Two seemingly unrelated posts today by others prompt me to revisit the concept of planning, a widely misunderstood business practice.
In a post on HarvardBusiness.org Rita McGraith, a professor at Columbia University, discusses the differences in planning between large corporations and entrepreneurs. She states:
"In large corporations, it is entirely possible to get enough resources to run a project for quite some time before anybody goes back and checks the assumptions in the plan. You can be wildly off-base and exposed to substantial risks before the program gets reined in.
Entrepreneurs, in contrast, use plans to focus their thinking and create a framework out of a blank sheet of paper. The measure of the quality of a plan is not necessarily whether it worked out as they thought - rather, it's whether the plan helped them learn what they needed to learn to move to the next phase of the business."
A quote I have used before in this blog comes from a former General--President Eisenhower:
Business planning is a systematic analysis of data and risk in order to allocate resources to achieve an objective in an economically efficient way. The professor is correct in her belief that the process is as valuable as the results of the plan, but there is no inherent reason why large corporations can not achieve the same benefits of the planning process as the entrepreneur. In fact, the frequent lack of realistic plans from entrepreneurs would suggest they should put more emphasis on the quality of planned results. My points:
- Planning is an indispensable part of successfully growing a business, but that is true for any size business
- Do not become over enamored with the process, because the results of the plan do count.
Remember President Eisenhower did win WWII, avoid nuclear war with the Russians and start the civil rights movement in the U.S. by integrating the U.S. military. Some amazing results from that indispensable process--planning.
The second post today that intrigued me was from Flowing Data where they summarized a McKinsey Quarterly interview with Hal Varian, Chief Economist at Google. A Varian quote is particularly noteworthy and stated below.
"The ability to take data—to be able to understand it, to process it, to extract value from it, to visualize it, to communicate it—that’s going to be a hugely important skill in the next decades, not only at the professional level but even at the educational level for elementary school kids, for high school kids, for college kids. Because now we really do have essentially free and ubiquitous data. So the complimentary scarce factor is the ability to understand that data and extract value from it."
How does this "ubiquitous data" relate to planning. Read on faithful readers.
- Planning is now much less constrained by data availability, which means the resources to develop better plans are freely available. Take heed!
- While analysis of data has always been important, the expectation will be for more insightful analysis given the expanding quantities of data.
- Visual presentation of large amounts of data and related conclusions will become a key factor in establishing credibility (in plans), which explains in part why so much money is being invested in new techniques to present or visualize large amounts of data. (This technology is a large part of what Flowing Data covers.)
The expectations for the quality of business planning will increase as the amount of data increases and the process of planning should become more fruitful as more data enriches the process.
