And that’s the point really. Many organisations work on very detailed plans and then continually adjust them as reality turns out to be very different for a whole host of reasons; Economics, Pandemics; Staff Shortages ; Supply challenges etc.
I’ve always been a big fan of what I like to call Fuzzy planning horizons. Silly name, but let me explain. The basic concept is an image that you can see on the horizon. You know it’s there and you can detect the basic shape. Might be a ship, might be a canoe, might be an island. You move towards it and as you get closer, it becomes less fuzzy. You narrow down the choices, it’s definitely a ship. Might be a passenger liner, or a cargo freighter or a destroyer, it’s still too fuzzy to tell, but it’s definitely a ship.
You move closer still (over an elapsed period of time, which might be quite a while). Two things (or more) start to happen. You make out its definitely a passenger liner, but you can’t see from which line, nor its actual size. It’s big, sure, but how big, too early to tell. Then in the distance (on the “New Horizon”) you see another object. What’s this one, might be a ship, might be a canoe, might be an island. The process continues. Moving closer still over more time, you are sure you have a white ship, from P&O Lines, and it’s got 8 decks above water. Ahhh clarity finally, but what’s this other object, and the one that’s now appeared behind it ?
OK, so you get the picture (literally) that you can only see what you can see and guess the rest based on clues. You can’t really plan on what you can’t see, but as it becomes clear you can. That takes time. So if we have these multiple images scattered between us and the horizon, some are clear and they become, from there, progressively fuzzier. If you commit to a plan too early you can get caught out, but too late and the ship might crash into you before you adjust course.
So the point of all this horizon gazing metaphor stuff is to start to understand that annual planning is a bit silly, certainly in too much detail, and that perhaps what we should be doing is developing plans that have levers (Demand, Supply, Inflation, Exchange Rates, Labour Costs/Availability, Project costs). In the first instance these are stabs in the dark, literally, based on certain assumptions, and these assumptions (levers) should be treated as monthly variables in the plan, so that when they change, these fuzzy plans can become a bit cleaner over time, but its a continuous process.
Another crucially important thing that comes out of this, is that you can (and must) start your fuzzy planning early, because there’s no point in waiting. The whole point of understanding the fuzzy planning horizon is to have lots (and lots) of fuzzy plans on the go all the time.
It might be useful to think about fuzzy planning in the context of product or service development as opposed to financial budgeting (which has lots of rules and fixed periods). At any one time you might (should ?) have fuzzy plans for new products or services floating around, but over time you jettison some as it becomes clearer they are less viable then the initial plan might have seemed. At the same time you jettison a fuzz plan 3 months into its life cycle, you might hatch 3 more that are new babies. Over time you will have a group of new products or services that keep surviving the increases in clarity as you get closer to them and maybe one or two might end up floating. It’s a really useful process.
Most, but not all, of the levers that act on your plans are externally generated forces over which you have little influence. You’re a customer (or prisoner) of these levers. Some levers, like pricing and possibly wages and rent are levers you have some near and some far type of influence over so you can react. Just remember that all fixed costs are variable in the long term.
It doesn’t matter whether you apply this theory to financial budgeting at the organisational level, or project planning at the project and task level, or product development. The reality is the same. The further into the distance you’re looking, the less you really know and the more variable and adaptable the planning needs to be. By accepting that this is reality and not pretending you”know” what is going to happen, planning becomes less stressful and your organisation or project becomes more agile and nimble. Of course you have to react to these changes, and make decisions off the back of them, but hopefully spend less time justifying why your Crystal Ball of 18 months ago turned out to be no more than a paperweight.
So I guess the story is, embrace fuzzy planning rather than fearing it and ‘waiting’ for clarity, because by then, you may have missed to boat (or canoe, whatever !). How does one go about it though ? You can have a formal or informal FPH methodology, or a hybrid. Let me explain.
A formal FPH methodology would outline how many of each type of plan you can create say monthly. Then it would also dictate some kind of formal review and / or qualification focus in the following periods, which would, by definition, whittle down the number of plans on an ongoing basis, which is good as you’ve probably started another 10 since they were hatched. Obviously the informal version does the same thing without fixed metrics but probably applying similar hurdle methodologies. And of course the Hybrid does a bit of both.
It may be you use formal methodology thinking for one class of plans (product development for example) and less formal ones for internal projects. It’s up to each organisation to get a handle on this and apply it as best they can.
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