The future will not just happen if one wishes hard enough.
The future requires decisions—now. It imposes risk—now. It requires action—now. It demands allocation of resources, and above all, of human resources—now. It requires work—now.
The idea of long-range planning—and much of its reality—rests on a number of misunderstandings. The long range is largely made by short-run decisions. Unless the long range is built into, and based on, short-range plans and decisions, the most elaborate long-range plan will be an exercise in futility. And conversely, unless the short-range plans—that is, the decisions on the here and now—are integrated into one unified plan of action, they will be expedient, guess, and misdirection. “Short range” and “long range” are not determined by any given time span. A decision is not short range because it takes only a few months to carry it out. What matters is the time span over which it is effective. Long-range planning should prevent managers from uncritically extending present trends into the future, from assuming that today’s products, services, markets, and technologies will be the products, services, markets, and technologies of tomorrow, and, above all, from dedicating their resources and energies to the defense of yesterday. Everything that is “planned” becomes immediate work and commitment.
Strategies planning deals with the futurity of present decisions.
Traditional planning asks: “What is most likely to happen?” Planning for uncertainty asks, instead: “What has already happened that will create the future?”
Strategic planning is not a box of tricks, a bundle of techniques. It is analytical thinking and commitment of resources to action. It is the continuous process of making present entrepreneurial decisions systematically and with the greatest knowledge of their futurity, organizing systematically the efforts needed to carry out these decisions, and measuring the results of these decisions against the expectations through organized, systematic feedback. The question that faces the strategic decision-maker is not what his organization should do tomorrow. It is: “What do we have to do today to be ready for an uncertain tomorrow?” The question is not what will happen in the future. It is: “What futurity do we have to build into our present thinking and doing, what time spans do we have to consider, and how do we use this information to make a rational decision now?”
Most of the people who persist in the wilderness leave nothing behind but bleached bones.
When a strategy or an action doesn’t seem to be working, the rule is, “If at first you don’t succeed, try once more. Then do something else.” The first time around, a new strategy very often doesn’t work. Then one must sit down and ask what has been learned. Maybe the service isn’t quite right. Try to improve it, to change it, and make another major effort. Maybe, though I am reluctant to encourage this, you might make a third effort. After that, go to work where the results are. There is only so much time and so many resources, and there is so much work to be done.
There are exceptions. You can see some great achievements where people labored in the wilderness for twenty-five years. But these examples are very rare. Most of the people who persist in the wilderness leave nothing behind but bleached bones. There are also true believers who are dedicated to a cause where success, failure, and results are irrelevant, and we need such people. They are our conscience. But very few of them achieve. Maybe their rewards are in Heaven. But that’s not sure either. “There is no joy in Heaven over empty churches,” Saint Augustine wrote sixteen hundred years ago to one of his monks who busily built churches all over the desert. So, if you have no results, try a second time. Then look at it carefully and move on to something else.
“One prays for miracles but works for results,” Saint Augustine said.
There is an old saying that good intentions don’t move mountains, bulldozers do. In nonprofit management, the mission and the plan—if that is all there is—are the good intentions. Strategies are the bulldozers. They convert what you want to do into accomplishment. They are particularly important in nonprofit organizations. Strategies lead you to work for results. They convert what you want to do into accomplishment. They also tell you what you need to have by way of resources and people to get the results.
I was once opposed to the term “strategy.” I thought it smacked too much of the military. But I have slowly become a convert. That is beacuse in many businesses and nonprofit organizations, planning is an intellectual exercise. You put it in a nicely bound volume on your shelf and leave it there. Everybody feels virtuous; we have done the planning. But until it becomes actual work, you have done nothing. Strategies, on the other hand,m are action-focused. So I have reluctantly accepted the word because it’s clear that strategies are not something you hope for; strategies are something you work for.
The budget for the future remains stable throughout good times and bad.
In most enterprises—and again not just in business—there is only one budget, and it is adjusted to the business cycle. In good times expenditures are increased across the board. In bad times expenditures are cut across the board. This, however, practically guarantees missing out on the future. The change leader’s first budget is an operating budget that shows operating and capital outlays to maintain the present business. That budget should always be approached with the question: “What is the minimum we need to spend to keep operations going?” And in poor times it should, indeed, be adjusted downward.
And then the change leader has a second, separate budget for the future. The future budget should be approached with the question: “What is the maximum funding these new activities require to produce optimal results?” That amount should be maintained in good times or bad—unless times are so catastrophic that maintaining expenditures threatens the survival of the enterprise.
The ultimate test of an information system is that there are no surprises.
The ultimate test of an information system is that there are no surprises. Before events become significant, executives have already adjusted to them, analyzed them, understood them, and taken appropriate action. One example is the very few American financial institutions that, in the late 1990s, were not surprised by the collapse of mainland Asia. They had thought through what “information” means in respect to Asian economies and Asian currencies. They had gradually eliminated all the information they got from within their own subsidiaries and affiliates in these countries—these, they had begun to realize, were just “data.” Instead, they had begun to organize their information about such things as the ratio between short-term borrowing and the country’s balance of payments and information about funds available to service foreign short-term debt. Long before these ratios turned so unfavorable as to make a panic in mainland Asia inevitable, these executives had realized that it was coming. They realized that they had to decide whether to pull out of these countries, or to stay for the very long term. They had, in other words, realized what economic data are meaningful in respect to emerging countries, had organized them, had analyzed them, and had interpreted them. They had turned the data into information—and had decided what action to take long before that action became necessary.
Information has to be organized to test a company’s assumptions about its theory of its business.
Information has to be organized to challenge a company’s strategy. It has to test the company’s assumptions about its theory of its business. This includes testing the company’s assumptions about its environment—society and its structure, the market, the customer, and technology. And information on the environment, where the major threats and opportunities are likely to arise, has become increasingly urgent. Then there are assumptions about the specific mission of the company. Third, there are assumptions about an organization’s core competencies needed to accomplish its mission. Software may be designed to provide this information tailored to a specific group such as hospitals, universities, or casualty insurance companies.
Companies can produce some of the information they need themselves, such as information about customers and noncustomers. But even big companies will have to hire outside experts to help them acquire and organize the information they need. The sources are simply too diverse. Most of what the enterprise needs to know about the environment is available only from outside sources—from all kinds of data banks and data services, from journals in many languages, from trade associations, from government publications, from World Bank reports, from scientific papers, or from specialized studies.
A business intelligence system is a systematic process of organizing information about the business environment. It involves gathering and organizing outside information and then integrating this information into decisions. Organized information about the environment needs to include information about actual and potential competitors worldwide. However, not all outside information is available. But, even when information is available, many businesses are oblivious to it. Half of new technologies that transform an industry come from outside the industry, and information about these new technologies is available. Molecular biology and genetic engineering were not developed by the giant pharmaceutical industry, yet they are transforming the entire health-care industry. Information on these developments is available and companies in the pharmaceutical industry must keep abreast of these developments.
