“Planning For An Uncertain Future” by Baron Lukas, Managing Director, ExecHQ

“No battle plan survives contact with the enemy” - Helmut von Moltke the Elder (Field Marshal and Chief of Staff of the Prussian Army, 1800-1891)

While no future can be certain, today’s geopolitical, national security, economic, and business environment is more than just uncertain, it is both chaotic and alarming. We have been facing high inflation, high interest rates, natural disasters, two foreign wars with a direct impact on our national security, and increasing crime rates in our major cities. To complicate matters even more, we are now only two weeks away from a presidential election. There is no such thing as business as usual, and we have gone well beyond a “new normal.” Business planning has never been easy, but the extraordinary situation we find ourselves in requires a new look at how you approach your business or strategic planning effort.?

If the quote by Field Marshal von Moltke does not resonate with you, think of it this way: “No business plan survives the complexity of our current situation or first contact with your customers, your vendors, or your competitors.” Either way, this means that while plans are an important starting point, it is really the planning (and the planning process) that is important. With a proper planning process, you will discover more about yourself, your leadership team, your business, and your business environment than you ever thought possible. Now imagine doing this on a continuous basis instead of the typical annual business planning and budgeting exercise, where a plan and a budget are hammered out over the space of a few weeks and then put on a shelf with last year’s plan, only to be forgotten on the first day of the new business year. In a continuous planning cycle, you deliberately test your plan and the assumptions it was based on, thereby continuously improving your operations and performance based on the evolving situation, simultaneously mitigating risks while capitalizing on opportunities. Sound difficult? Well, it’s not. And, neither does it have to be costly nor burdensome to your leadership team. What it takes is discipline, a coherent planning process such as the one used by our advisors at ExecHQ, and senior leadership buy-in.?

We wanted to take you through some of the initial steps of a coherent planning process. First, ask yourself this question: Is your entire?leadership team?on the same page regarding where the organization is going, when and how it will get there,?and each member's role? If you can’t answer this simple question with full confidence and conviction, you should consider rethinking how you plan, communicate, and operate in this highly volatile business climate.?

Before you begin overhauling your planning methodology, I recommend having someone conduct a third-party assessment of your business. Think of it like preventive maintenance or an annual doctor’s visit for your business. A comprehensive independent look at your business is a great starting point as you adopt a coherent, continuous planning process. Get a thorough assessment of all your business verticals—Leadership Team, HR, Finance, Ops, Procurement, Marketing/Sales, Safety/Liability, IT/Cyber Security, etc. Every business is a bit different, but most face similar issues and challenges.? If you value your business, it is worth contacting us to help you through this assessment process.?

Once you have a good (and unbiased) idea of where your business stands, it is time to look at a coherent, strategic planning process, such as our strategic advisors use at ExecHQ. Here is what makes it different:

It is continuous. No annual plan just gets put on the shelf the minute the ink is dry. This is a continuous evaluation of your plan based on what you know, what you don’t know, and most importantly, on the assumptions you made and had to make to continue your plan. Using a disciplined daily, weekly, monthly, and quarterly meeting and planning cycle, you and your leadership team evaluate your plans, assumptions, and performance against the desired objectives and end state. After analyzing and adjusting the strategic, operational, and tactical plans, you continue to develop these plans, implement them, and evaluate your progress in a continuous improvement process.? ?

It is Assumption Based. Assumption-based planning has been at the heart of military planning for several decades, but it has yet to be adopted by most businesses, or for that matter, business consultants. What is assumption-based planning? Since you can’t foretell the future, you must make some assumptions to start planning. The secret here is to keep track of those assumptions and have someone responsible for continuously testing those assumptions in relation to your plans and ongoing operations. In this way, you can proactively mitigate unforeseen risks while capitalizing on opportunities as they emerge from the “fog of war” or if you prefer, “the fog” of your daily operations. Here are some higher-level “assumptions” I used as the CEO of an oilfield chemical distribution, services, and engineering company (2018). While none of these would apply today, they will at least get you started thinking in the right direction. However, be careful. Always test your assumptions regularly—there are no guarantees—and predicting the markets is a lot like predicting the weather:

• No major conflicts or wars, major natural disasters, or significant global political changes for the next 12 months
• Price of crude oil is to hover between $52 & $55 for the next six months
• U.S. economy to remain on current growth curve
• U.S. energy demand to stay high
• Global energy demand to shift as the global economy slows
• U.S. to continue to drive toward energy independence
• Credit and appetite for risk within the financial sector to strengthen????

It is scenario-based. In the military, every plan is “war gamed” to ensure that every possible development the planning staff can think of is tested against your desired outcome and the plans to get you there.? This requires a standing planning team and a standing “RED” team that works against your planning staff to test your plan.? The red team becomes a thinking enemy that tries to poke holes in your plan and assumptions (I recommend a senior, highly experienced executive to take this role).? Think of it like playing Stratego, with your business plans and assumptions against a thinking “enemy.” In this way, you can look for ways around possible obstacles and think through situations that could represent a significant opportunity.? It allows you to test your available resources and identify when and where you will need to secure additional resources, such as funding, people, equipment, capacity, etc.

? In its simplest form, the entire process can be reduced to just 15 Strategic Questions:

1.???? Who are we as an Organization? (how do we describe our company)

2.???? What are our Values?

3.???? What is our Why?

4.???? What is our Mission?

5.???? What is our Vision?

6.???? What is our core business?

7.???? What do we know, don’t know, and what must we assume to continue planning?

8.???? What is our 5-Year Vision?

9.???? What is our 3-Year Target?

10.? What is our 1-Year Plan?

11.?? What is our marketing and sales strategy?

12.?? Do our resources align with our Vision, Target, and Plan? (financial, people, infrastructure)

13.? Do we have the right people in the right seats?

14.? What are our issues, and how do we solve them?

15.? What are our priorities for the next quarter?

After you answer these, the devil is in the details of developing cascading supporting, operational, and tactical plans along with supporting resources plans (budgets, HR requirements, training, etc.), which should directly support your 1-year plan.

? At this point, it is worth demystifying the concept of “strategy.”? This simple word seems to have taken on a life of its own, so let’s demystify it. Here is a good and, frankly, straightforward definition:

At its most basic, strategy is figuring out what we need to achieve and determining the best way to use the resources at our disposal to achieve it. The plan is then communicated to all and executed while continuously monitoring our progress, validating our assumptions, and adjusting the plan to best achieve our desired end state.

?That having been said, here is what it is not: The annual budget, the Vision, Mission, or Core Values Statements, or planning or goal setting without regard to the current situation, assumptions, or resources. Remember, a vision without resources is just a hallucination.

? So, now you have your planning process in place, your standing planning team knows what they are doing, the red team is challenging you to ensure your evolving plans will work, and you have developed an excellent strategy for the next year. Now what? Communicate, communicate, and communicate your intent again and again, down to the lowest levels of your company. You cannot over-communicate. If you cannot ask any one of your employees what the vision, mission, and values are for your company, you have not communicated enough. The military concept of “Commander’s Intent” is a great communication tool and philosophy for any business leader, and we highly recommend adopting it for your business.

?Once your plan has been communicated to every stakeholder down to the lowest levels, it is time to execute and adjust.? As stated above, no plan survives first contact with your customers,? your vendors, your ownership, etc.? The plan WILL change as the situation develops. The trick is to be prepared. If you adopt the planning concepts outlined here, you will be well prepared because you will know what you know, what you don’t know, what assumptions you made to continue planning, your shortfalls, and your risks—and—you will be continually testing these factors and adjusting your plans accordingly.

? If you would like to know more about the complete strategy development and execution process or would like an expert assessment of your business, please contact us at [email protected].

? Good luck, and keep attacking.