John,
Terrific response, however my point is about the plan, not the fact that
having created a plan one retains the fundamentals of it in one's head. Good
point and very true - but updating something in one's head is far different
to updating the plan itself. Failure to do so is surely going against one of
the basic tenets of planning in the first place - have a good plan and keep
it up to date.
I once did some consultancy work with a guy who did drop out of school at 16
and has since become a multi, multi-millionaire (a familiar story?). I asked
him how he conducted his strategic and business planning and he pointed to
an A4 sized Gantt chart on the wall and said "That's it!". Sure, he may have
become just as successful if he'd spent his time planning, monitoring and
reviewing, but he didn't and has been a very happy little duck not doing so.
Merry Xmas anyway
Phil Rutherford
-----Original Message-----
From: John L. Naman <naman+@pitt.edu>
To:
MG-ED-DV@MAELSTROM.STJOHNS.EDU <
MG-ED-DV@MAELSTROM.STJOHNS.EDU>
Date: Saturday, 19 December 1998 1:30
Subject: Re: [MG-ED-DV] Personal view on business plans - Revisiting the
Cognition
>Phil said, "However, for every person who espouses the need for a business
plan
>I
>can bring out ten who say that yes, they've developed business plans but
have
>never looked at them since and are still doing quite nicely thank you very
>much.
>We teach people to develop and constantly update their business plan, but
most
>are
>so busy taking advantage of the good times, and working like crazy in the
bad
>times, to come back to them. So, where are their plans now? Usually in some
>bottom
>draw somewhere."
>
>Most of our feedback had to do with CREATING a bus. plan, not dynamically
>UPDATING it. I'll work with your ten above, who did create one once. You
ask
>where the (current) plan is, noting that the original paper plan is in a
>drawer. I contend that the plan now resides in their head and is
dynamically
>updated.
>
>1) The fact that you don't see them and owners don't (or can't) admit it
>doesn't mean that people don't have plans. For example, most people don't
have
>a written career plan, but they do have a plan and make decisions based on
a
>set of interconnected goals. You can examine their (business owners)
behavior
>and use verbal protocols to reveal the underlying plan.
>
>2) One may attempt to assess the cost and value of keeping a plan updated
in
>writing. For example, written plans provide a quality check to keep us from
>forgetting to implement some detail in a complicated network of actions
(e.g.,
>critical path or PERT chart). Certainly it is reasonable to hypothesize
that
>the more complicated an organization (e.g. multinational) the more value
added
>by updating written plans and in the small, less complicated businesses,
the
>cost (time, money, thinking effort) as a percentage of sales or profits is
very
>high relative to the major players.
>
>3) To me, your "theory" should be tested on the basis of performance. Find
>matched pairs of businesses, where one owner plans explicitly and the other
>claims not too, and compare performance (sales, profits, market share) over
a
>period of time (5-10 years). It would be best to find an idiot who
evidences no
>planning rather than an intelligent person who evidences updating a plan in
>their mind. As a quick test, one might look back in time; a better test is
>prospective (starting now). Be careful about claims of "doing well", they
often
>are not true when compared to other firms or your own sense. One owner told
me
>that their business was growing 20% per year and I thought that was pretty
good
>until he said that all his competitors were growing at 40% and more
profitable.
>
>4) If this isn't true in one form or another, you should question the
actual
>value of attending college -- it sounds like it would be better to start a
>business at age 16 and just start plowing ahead.
>
>Prof. John L. Naman naman+@pitt.edu
>