A journey of a thousand miles begins with the LAST step

December 5, 2018

 

The media have created quite a stir in reporting the worst of the worst case scenarios the Bank of England has generated of a post-Brexit Britain. Whatever the "politics of fear" etc that various actors are peddling, their source is the work of a group of techies somewhere in the Treasury that have slaved over models of the economy asking "what if" of various factors and arrived at a range of scenarios. Whilst we may only ever hear of the deductions that make "good" headlines, the techies will have generated several scenarios that must each demonstrate that they are plausible beyond reasonable doubt. 

 

This reminds me of when I was a strategy director in a multinational aerospace company. Every year I had to corral my colleagues to revise our ten year strategy. We had to model how our business made money, how this was affected by customers, markets, competitors etc, and what would be the effect of us making this move or that. Often I would be confronted by colleagues who thought this was a waste of time and who prefered to be reactive rather that proactive.

 

This is not confined to corporate executives. I meet business owners who are so caught up in the here and now that they rarely, if ever, give time to planning. Whilst ten years ahead may be the concern only of engineering companies tied in to capital intensive programmes, ten months would be a huge advance for many business owners. Whilst comparing current performance with last year's gives a measure of comfort when it is better, this is akin to driving forwards with our gaze locked to the rearview mirror.

 

Suppose we asked, "What if I set my sales target next year this time at 10% above what it is now, how would that affect my cash position a year from now? Could I deliver sales at that level? And what if I also reduced my costs by 10%, what would that look like? What would I have to do to achieve both targets?" Suppose you build a scenario of your business in one year's time having achieved both these targets. Now ask, "What is the last thing my business must achieve before these target are reached?" If you have reached that point, what is left to do to reach the target? Then ask the question again of that last thing, and kep working backwards until you have reached today. They say that "a journey of a thousand miles begins with the first step". This revises that to say that it begins with the last step, and works backwards to the first step. A journey of a thousand miles could go anywhere from the first step!

 

This level of planning does not need an army of consultants armed with charts and powerpoint slides. It needs a little thinking here and there until a plan emerges. Sorry, not " a plan" but a plausible plan that is worth developing into an action plan.

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