Are There Better Ways To Plan?
The interview topic "Plan As You Go, Not Where to Go" may seem strange as for most people planning is all about setting goals and then working out how to get achieve these goals.
Professor Sylvie Chetty explains why traditional goal-based planning may not always be appropriate. How can you plan when there is so much uncertainty and there are too many unknowns? Effectuation is a means-based method of planning, which is well suited to uncertainty and a lack of information. This is particularly relevant when launching a new product or entering a new market.
Read more to watch the trailer video and listen to the podcast.
Plan As You Go, Not Where To Go
The trailer video explains why traditional goal-based planning may not always be the best way to plan. How can you plan when there is so much uncertainty and there are too many unknowns? This means that when you are entering the unknown, you lack the knowledge and information for goal-based planning. Using Effectuation, planning and implementation converge.
Interview with Professor Sylvie Chetty
The interview lasts for 26 minutes and is packed with great insights.
Find out why traditional goal-based planning may not always be appropriate.
How can you plan with:
- So much uncertainty?
- Too many unknowns?
- Too little information?
The answer is "Plan As You Go".
Are There Other Ways To Deal With Uncertainty?
You cannot plan in the absence of knowledge and reliable information. Saras Sarasvathy developed Effectuation Theory, which is a means-based method of planning.You start with your resources. Who do I know? What do I know? You shape the plan as you go and it is important to be open and flexible, so that you are open to surprises and potential new opportunities. Avoid a fixed plan and use new information to shape your thinking. The technique of improvisation comes from theatre. You take new information and add to it. This can lead to new ideas and be the source of innovation. This helps you get out of your box and fixed ways of thinking by trying something new. So If you always follow the same recipe, you will get the same result.
How Much Should You Invest In A New Venture?
Taking a staged approach and little steps can help to manage risk. Boards of Directors can be too risk averse and constraining. Being too risk averse can stifle innovation.
How Important Is Your Network?
Your network is your net worth. Every business is part of a web of customers, suppliers, competitors and service providers. They all have information, knowledge and resources that a business can use. These are intangible assets. Don’t treat dealing with customers as a transaction, as customers are a valuable resource and they can provide ideas and insights. Don’t put people in boxes and recognise that roles can change. For example, a supplier could become a customer. Finding out about a customer’s problems could give you the idea for a new product.So focus on their problems, not your solution!
Beware of closed networks that are too narrow. How many new people are you allowing to enter your network? Beware of the risk of being “over-embedded”, which means that you are not open to new ideas. One example is Italian textile groups that were so closed and inward looking that they eventually imploded. Success today does not mean success tomorrow. Look at other industries and foreign markets as sources of new ideas.
The “strength of weak ties” is an important concept. A distributor may not be able to help you directly but may have contacts that could help you. Another source is new migrants, especially those with strong business ties to their home countries. International students as interns can be another source of new insights and networks.
What Conclusions Can We Draw From Your Research?
Be open to serendipity: chance or luck. Make the effort to talk to new people at a business function. Problems and challenges may be opportunities in disguise. Start with your resources and use Effectuation when there is too much uncertainty. The skill you need to develop is combining Effectuation and traditional goal-based planning. Some companies move from means-based to goal-based planning as their knowledge increases. Banks and investors need to understand this approach and be more open to companies being more flexible and taking small steps. So Plan As You Go, Not Where To Go. This means that planning and implementation converge, they come together.
What Questions Does This Raise?
You should now understand some of the thinking behind Effectuation and why traditional goal-based planning may not always the best way to plan. I encourage to reflect on the interview and think about what type or types of planning are best suited to your business.
- How much uncertainty do you face?
- What combination of goal-based and means-based planning is best for your business now and next year?
- What are the most pressing problems you face in finding the best way to plan?
Please contact me if you would like to have a discussion about the way you plan.