Is business planning a waste of time?

Smashing piece of Iconoclastic writing! And such a breath of fresh air when compared to the acres of the same old stuff that is repeated again and again.

At this stage I should declare an interest because as well as being a small business advisor I also produce and sell business planning software.

But, the market I deal with is small and micro businesses and I daily come up against people who have found the business planning process useful (sometimes very useful) - so there is value in it.

I think of business planning as a bit like going on a diet: nobody enjoys it but most people do benefit from it. So while I would say that business planning CAN in specific situations, if done badly, be a waste of time - amongst small and micro businesses it almost NEVER is.

Thanks Adi. You've brilliantly hammered the last nail on BP's coffin if we are to side with those who say business (strategic) planning is dead given cited studies aknowledging a growing number of organisations which have abandoned strategic planning. Adi states: business planning (BP) "fails on an operational level as there's a good chance it's out of date by the time the ink is dry." Absolutely!!!

Because the BP designers falsely assume while they understake BP, the world around them is static, and can be predicted accurately. It's unfortunate that business schools over the years have been churning out seat-in-glass-office planners instead of business DIYers—the operations people with intimate firsthand experience of business craftmanship.

Overcoming the dichotomous relationship between the BP and today's fast-moving business landscape, requires planing processes that enable continous learning and braod-based participation.

What an interesting thread with some great comments backed up with a bit of evidence. I would say that there is a business plan representing 1 year. You might as well do it because you need to communicate to your shareholders or bank anyway. Plus, if it is going wrong you need to know so meticulous monitoring is required. Beyond this you're looking at a forecast, which is just that. It states what assumptions you are making.

I would say, that for big organisations, rather than throwing away the plan they are choosing more considered options.  Organisations like Shell ( look up work done by Pierre Wack ) use scenario planning. they recognise the future is very uncertain especially in geopolitical terms and create possible scenarios of the future and consider capital expenditure in the light of those scenarios thus creating upsides and downsides.

One last point which I think is more important than my first: The annual planning cycle is like a Scottish chieftain gathering the clans a couple of times a year. They ( departmental fiefdoms ) agree common enemies, trade favours, reward each other for battles recently won and engage in battles for the next cycle having bonded and unified.

Consider the squirrel.

He knows where he needs to go. It's that tree over there. But watch the way he moves.

He takes a few rapid steps. Then he stops and scans his environment. Are there any predators about? Is there a supply of nuts I didn't consider?

Then he's off again. Another short burst towards that tree. Then he stops again. Scans the environment. Has anything changed? Am I still on track?

In this fast-moving business climate, we might learn alot from the squirrel.

There is no reason why the two should not go hand in hand. BP provides the framework where experimentation can take place. Experiments without guidance could become costly hobbies, or even disastrous. Guided experimenting keeps you on your toes and makes you keep up to date with developments. Felxibility must be built within the BP process and experimenting is only one part of the flexibility.

+1 Very good stuff.

Planning can often be a substitute for actually doing something.  This is especially so with executives who spend their lives stuck in powerpoints and various reports, oblivious to what is actually happening in their organisation.  They confuse having a plan with implementing a plan.  Two very different things.  So many companies have vast filing cabinets full of plans and reports that largely sit there gathering dust.

All that time spent on plans that no one reads would be much better spent solving the problems their business faces.

With the exception of businesses that require funding the business plan works best as a reminder of what you want to achieve. Quite often there are a myriad of ways to get to a goal and thus the plan needs to be flexible enough to change with the times and circumstances.

I love Adrian's blog post (above) on the 3 reasons why you would need a business plan and the 'Time Capsule' has definitely been something I have experienced so having my plan has helped get me back on track... more than once!

Organisations need the rigour of a business plan.  It's the bedrock of how you then approach everything else.  Easy to live without it in the short term but in my view - a dangerous game.

Hi - great thread - 

I'd add to the comments in Berlin's link - that a business plan demonstrates the knowledge of the person presenting it, and so its useful in determining whether someone understands the product/market/proposition.  But I agree with others, it can go quickly out of date and there is the game theory concept of 'updating your priors', i.e. when you get subsequent information you should be willing to change your mind.  My firm had a meeting about market strategy in early 2011, and we had to throw it out the window as we adapted and took up new opportunities, while those we wanted to chase simply weren't there - we updated our priors pretty quick!

As documents, business plans can be a 'demonstration' of knowledge, but they can also be used as smoke and mirrors.  As guides, they can be valuable to check against, or they can become a rod for your own back.