How to plan in an era of uncertainty

0723 Ec Leadership Insights

Today’s chief executive officers are facing an unprecedented rate of change. Some call it the “new normal” or the “new reality.” Whether it’s new or not, this is the world CEOs live in.

Examples of this include the post-COVID pandemic, globalization, worldwide political instability, polarization of politics in the U.S., digital transformation, inflation, and supply chain issues. There is also the possibility of a recession in late 2023.

CEO visions

The key question is how do leaders go about dealing with this new reality, this increasing uncertainty? Nobody can predict the future. However, CEOs can create it by how their organization thinks, how it plans, and most importantly, how it acts on these plans. To this end, the most important responsibility is to lead an organization’s planning and execution efforts.

Every chief executive has a vision of their organization’s desired future. This vision may be written down or simply in their mind, but the issue is not our vision. The real issue is how to develop a plan that ensures the highest probability that this vision will be achieved — even in the face of increasing uncertainty and rapid change. This is no easy task.

CEOs have a lot on their plate. It is clearly a complex and challenging job. Leading and managing an organization, especially during this era of increasing uncertainty, requires a high level of thinking, dynamic planning, and timely decision-making. Priorities are constantly changing. Issues are coming at business leaders from all directions.

Many years ago, a very successful industrialist from France named Henri Fayol identified the most important functions of top management. These are planning, organizing, motivating, and controlling. Over the years, these have become known as the Tenets of Management. Of these four tenets, Fayol determined that, by far, the most important task is planning. It sets the tone, the direction, and the course for an organization’s future performance.

Uncertain planning

In essence, planning requires the leadership team to carefully think through what they would like their organization to accomplish. These require two separate but integrated planning processes. The first is strategic planning which focuses on an organization’s top-line growth. The second is operational and financial planning that focuses on the profitability and viability of the organization.

As a planning consultant for the past 40 years, there is a principle of planning that has either been overlooked or not fully appreciated. This principle is “The process of planning is more important than the plan.” Fully embraced, these 10 words can transform an organization’s planning efforts as well as its ability to consistently execute these plans. The reason this principle is powerful is that the process of planning, when understood and properly implemented, can handle any level of uncertainty, volatility, and change that an organization faces. While this is a tall order, it is a realistic promise.

Process of planning

Of course, planning has been around forever. What has not been around is the awareness, the knowledge, and the practice of the methodology known as the process of planning. This process is comprised of two distinct areas. First and foremost, it is about getting people excited about planning. This includes their role, their involvement, their commitment, their ideas, and their accountability.

The second area is the actual methodology of how to go about the process of planning. Planning has its own concepts, its own terminology, and its specific elements. We have developed a comprehensive framework called the “Integrated Planning/Execution Process,” which provides a detailed roadmap of how to go about developing a strategic plan, an operational plan, a financial plan, and a plan execution process.

Planning needs to produce a product, namely a plan, and the best process of planning will always produce the best plan. But the process of how this plan is created, adjusted, replanned, and ultimately achieved is the absolute key to planning in an era of increasing uncertainty. A mantra we have written about in our books and stated on numerous occasions is, “The purpose of planning is not to produce a plan, it is to produce results.” A corollary to this is that people produce results, not plans.

Viewing and carrying out planning as a process requires the CEO and leadership team to be knowledgeable about how to best go about developing their plans in an effective and efficient manner. Equally important is how to ensure that people are committed and motivated to follow through and execute these plans.

In their classic book, The Wisdom of Teams, Jon Katzenbach and Douglas Smith state that “real teams are best developed around their ability to focus on and achieve objectives which are not only specific but very meaningful as well.” The process of planning is the ideal vehicle for this to happen. In fact, the planning process, when done properly, is an excellent methodology for not only developing teams but developing people at all levels within an organization.

All plans need to be constantly adjusted to reflect changes in the environment. The key to planning in an era of uncertainty are the planning concepts “continuous” and “flexible.” Conditions and situations will change. Plans need to be continuously adjusted and adapted to changing circumstances. This is simply the reality of planning and execution.

A flexible process of planning and execution takes results achieved into consideration. It also ensures that going forward, adjusted or new plans are in tune with changes that are happening. The well-worn cliché “the only constant is change” means that plans need to be constantly adjusted to be in alignment with changes.

The best methodology for dealing with uncertainty and rapid change is through a formal replanning process. The purpose of replanning is to continuously incorporate this new reality or new normal into an organization’s plans. Regardless of how uncertain or how volatile the environment of an organization is, a timely replanning process can factor the adjustments or changes needed to plan. Actual results need to be continually compared with plan results. Going forward, replanning is paramount to a successful process of planning.

All organizations need three planning processes — one for strategic planning, one for operational and financial planning, and one for plan execution (replanning) to achieve consistent organizational results.

Patrick J. Below is founder and CEO of CEO Consulting Services, a local consulting firm based in Madison. He has authored three books: The Executive Guide to Strategic Planning, The Executive Guide to Operational Planning, and The CEO Challenge.