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Death By Assumption
A key to effective planning in today's hyperlinked world is reducing time-to-action -- gaining new knowledge and making it actionable so that you can make your move ahead of the competition and before market shifts put you behind the curve.
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TOP SHELF TIP NO. 3
"Plans are only good intentions unless they immediately degenerate into hard work."
Peter Drucker, American businessman, 1908-2005 | |
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Whether a vacation, a new house, or next year's revenues -- any plan for future action is based on assumptions. Some assumptions, for example, no one will get sick, or this year's revenues are the baseline, are so basic that they don't need to be recorded or discussed.
Other assumptions, however, must be articulated and recorded so the plan makes sense and can be evaluated as it is put into play. Too often, these assumptions are not clearly identified or managed, so that when a plan goes south, there is no way to go back and reevaluate or manage the original assumptions.
Managing Assumptions
All planning is based on imperfect knowledge and involves assumptions about the future that are based on available data, combined with the experience of the planning team. Most plans assume a certain future, which is a dangerous misconception. The future is always subject to change in crazy, chaotic ways no one could have ever anticipated. Add to this the competitive pace of change in your market and uncertainty increases even more.
Unless the planning team has the willingness and flexibility to redefine the assumptions when more knowledge becomes available, its plan is not likely to deliver the expected results.
Assumptions must be stated, debated, and continually reevaluated as the plan goes forward. Here are a few practical steps you can take to manage your planning assumptions:
Understand what kind of assumptions you are making. There are four general types of planning assumptions:
Cause-Effect: If we increase sales training, our close rate will increase. Or, we do not believe more training will have a measurable impact on sales.
Performance Expectations: We expect to get a 3 percent response on our direct mail campaigns based on what we know about similar situations. Or, we expect to close 15 percent of the leads we generate at a tradeshow. Or, we expect our average order value to be $$$.
Customer Behavior Theories: We believe that CFOs care more about reliability over cost in our competitive market space.
Trends: We believe it will take 120 days to close a sale in this new market. Or, our marketing costs will spike at $100K for the first 6 months, then decrease to $50K per month for the rest of the year.
Make A List, Check It Often
List all of your key assumptions in the appendix of the plan. Rank the strength of each one and estimate how much of the plan is riding on each assumption. Make this list a part of your final planning document so it can be debriefed later. Also,
*Collect and review available metrics that will shed light on the validity of the assumptions. Debrief regularly to identify what went right, what went wrong and why.
*Develop real-world experiments for the biggest risks that can prove or disprove the key assumptions.
*Get more intelligence about what you may not be seeing in your environment before you throw more resources at the problem.
*Plan contingencies that you can implement if course corrections are needed.
*Increase your awareness and knowledge in areas that address vital assumptions.
A fundamental mistake planners often make when dealing with time and uncertainty is forecasting events too far into the future. We can rarely expect to accurately foresee outcomes or precisely control developments in our environment, especially over long horizons of time.
It is best to think of your plan as an open architecture that lets you to consider and pursue multiple possibilities. Assumptions are the foundation of any plan, and if they are flawed, the whole plan is flawed. A good plan will recognize the volatility of assumptions and will maximize freedom of action for the future by incorporating plans for contingencies.
Source: Bryan Feller is CEO of Catalyst Performance Group, a full service B2B sales and marketing agency that focuses on the whole go-to-market system. | |
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