I’ve spoken with many business leaders over the past months, either in the middle of or getting ready for next year’s planning.
It hit me how peculiar it is, that most of us follow the same, old-fashioned way of planning: Forecasting the future based on the past.
I get that a large proportion of the plan is coming from the existing base. Volume, revenue, overhead costs, staff costs. Using the past and the present for that part makes sense. It is our current foundation and adding or detracting a certain % for those lines is a sensible practice.
It’s like putting one foot in front of the other. Letting one year follow on from the last. Which is the way most of us do business and life.
But when our starting point is the past and the present, the vision for the future will be very predictable indeed. Planning the future really should be a very different exercise than forecasting and prescribing next year’s plan based on the past.
And capturing the numbers, the financial planning – whether for our businesses or our private lives – really should be seen as the final step of translating our vision into numbers.
Creating the future based on the past will give us more of the same. Truly creating the future takes a very different scope.
What if we instead created the future based on criteria and scenarios that don’t exist yet?
What if we focused on areas to start exploring that we’ve not touched in the past?
What if we took ourselves out 5 years from now and looked back?
It seems like strategic insanity to forecast the future based on the past. Yet, that’s what most of us do. In business and in life.
Let’s create the vision first, then work backwards and fill out the numbers.
That’s true strategic planning.