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Business Knowledge: Planning Is Not A Tool For Thriving

planning is not a tool for thriving

"No plan survives contact with the enemy"
Helmuth von Moltke

Is the world your business started in the same as the world your business is in now?

Is the market you are operating in now the same as the market in 2005?

Change is the great opportunity creator in business. Change is also the enemy that demolishes all planning.

So why are business owners and consultants and schools so invested in planning over learning?

Don't think they are? How many courses in business schools have you seen with strategic planning as a core class? Now how about a course in strategic learning? We see lots of business plans required as a pre-condition to loans or investment... how come lenders don't require owners to submit a "learning plan"?

What is the equivalent of the old chestnut "Fail to plan; plan to fail?" It isn't "Fail to learn; learn to fail," though it should be!

Google Is Always Right

I searched the internet for news stories (AKA articles and blogs) on learning vs planning. Here's what I found.

  • "business education" with "schools" and "universities" filtered out: 75.4K hits
  • "business learning" 1.2K hits
  • "business training" 27K hits
  • "business planning" and "business plans" 689K hits

Yes, that is a total of 103,000 hits business training and education vs. 689,000 hits for planning.

When the 2008 recession hit, who do you believe generally fared better, the business owners who knew deeply how the fundamentals worked but wrote no business plans, or those who only filed their annual 3 year plan in 2007?

I believe in the value of planning. Starting with the end in mind, as Covey suggested, can be an accellerant for success. My bewilderment is how business knowledge and experience are undervalued relative to business planning.

I made the comment about the lenders and investors only partially in jest. I have been involved in loan applications by businesses of all types and sizes for many years. I have never witnessed a bank manager or any other lender require any proof that the business owner actually knew what they were doing. Every single lender has required a business plan, which isn't proof of anything!

I can hear people at the back of the room muttering "Yeah, but they submitted financials to the lender. Aren't healthy financials proof the owners know what they're doing?" 

Maybe. If you believe in the tooth fairy. If you believe that I suggest a quick refresher on creative bookkeeping, the role of luck (check out the history of the companies in Jim Collins' Good to Great that are no longer great), and some statistics 101 (false causality).

Inclusive - Exclusive

To clarify two other objections that might be in your mind right now:

  • "Are you saying planning and learning are mutually exclusive?" No, planning and learning are not exclusive. The most successful leaders and business owners engage in both with equal commitment.
  • "Aren't planning and knowing the same thing? Don't you already have to know what you are doing to write a business plan?" No, you don't need to know what you are doing to write a business plan. The number of templates, hand-holding services, and consultants providing the framework and even the content for business plans is an industry in itself.

The business press trumpets the growing rate of change in our world, the increasingly frequent appearance of disruptors like CD's, the Internet, Amazon, Zappos, social media, Uber, AirBnB, the rise of the Chinese middle class and its impact on Scotch Whisky. It seems barely a quarter goes by when some disruptive force doesn't distort or even wipe out an entire industry.

Yet no one seems to ask what is an obvious question to me: what is the value of long-term strategic planning in a world where oil prices plummet from $110 to $60 a barrel in 6 months? And if planning alone won't get you through these moments, what will?

For that answer we have to leave the world of business, and its obsession with predicting the future as a risk management strategy. We have to turn to the performing arts and the martial arts. In those worlds risk and change are not managed by planning, they are managed by practice.

Start treating your business as a discipline: something you study and master. Sometimes we use the phrase "more of an art than a science" to imply art something is loosey-goosey and undisciplined. Only someone who has never been a performing artist would ever use that phrase. Ask any trained musician if they think their art is not an exhausting and exhaustive discipline as rigorous as any science. Especially ask scientists who play music, of which I have known a number.

Five Disciplines

In the Great Performances world, the discipline of business has five sub-disciplines. Here are some tips for improving your business knowledge in all five areas. Even if you have employees or suppliers who do some of these things for you, as the owner you should still be educated and literate in these areas.

Marketing. Marketing is about understanding and meeting expectations. Three areas of learning will make you a more effective marketing leader in your organization.

  1. Psychology - read books like Daniel Kahneman’s Thinking, Fast and Slow to understand the psychology of decision making.
  2. Sales - sales is an art in the best sense: guided by rules and a deep understanding of human behaviour. Read the greats like Zig Ziglar and others.
  3. The marketing mix. Also known as the "Four P's". Very old-school but we still believe every business owner must understand the marketing mix if they are to master the discipline of marketing.

Management is the art of working with teams. To learn how to be a better manager you can read all you want, and I recommend the works of Marcus Buckingham to start. But this is an area where a coach or mentor makes all the difference. Management is about behaviour, especially our own. It is hard to change or even be aware of our behaviours without an outsider perspective.

Human Resources. Familiarize yourself  with the employment and labour websites in your province or state. It never fails to amaze me how little employers actually know about being employers. Worse, every year I run into practices so illegal regarding employment, compensation, harassment, termination, that if they owner knew what I knew (and they soon do) about the risks, they wouldn't be able to sleep at night.

Operations. This is a generalized discipline that has many sub-disciplines including inventory management, logistics, office administration, supply chain management, manufacturing processes, and productivity. If marketing is about understanding customers' expectations, operations is about delivering on those expectations, profitably! Taking the time to understand how your business really works on the inside is not optional. Take courses and read about productivity, lean systems, time management, workplace ergonomics, new technologies, logistics, and inventory management. This technical stuff will make you more successful than a whole library of The Secret. In business there are NO real secrets, just a lot of stuff to learn!

Finance. Take this simple test: can you with absolute clarity, explain the following: revenue, gross profit, net profit, variable costs, fixed costs, accounts receivable, accounts payable, and cash flow? If you can you are on steadier financial ground than 80% small business owners in North America. If you also know how to read your balance sheet we'll move you to 90%. If you don't? Reading won't help because even for those of us who work in this stuff every day, many written explanations are more confusing than helpful. The real answer is to spend an hour or two a month with your accountant and have them explain the financial mechanics of your business and your markets to you. One year of this, and so many other things will fall into place.

Want to learn some more truths about what it really takes to grow a business?
Download our Blueprint for Growth
"Six Things That Will Absolutely Improve Your Business (That You Probably Arent' Doing!)"

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