Last week, we celebrated Veterans Day as a nation. That reminded me of Dwight D. Eisenhower, our 34th president, a rare five-star general of the army, and the supreme commander of the Allied Expeditionary Force. With so many great accolades to his name, I was struck by this singular quote:
“Plans are useless, but planning is indispensable.” – Dwight Eisenhower
What surprised me was this notion about planning. If you’re at all familiar with D-Day or any of the other large military campaigns of that time, you know that none of them was a small, uncoordinated effort. They required massive logistics planning and perfect execution.
Like war, business can be unpredictable. One thing they both require is careful planning.
Plans are useless
No one can predict the future. The best we can do is to prepare as much as possible for what “might” happen. Donald Rumsfeld famously said:
“There are known knowns. There are things we know that we know. There are known unknowns. That is to say, there are things that we now know we don’t know. But there are also unknown unknowns. There are things we do not know we don’t know.”
One of those ‘unknown unknowns’ is how to run your business during a once-in-a-generation health crisis. Another is how to keep the doors open during rampant inflation caused by the worst supply chain crisis in 50 years. The existence of these unknown unknowns provides a business owner with a reason for a rainy-day fund or an insurance policy. “Just in time” inventory management is being replaced by “just in case.” The last 18 months have taught us one thing above all else: global economies are tightly woven systems that need everything to work, all at once, or else nothing works. The businesses that will succeed during these trying times are those that can plan successfully for the unknowns.
Two effective methods of planning are backward planning and decision trees. Both use different techniques to go from point A to point B and both allow for Rummy’s unknown unknowns.
Start with your end goal and work backward from there. This is essential retirement planning for anyone who has a 401(k) or an Individual Retirement Account (IRA). It starts with a simple question: What do you want when it’s all over?
- Do you want to build the business up and sell it?
- Do you want to be the next Amazon?
- Do you want to build a family legacy that will ensure economic security for your heirs?
Once you know the goal, put a timeline on it. Decades? Years? Months? For example, if your goal is to have $1 million in the bank by the time you retire at 65 and you are currently 35; you have 30 years to make that happen. What was last year’s income? What percentage do you need to grow per year to hit your target? Work backward from the end goal until you reach today, then you will know where to take your first step.
Example: Try something simple. It’s 3 p.m. and you want to catch a movie at 6 p.m. You have plenty of time, right?
- The movie starts at 6 p.m. and you are a 15-minute drive from the theater
- 5:45 p.m.
- You know it takes 10 minutes to find a parking space
- 5:35 p.m.
- You probably want to get popcorn and snacks, which means you have to wait in line
- 5:20 p.m.
- You need to get ready to go out, that can take an hour
- 4:20 p.m.
- You need to get something to eat first, that can take 30 minutes
- 3:50 p.m.
- You need to finish what you are doing, which will probably take 20 minutes
- 3:30 p.m.
- By this estimate, you have a 30-minute buffer to adapt to the unknown unknowns
- Now you are prepared in case something … wait a minute. Did you buy tickets yet?
- 3:20 p.m.
- You now have 20 minutes to adapt!
- Where did all the time go?
Time management is one of the hardest skills to master; planning is indispensable.
The decision tree
The second technique starts at the beginning. Every step of the planning process requires open-minded brainstorming for possible outcomes and your reaction to each of them. See below:
A decision tree gives you what all business owners need: options. When things go wrong — and they will — a decision tree will save you and your business. The decision tree is also a great way to forecast the unknown unknowns, things you haven’t thought of yet.
Go back to the movie theater model. Decision No. 1 may be what time to leave. A chance event could be traffic, construction, snowstorm, pulled over by a cop, flat tire, road rage, argument with passengers, etc. Each of those has now altered your original plan and each requires you to make another decision. What steps can you take to alter your plans and still make your goal of a 6 p.m. movie?
Planning is indispensable
These may be overly complicated examples, but hopefully, they are making you think about how you approach the big stuff. What would you do if you missed a key shipment from your supplier? What would you do if the bank cut your credit limit? What would you do if your star employee quit right before a big contract job?
As Eisenhower knew 80 years ago, the time to plan is not when your forces hit the beach, the time to plan is before the battle begins. Take it from General George S Patton:
“He who sweats more in training bleeds less in battle.”
Get to planning. Your business relies on you managing the knowns and the unknowns. Plans don’t always go the way they are supposed to, but planning is essential.