organisation is not in that position in that market the ride will be difficult and uncertain.
- Over-reliance on hard, quantitative data. Numbers tell a basic picture, but the real power lies in qualitative data. Few organisations have a good grasp of either type of data but a failure to understand why customers buy what they do or why they do or even what they want to buy is a serious problem. Marketing needs to be sharper than ever accompanied by a clear and unwavering commitment to customer delight.
- Strategy comes from unplanned opportunities and actions, unintended consequences and unknown market factors that emerge over time. As such long-term strategy has serious limitations.
So what is the moral of the story? Accept nothing but uncertainty but attempt to control it!
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