Stop Planning For The Year You Think You're Going To Have
By Jason C. Bork
Years ago, a mentor recommended Clayton Christensen’s How Will You Measure Your Life? One story from the book has stayed with me.
When Honda entered the U.S. motorcycle market, its deliberate strategy was to compete in the market Harley-Davidson dominated. Honda had a strategy, invested behind it, and began executing.
But things didn’t go according to plan. Americans liked their Harleys.
Meanwhile, Honda employees were using the company’s much smaller Super Cub motorcycles around Los Angeles, including recreationally. People noticed. They started asking where they could buy them.
An opportunity emerged that wasn’t a part of Honda’s original strategy.
Eventually, Honda shifted resources toward the smaller motorcycles. What began as an unexpected opportunity became an important part of its U.S. strategy.
Christensen uses the story to distinguish between deliberate strategy, the strategy we intentionally set out to execute, and emergent strategy, which develops as new information, problems, and/or opportunities appear.
The lesson isn’t to avoid having a strategy.
It is to have a strategy while remaining open to evidence that the strategy needs to change.
That lesson has direct implications for annual planning.
Every year, leadership teams spend significant time developing revenue forecasts, allocating budgets, prioritizing programs, setting milestones, and approving headcount.
Then the year starts.
In life sciences, reality has a habit of rewriting the plan.
A clinical trial reads out differently than expected. The FDA provides new feedback. Funding takes longer to secure. A competitor publishes unexpected data. A partnership emerges. A specific technology matures faster than anticipated. A portfolio decision redirects resources almost overnight.
The problem isn’t that organizations are planning too much.
It is that too many organizations plan as though one version of the future is going to happen…and then stay committed to that plan in the face of growing evidence that their assumptions, which were foundational to their strategy, no longer hold true.
The better approach is to build plans and processes designed for uncertainty.
Plan For Multiple Futures
I experienced this firsthand during my career at Eli Lilly.
At the time, Lilly was facing several major patent expirations. We did not know exactly what the future organization would look like. Would Lilly remain a fully integrated pharmaceutical company (FIPCO) owning nearly all aspects of the discovery and development engine? Would it rely more heavily on outside development partners and merely coordinate asset development among disparate service providers? Would new therapeutic innovations primarily be in-licensed or acquired instead of internally developed, changing how the company operated?
Those different futures would have a major impact on how we shaped and evolved our Project Leadership and Project Management organization.
So rather than planning against a single future, we explored several.
First, we described multiple plausible future states in enough detail to understand which competencies would matter most and how our organization would need to deliver.
Next, we identified what would have to happen for each future to become reality. What internal decisions, external developments, or other factors would move us in that direction? When were those events likely to occur? We completed that work across several scenarios.
Then we looked for what those possible futures had in common.
Which organizational strategies made sense across the most likely possible futures? Those were areas where we could invest and move aggressively now.
Which strategies depended heavily on a particular future? For those, we identified when we expected to know more and what information would allow us to make a better decision.
That distinction was powerful.
If an activity was necessary under almost every plausible scenario, we didn’t need to wait for perfect information. We could move forward confidently.
If a decision depended on a particular outcome, we could identify the decision point, determine what information was missing, and establish when that information was expected to become available. Then we either waited for the ‘trigger’ or made a decision at-risk, fully comprehending the intended and unintended consequences of the timing of that decision.
Instead of saying:
“We don’t know yet, so we can’t plan.”
We could say:
“This is how we will move forward now. This is what depends on a future outcome that may be within or outside of our control, and the information it will deliver. And these are the anticipated directions we could go in when we make that decision.”
That creates a very different organization. Uncertainty stops being a reason for paralysis and becomes something that can be managed.
Make The Assumptions Visible
Traditional annual planning often hides assumptions inside the numbers.
They shouldn’t be hidden.
For every major strategic initiative, leadership teams should ask three questions:
- What has to be true?
Identify the assumptions supporting the strategy, including scientific, financial, regulatory, commercial, operational and organizational assumptions.
- When will we know?
Determine when important information will become available and establish explicit decision points.
- What will we do if the answer is different?
Define the most likely alternatives and determine which parts of the strategy change, and which do not.
This turns an annual plan from a forecast into a decision architecture.
Separate Commitments From Choices
Scenario planning does not mean creating five elaborate versions of the annual operating plan. Most organizations don’t need five plans. They need one strategy with clearly defined branches.
Think of it as a tree.
The trunk represents actions that make sense across most scenarios. Those should be executed firmly and efficiently.
The branches represent decisions that depend on future information. Those should have defined assumptions, triggers, decision dates and potential actions.
This distinction helps prevent a common problem: delaying everything because one part of the future is uncertain.
If 70% of the work makes sense across three plausible scenarios, there is little reason to wait on that 70%. Move forward while maintaining flexibility around the remaining decisions.
Strategy Needs A Plan And Permission To Evolve
Honda did not abandon strategy. It responded when reality provided new information. Our organizations should do the same, especially in today’s environment, where technology and change have an increasingly rapid impact on our future.
Annual planning can often create a false sense of certainty. Once the budget is approved, objectives are documented and milestones are entered into the system, leaders can become psychologically invested in making reality match the plan.
But the purpose of a plan is not to predict the future correctly. “All models are wrong, but some are useful,” wrote the statistician George E.P. Box.
It requires leadership to maintain a big picture focus and understanding of external shifts within the market or ecosystem — when is our annual plan no longer useful?
The purpose is to prepare the organization to make better decisions as the future becomes clearer.
A strong annual plan makes clear:
- what the organization believes;
- what it does not yet know;
- what it will do regardless;
- what information could change its direction; and
- when critical decisions need to be made.
Uncertainty and change are far less disruptive when employees understand the assumptions behind the strategy, and the different directions the organization may take. When a change comes, the reaction should not be, “Where did this come from?”
It should be: “Oh, yes. We knew this was one of the possibilities. Glad we planned for it.”
Don’t plan for the year you think you’re going to have. Build a plan for the decisions you’re going to have to make.
About The Author:
Jason C. Bork is President and Founder at Pintail Solutions, a life sciences consultancy. He is a seasoned life science executive with more than 30 years of experience across large pharma, CRO, and start-up organizations. He is an entrepreneur known for seeing the essence, distilling the complex into actionable steps, and developing those around him to new levels of fulfillment. From business strategy, organizational change, and operational excellence, Jason enables organizations to solve critical challenges, deliver high-impact projects, and move into the future with clarity and confidence.