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WHY BUSINESS PLANNING IS NOT POINTLESS

Dear Ron,

It was with a heavy heart that I read your recent article entitled ‘Business Planning is Pointless’. I thought for a moment that the title was a form of ‘link bait’ enticing the reader in with a provocative headline before arguing the very opposite. Alas, no. The content supported the heading, so I felt duty bound to respond. Of course, by way of full disclosure, our company is the market leader in the business planning space so we have a vested interest in rebutting your contentious view. That aside, I feel some of the arguments made are simply not sustainable.
From the article, I felt the following represents the crux of your argument; that in this increasingly chaotic and time-pressed world, entrepreneurs are best served ‘doing’ rather than ‘planning’.

I find myself agreeing with many of your points. Many business plans are too cumbersome, too time consuming and too formulaic. Preparing a three-year plan can seem pointless with so much uncertainty in the air.

However, I feel your ultimate conclusion that business planning is pointless, is simply ill advised. Why not adapt? In reality, modern business planning does not equate to the business plan you describe.

Part of the confusion lies in the fact that the phrase ‘business plan’ is a homonym (i.e. has two separate meanings), a physical, detailed business plan document and a plan for your business. Viewing business planning through this lens makes it easier to see how valid criticism of the former can taint the latter. Business planning entails setting goals that need to be accomplished, managing cash flow, establishing milestones, allocating resources and forecasting sales. Activities that can be assigned to individuals who are then held accountable. Are you really suggesting that these are pointless? What of the old adage,’what gets measured gets managed?’ Planning is an integral part of management and should continue to be. However, it is also about considering a number of plausible future outcomes based on assumptions we make. By committing figures to these, we can be better prepared to manage so that as time passes, we are able to react more effectively through simple variance analysis as the different scenarios play out.

In terms of the complex and chaotic environment you refer to, I feel planning is all the more necessary, when faced with such uncertainty, a view The Economist supported in a article back in 2009:

“Precisely because peering into the future is harder today than it was a year ago, managers should be using every available means to gauge what the world could look like in the coming months and to establish targets using this analysis.”

The solution to chaos and uncertainty is not to dispense with planning, but rather to encourage people to consider a wider range of scenarios, to manage more effectively and to ensure transparency. Would we tolerate a “planning is pointless” response from our political establishment when faced with increased uncertainty and chaos? I would think not.

Finally, I want to address the claim that ‘42% of the most successful entrepreneurial businesses in the U.S. have no plan at all.’ While it is difficult to comment without the full context (there was no source cited), it does seem a curious statistic. Am I therefore correct in concluding that the remaining majority of 58% do in fact have a business plan? Regardless, I suspect this quote refers to the physical business plan document rather than business planning in the wider sense. And as I have explained above the two are different concepts.

Yours Sincerely,
Alan Gleeson

Post by Alan Gleeson, General Manager of Palo Alto Software Ltd, creators of LivePlan and Business Plan Pro.

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