{"id":105044,"date":"2023-06-10T09:26:00","date_gmt":"2023-06-10T13:26:00","guid":{"rendered":"https:\/\/www.shortform.com\/blog\/?p=105044"},"modified":"2023-06-14T10:36:39","modified_gmt":"2023-06-14T14:36:39","slug":"importance-of-planning-in-business","status":"publish","type":"post","link":"https:\/\/www.shortform.com\/blog\/importance-of-planning-in-business\/","title":{"rendered":"Importance of Planning in Business & How to Succeed at It"},"content":{"rendered":"\n

What is the importance of planning<\/a> in business? How can you create a detailed plan that will help execute your goals?<\/p>\n\n\n\n

A solid plan is essential for any growing business. Keith Cunningham’s book <\/strong>The Road Less Stupid<\/em> says that having a goal for your business isn’t good enough. You need a clear plan for how to reach that goal and track your progress<\/a>.<\/p>\n\n\n\n

Keep reading to learn why a business plan is important and how to develop one.<\/p>\n\n\n\n\n\n\n\n

Confusing Goals With Plans<\/strong><\/h2>\n\n\n\n

According to Cunnigham, a bad mistake that frequently tempts executives is to establish a goal or vision for improving the company but fail to establish a detailed plan for achieving it. Just thinking about a desired end state doesn\u2019t help you get there<\/strong>, no matter how much you want to. To reach it, you need to identify what obstacles stand between you and your goal (you\u2019d already be there if nothing was holding you back<\/a>) and figure out exactly what you need to do to overcome those obstacles. <\/p>\n\n\n\n

The importance of planning in business is that it\u2019s actionable (unlike a goal), and it gives you a standard against which to track your progress so you\u2019ll know when you begin to deviate from it, as you inevitably will at some point. Deviations aren\u2019t always a bad thing\u2014sometimes you may discover opportunities along the way that are better than your original goal. But it\u2019s important to know when you start to deviate so you can reassess the situation and update your plans as needed. <\/p>\n\n\n\n

(Shortform note: In The 33 Strategies of War<\/em><\/a>, Robert Greene elaborates on the relationship between detailed, actionable plans and the ability to adapt<\/a> to changing circumstances. He says successful generals would often compose detailed battle plans for a variety of possible scenarios and contingencies<\/a> so that they could quickly change course if the situation warranted it. This kind of branching plan can also be useful in business, enabling you to adapt quickly to changing circumstances.)<\/p>\n\n\n\n

How to Develop Your Plan<\/strong>

In Execution<\/em><\/a>, Larry Bossidy and Ram Charan elaborate on the process of turning your strategic goals into actionable plans. While they acknowledge that every situation is different, and thus will require a unique plan, they recommend using the following standard workflow<\/em><\/a> for creating your plan: 

Step #1<\/strong>: <\/strong>Identify which departments or teams in your organization need to be involved in the plan. Determine what each team\u2019s role in the plan needs to be, and ask team leaders to draft the portions of the plan that their teams will be responsible for.

Step #2<\/strong>: Hold a meeting with the team leaders to discuss assumptions they made in drafting their portions of the plan, and make sure everyone is on the same page.

Step #3<\/strong>: <\/strong>Assemble a complete plan from the individual portions that the team leaders submitted. Work out any differences, discrepancies, or conflicts between them. 

Step #4<\/strong>: Identify contingency plans that can accommodate shifting circumstances. 

Step #5<\/strong>: Wrap up discussion and secure commitments from everyone to ensure alignment with the plan.

Step #6<\/strong>: After the meeting, send a memo or otherwise follow up with the team leaders, summarizing each person\u2019s commitments and short-term benchmarks<\/a>. 

Step #7<\/strong>: Assess progress toward those benchmarks at quarterly review meetings. Presumably, this is where you\u2019ll also analyze any deviations from the plan and assess whether any parts of the plan need to be changed.<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n

Using the Wrong Metrics<\/h3>\n\n\n\n

As you track your progress to plans, Cunningham stresses the importance of using the right metrics. People tend to focus more on tasks that get measured and reported because the results will reflect on them more strongly, and people want to look like they\u2019re doing well at their jobs. Thus to set up your plan for successful execution, you need to select metrics that will focus people\u2019s attention on the right things. <\/p>\n\n\n\n

For example, suppose you\u2019re running a telemarketing business. If you track how many calls your marketers make as a measure of how well they\u2019re doing, that will incentivize them to make as many calls as possible\u2014potentially forfeiting some sales if they cut their calls short to get in as many as possible instead of taking time to address customers\u2019 questions and concerns. But if you track the number of sales<\/em> instead, then they\u2019ll focus on making sales<\/a>, instead of just on making calls.<\/p>\n\n\n\n

It\u2019s also important to select metrics that enable you to make corrections to your plan early enough to avoid<\/em> problems<\/strong>, instead of merely alerting you to problems that have already come up. Cunningham notes that standard business KPIs (key performance indicators) like monthly profit and loss usually measure results, and thus only alert you to problems after the fact. He advises you to find the causes<\/em> of these results and a way to measure the causes, giving you leading indicators that you can use to steer your company toward the results that you want.<\/p>\n\n\n\n

Measuring What Matters<\/strong>

In Measure What Matters<\/em><\/a>, venture capitalist John Doerr describes a method for tracking progress<\/a> on plans as Cunningham suggests. He calls it the OKR system, for \u201cObjectives and Key Results<\/a>.\u201d This approach allows you (and everyone else) to easily see how the plan is progressing and where things may be deviating or falling behind. As its name implies, the OKR system involves tracking the objectives and key results<\/a> of each team and individual worker in the company.

Doerr describes objectives as high-level goals, but he also says they must be tangible and action-oriented, so these could be milestones or other interim achievements stipulated by the plan that you\u2019re executing. Doerr insists that each entity, whether individual worker, team, or department, should only have three to five objectives at once so that their focus doesn\u2019t get spread too thin.

Key results are actions or sub-goals that support each goal and have specific deadlines. For example, if the objective is to increase the size of the workforce in support of a certain project, one of its key results might be to interview at least five people for a certain position and hire one of them by the end of the month. In the context of Cunningham\u2019s discussion of tracking both cause and effect, you can view key results as causes and objectives as effects.

Again, to maintain focus<\/a>, Doerr says there should be no more than three to five key results for each goal. He also recommends that each worker and team set most of their own key results, although it\u2019s OK for their superiors to set their objectives. This gives superiors the tools they need to focus their staff on the right metrics associated with the objective, while also ensuring that employees have buy-in and understand what they\u2019ll do to achieve their objectives.<\/td><\/tr><\/tbody><\/table><\/figure>\n","protected":false},"excerpt":{"rendered":"

What is the importance of planning in business? How can you create a detailed plan that will help execute your goals? A solid plan is essential for any growing business. Keith Cunningham’s book The Road Less Stupid says that having a goal for your business isn’t good enough. You need a clear plan for how to reach that goal and track your progress. Keep reading to learn why a business plan is important and how to develop one.<\/p>\n","protected":false},"author":14,"featured_media":82937,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[45,14],"tags":[1058],"class_list":["post-105044","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-business","category-management","tag-the-road-less-stupid","","tg-column-two"],"yoast_head":"\nImportance of Planning in Business & How to Succeed at It - Shortform Books<\/title>\n<meta name=\"description\" content=\"A good, detailed plan is the key to keeping you on track with your company's goals. 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