Business Planning: 12 Common Mistakes

Albert Einstein once pointed out “a person who never made a mistake never tried anything new”.  This article profiles 12 common mistakes made in business planning.

 

1. The timeframe of the plan is too long

While business strategies should be expected to be steady and relatively unchanged for a longer period of time, strategic plans need to remain focused on accomplishing strategic priorities in a timely manner.  The plans also need frequent refreshing to keep them from becoming stale and to keep the organisation energised on plan execution.  Long-term planning certainly has its place in a corporate world, but shorter operational plan horizons, going only 12 months out, allow organizations to utilise valuable current information and remain engaged in delivering to the milestones.

A rolling 12-month plan that is updated on a quarterly basis offers more value in several ways.  As long-term plan goals are partially or fully met, the operational component of the plan moves forward and is refreshed with more accurate and updated information for the coming 12 months.  New objectives and initiatives move up as others are completed.  This provides actionable data for managers to work from during budgeting and gives a more realistic sense of actual plan momentum and progress.

 

2. Too many strategic goals

Businesses often have a long wish list of goals, ranging from pie-in-the-sky to mundane.  Dreaming up goals is generally not a challenge.  Instead, the challenge is having the discipline to narrow down prioritised goals to a manageable and achievable level.

Five goals is a good number to consider as a maximum.  When you consider that each goal will lead to a sequence of programmes, initiatives, activities and deliverables that will need to be managed and implemented, it’s easy to see how a long list of goals can inhibit implementation success.

3. Goals not tied to measurable outcomes

Business goals should be constructed in terms of outcomes that will mean something tangible to customers and employees.  Likewise, goals should be defined in such a way that they can be measured and managed throughout the layers of the organisation.  Goals should help propel action and achievement from the managers and workers who are involved in accomplishing them.  These principles make the adoption of OKRs all the more compelling.

 

4. Employees are unaware of the goals

When the planning process fails to consider the individuals who will actually implement the plan, breakdowns happen and desired outcomes are rarely attained.

Detailed plans of action are needed for each initiative and goals should be carefully communicated throughout the organisation so that everyone knows and understands not only the “big picture”, but what is expected specifically of them.

5. Key suppliers and partners not considered

By communicating business goals to key distributors, suppliers and partners, much needed buy-in and assistance can be gained from these external parties to achieve desired outcomes – especially in the “hard times”.  For example, asking for price reductions, extended payment terms, or quantity discounts can be achieved when suppliers and partners are made part of the process and understand what may be in it for them in the long-run.

6. The plan leaves too much room for interpretation

This mistake typically circles back to the way business goals have been defined.  If there is ambiguity in the way the goals are explained, they will be easily misinterpreted and will result in execution that misses the intended mark.  Starting with a clearly defined outcome, much of this interpretation and resulting ambiguity can be replaced by clearly defined expectations.

7. Job descriptions not aligned to desired strategic outcomes

When job descriptions and job responsibilities align with corporate goals, organisations see better results in strategy execution.  Job alignment helps achieve accountability and also fosters needed cooperation from individuals.

When job descriptions and responsibilities are effectively communicated to employees and when additional responsibilities are given to them related to accomplishing tasks related to strategic goals – these individuals become tuned-in with their roles and the expectations surrounding them.  The goal is to create empowered team players.

8. Performance measures not aligned to business goals

Businesses must set performance measurements and incentives for employees.  These performance measurements should be derived from the job descriptions and job responsibilities, and the resulting incentives must be strong enough to empower all layers of management to measure and manage efforts toward the achievement of the plan’s goals.  While this adds a layer of complexity to the planning process, neglecting this step will result in under achievement.

9. Culture is overlooked

The planning process must consider culture.  Without this, it is impossible to fulfil the business’s potential to dominate within its chosen marketplace.  Culture determines how the business functions and how work will be completed.  Aligning strategy, tactics and governance to address these dimensions will positively affect the outcome of planning efforts.

10. Customer value is overlooked

Customer-centric planning puts the end customer at the forefront of the business’s activities and goals.  By creating goals that reflect the value created for the customer, you’ll “put a face to the name” and more effectively connect members of the business with the desired outcomes.  This requires a competitive analysis in order to understand positioning, threats, and the true current-day value proposition.  Not all goals need to be customer-centric in nature, but overlooking this aspect during planning can lead to missed opportunities.

11. Operational planning is overlooked

An effective planning process allows the business to plan strategically at the enterprise level and then operationally at the business unit level with each part supporting the other.  Failing to reach all the way down through the organisational layers is a common problem with planning processes.  This is where inadequate budgeting can come into play, resulting in resource constraints that will undermine the plan’s execution downstream.  Strategic planning, to be effective, must address the entire business ecosystem from top to bottom.

12. Cyclical and seasonal peaks and valleys overlooked

It is well-understood that businesses must balance the realities of financial budgets during the planning process.   Yet, the organisation must also take into account relevant economic cycles that will impact the strategy over time.  Economic cycles will affect market conditions, access to capital, energy, focus, and many other factors (both positively and negatively) to inhibit or accelerate the accomplishment of desired outcomes.

To the extent that economic and cyclical factors are understood and anticipated, the business can build a layer of contingency into plans that address the peak workloads of staff, budget cycles, and many other factors thus improving the realism of the plan and ultimately the results.