Is Your Strategy Timeline Too Short?
“It’s tough to make predictions, especially about the future!”
— Yogi Berra, famous strategist
I received an email newsletter the other day on the topic of strategy. The recommendation? A one-year strategic plan.
The “logic” was that since longer-term plans involve, “months of effort and, in some cases, millions of dollars poured into them,” not to mention the fact that the world moves quickly, it makes sense to think no further than a 12-month horizon.
I was stunned. Yes, the world is changing fast (hint: it always has). And I don’t disagree with the premise that forecasting the future is, at the very least, difficult, if not truly impossible.
But to suggest we should therefore ignore longer time frames in our strategic thinking and planning shows a misunderstanding of what strategy is for. Strategy is about anticipating the likely future — so you can act intelligently and effectively; it’s not about trying to accurately predict what will happen.
The fact is, there are many good reasons why a 3–5 year time frame has long been the norm in strategic planning. I can think of three in particular…
#1. Some future trends are quite predictable.
If your target market is of a certain age — you run a college, assisted living community, daycare center, Medicare Advantage program, to name just a few — you can anticipate the size of the market in X years’ time. And you can field plenty of research — now — to track and better understand these cohorts, so you are prepared when they “come of age.”
For most organizations, there are a few specific trends that are likely to have the greatest impact. Some of these may be knowable years — even decades — out into the future. You can begin to plan for these changes — if your time horizon is long enough.
#2. The future arrives slowly.
Sometimes, an emerging technology, trend, or competitor appears insignificant. There is a long list of organizations (Kodak, Blockbuster, Nokia, etc.) that got into trouble by ignoring the early signals and, instead, making excuses for their gradual decline in business. They were later caught by “surprise.”
For example, Airbnb had just 47,000 room or home stays in 2010. Nothing there to worry about for a major hotel chain with one million rooms. But just five years later, Airbnb hosted 17 million guest stays! By then, whatever impact that once insignificant competitor would have was well underway and the chance to carefully plan a response instead became the need to quickly “do something.”
Of course, there is no easy way to know which emerging threats will matter. But rather than ignore these “faint signals,” it’s best to have a process in place for keeping a watch on them and determining what factors might lead you to conclude that the signals are becoming stronger and worthy of more attention. Often it makes sense to consider a few potential alternative scenarios to plan for and watch — something that also requires a multi-year time horizon.
#3. Some projects require significant lead time.
A good strategy may well include plans for the organization to expand its presence in a sector or launch new initiatives. Some of these things take years to implement.
When I worked for a discount chain in Wisconsin years ago, I saw that changes in insurance for prescription drugs would negatively impact our retail pharmacies — opening the future potential for mail order. It took over two years to research the field, design and staff a new division, and build the automated facility that would eventually enable us to successfully serve that market.
Part of strategic planning involves defining a credible path for building and scaling major efforts. If your horizon remains fixed on the short term, you may miss the opportunity to implement and guide these types of endeavors, some of which may represent substantial gains for the organization.
Reflections
The term “strategic plan” often evokes images of a rigid process, deep and time-consuming analysis, and specific projections intended to predict the future.
A good strategy, by contrast, takes a multi-year perspective as it considers what the organization seeks to accomplish and what it intends to look like in the future. It takes into account the environment in which the organization operates (both current and anticipated future) as well as which trends to watch carefully in case they accelerate in a way that will impact the organization or its constituents.
Ultimately, strategy provides a roadmap from which the organization can move forward confidently, whatever the future may bring. To once again quote Yogi Berra, “If you don’t know where you are going, you’ll end up somewhere else!”