Plan backwards

All sorts of planning activity is aimed at defining the point where we want to be, then assembling the resources and capabilities to get there.

That is how planning is done, almost always, because by and large, it seems to work, and it keeps the spectator crowd happy.

Libraries have been written that describe all sorts of methods and models that can be used. They can be very useful and thought provoking, providing a framework to help articulate the factors that will impact the business, and the options you have in responding, but they rarely offer  an antidote to the malaise affecting the development of really distinctive capabilities, genuinely new products, processes and business models.

The real innovations, the things that change everything seem to come from a different place, “left field” being the most common description.

Most planning ends up being just an extrapolation of  the past, despite the well meaning and significant effort to make it something else.

Perhaps a better way is to put yourself in the future place, then work backwards, identifying the steps that need to have been taken to reach the point where in your mind, you are now.

Be specific about the end, articulate it clearly, and then “Plan Backwards” by considering the factors  that delivered value for you. I generally call this process ‘Hindsight Planning’.

• What did you do that worked, and conversely, what might you have done that did not work?

• What capabilities did you need to develop?

• What trends drove changes to the industry you were able to leverage?

• Where did the technical innovations you leveraged come from?

• Which markets and customers  were successfully addressed?

• What big customer issues were addressed?

• What did the business model(s) you used look like?

• And finally, How were you able to extract value for all these things?

This sort of analysis, if it is to lead to a positive outcome, requires that you recognise and deal with two types of barriers:

Management barriers.

People like consistency and predictability, so when the forecast future looks very like the past, just a bit blurry, they are happy with it, endorse it, and resource it. By contrast, being the harbinger of change that will affect the status quo is no way to get ahead in most organisations.  However, it remains a truth that the future never looks the same as the past, no matter how much we would like it to be so.

1. Idea averaging. Management absorbs and usually just “averages” or applies committee thinking to a good idea, but at worst, just rejects them for a range of reasons that sound absurd and utterly naive with the benefit of hindsight. Existing businesses are rooted in the networks and frameworks  required to make them successful today, and are usually intolerant of new things that involve risk. Usually successful incumbents are well evolved, so are resistant to change, their current way has enabled the current business to be successful, why change? There are many examples of this phenomena, Kodak being a standout, Polaroid another, Cobb  & Co another. The current attempts by the taxi industry to resist the encroachment of Uber in my hometown, Sydney, is an example unfolding, and the music industry prosecuting their customers for using their products is an example of one that is just about folded.
2. New business models. The successful  commercial execution of a real innovation generally requires  some new way of delivering the value to customers and extracting value for the suppliers.  In short, a new business model. Industry incumbents rarely completely disrupt themselves, by definition, they have too much to lose. Therefore, there needs to be new strategies and supporting business models developed by those outside or on the fringes in some way of an industry. Uber and Apple came from way outside the industries they disrupted, and can you imagine Hilton, or Accor funding that mad idea AirBnB that was gong to crucify their budget tourist dollars?
3. The Profit paradox. Profit is counted by looking backwards rather than forward, rewards came after the fact. Forecasting profit, or “fortune telling” is inherently risky, as the only think you know for sure is that you will be wrong, the real question is by how much, but the consequences of getting this brand of fortune telling wrong are significant.  However, in the long term, you are only truly profitable if your returns are greater than  the cost of capital. If they are equal, you may as well put your money in the bank, because it is safe, less than that and you are long term destroying capital. This simple fact is ignored in almost every profit forecast, statement or review I have ever seen.  The conundrum is that to generate a return greater than the cost of capital you must take risks and do stuff differently, some of which will  not work out, or only work out in the long term, therefore risking the current profit. It is pretty easy to ramp up the profit made today at the expense of tomorrow, but in this case, tomorrow does actually come.

Creative barriers.

Creative barriers evolve around points of the assembly of ideas, where information, insight, experience, are mixed up to create the otherwise unlikely connections that are the foundation of a creative solution to  a problem, situation, or challenge.  These are the barriers that most businesses try and get around  by the off site strategic planning sessions that rarely seem to be able to deliver the promise of the day. The energy and drive in the workshop room gets absorbed by the day to day of being back in the business. Removal of the barriers is a high priority challenge for management.

The barriers to creativity are many and varied, often overlapping in many places. Following is a ‘brain-dump’ list of the ones I consistently find.

• No commitment from the ‘top’

• Fear of failure

• It is not OK to be wrong.

• Give up too easily. Edison’s famous quote “Now I know 999 ways that do not work” whilst experimenting to develop the lightbulb resonates still.

• Creativity is hard to quantify, and is therefore often not measured. The old adage what gets measured gets done is right, so creativity is extinguished.

• Lack of resources, time, equipment, money, are all used as excuses for being too willing just to accept the status quo.

• Enterprise culture eliminates risk as far as possible, and creativity is inherently risky and “out there”.

• Rules rule. Particularly in public enterprises, and creativity is not in the rules.

• Challenging orthodoxies, assumptions and the status quo is frowned upon.
• Lack of what I call ‘environmental intelligence’ or an understanding of the macro trends and individual movements in the commercial and strategic environment in which you compete. Seeing trends that impact an enterprise, and their intersections is a rich source of creativity.
• Lack of discipline. Perhaps counter intuitively, creativity includes a range of activities that if subject to some disciplined and focused thinking can deliver great results.

• Not having the right people. Creativity is perhaps the most collaborative of human activities, well, almost. Not having the right people is a commonly owned albatross.

• Everyone can say “no”. Formal layers of approval for ideas act on creativity like a wet blanket on a campfire.

• Creativity is not a required contribution from everyone, it is assumed to be the product only of the young, or the marketing department, of the boss’s wife. Creativity should be everyone’s job!

I could go on, the list is huge, it is a wonder that creativity survives at all given the barriers.

An idea is the outcome of all that has gone before, and the triggers around at any given time, rarely is it the ‘Eureka’ moment. Ray Kurzweil who has a stellar track record in seeing the future in technology believes we need to become comfortable with what he calls “Hybrid thinking”  and I can only agree but see that the ideas he articulates have a far greater range than just creativity and innovation in technology.

Related posts:

7 Mental models for business planning Foresight, hindsight, and common sense Why does ‘Hindsight Planning’ really work? The essential template for hindsight planning