5 Year Plans and Other Works of Fiction

In a recent lecture at MIT’s Sloan Business school, Ricardo Semler said some provocative things about business planning.  Below is an excerpt:

“A 5 year plan is just an extrapolation added to wishful thinking. Have you ever seen a business plan that says, “I’m going to go up 5% and then down -14% and then -22% and then I’m going to recuperate a little bit and then it’s going to go to hell?”

‘Cuz that’s what happens. That’s how it looks in practice, but that’s not the way we design it. We’re willing to trick ourselves into thinking we have control as long as we do it with wishful thinking.”

I am a planner.  Big fan of planning, actually.  Love making lists and checking things off.  Love twiddling with spreadsheets.  Just wish I could be better at making and executing a plan.  I bet you feel the same.  Who wouldn’t want to be able to predict the future?  Especially for new enterprises that don’t have years of trend data to extrapolate from.  No tracks in the snow that can be followed to the top of the mountain.  How do you make a five year plan?  All it is is wishful thinking.

Guy Kawasaki in his book, The Art of the Start, talks about how forecasts are mythical.  Everyone knows they are made up.  Any research company worth your subscription fees will tell you that there is a big market to be exploited.  Any schmuck can do spreadsheet exercises to arrive at a $50M company.  The truth is not in the forecast, but in the passion.

The truth is the not every can exploit a growing market.  Not everyone can build a $50M company.  Not everyone can start something.  So, throw a dart at the board or spend hours doing sensitivity analysis in Excel and convince yourself in the viability of your business.  Because it is not the accuracy of the forecast, but your own depth of your conviction that makes the difference.  You will not find a track.  You must leave one.

Photo by Jason.