Collection of Thought Pieces on Learnings from Three Box Solution: Number 10

Plan Or Action

Not long ago, I spoke with Sarah, who a few years earlier had jumped at the chance to lead a promising high-growth new business within her company. Sarah was alive with ambition. For two decades, she had worked her way up the ladder, from manual labor to management. She believed this new assignment was her ticket to the top. The CEO chose Sarah for the job because he admired Sarah’s leadership style. She was a motivator. She was an energizer. She had the ability to rally people around a vision, even if it was years away. Sarah was not a planner. She spent as little time planning as she could get away with.

Sarah had given the need for planning careful thought and rejected it. The first observation Sarah shared about time spent planning was that it was time not spent doing. Like many people leading new initiatives, Sarah believed she was in an all-out race. Without a relentless focus on execution, she would not be first to market. When forced into planning meetings, she deflected attention away from immediate results. She talked constantly about the long-term transformational potential of her business. She did not want to be bogged down in details. She wanted to work flat out and focus on the vision.

True, there is a tradeoff between planning and doing. And planning in many companies is an exacting process requiring hours of analysis. Sarah’s staff was thin, and her wariness was understandable. But Sarah did not need plans similar to those of her peers who ran established businesses. Their plans guided efficient execution and quick isolation of problems. (Example: The cause of a revenue shortfall was that an unexpectedly high number of salespeople in the southeast subregion left the company.) What Sarah needed was simpler. She needed to identify a handful of critical unknowns that could make or break her business and specify measures to resolve them quickly. But Sarah did not see it this way. She thought planning was pointless. Planning was about predicting outcomes, and in a nascent industry, outcomes were inherently unpredictable. So why bother? To learn.

Most people that I talk with agree that the first imperative for any new and unproven business is to learn quickly. No competitor knows what the future holds when an industry is just emerging. The winner is not the one that starts with the best strategy, but the one that learns and adapts the quickest. So far so good. But what must leaders learn? People leading new businesses must learn to make better predictions. They must build their understanding of which actions will lead to positive outcomes and which will not. You don’t get better at predicting by avoiding it. At first, predictions are wild guesses. Later, informed estimates. Eventually, reliable forecasts. This progression is a natural part of the process of proving a new business. Once predictions are reliable, standards can be set. Notions of what constitutes acceptable performance become crucial norms within any growing company.

Getting better at predicting can be an intuitive process if, and only if, feedback is immediate. We are spoiled as children. We get used to immediate feedback. We swing a bat and know immediately if we hit the ball. We play a video game and immediately know our score. We take a test in school and get a grade the next day. In business, we do not have the luxury of immediate feedback. As a result, the process of getting better at predicting learning from experience needs structure. It needs discipline.

Planning provides that structure and discipline. Predictions are made, recorded, retained, and eventually compared with outcomes. Analysis of that comparison is the heart of learning. Sarah’s avoidance of planning had an unfortunate result. It cost her her business. Flush with resources from the stock market boom, Sarah had invested in several business models simultaneously. The company could not sustain such lavish funding. Because she had not identified critical unknowns and gathered evidence against each, Sarah did not know which parts of her business were succeeding and which were failing. The business could only be viewed as a whole. And as a whole, it failed.