Just about every day, new technological developments threaten to destabilize even the most intricate and best-laid business plans. Organizations often find themselves scrambling to adapt to new conditions, and that's created a shift in how they plan for the future.
According to a 2017 study by CompTIA, only 34% of companies are currently developing IT architecture plans that extend beyond 12 months. One reason for that shift away from a longer-term plan is that business contexts are changing so quickly that planning any further into the future is nearly impossible. "If your company is trying to set a plan that will last five to 10 years down the road," CIO.com writes, "forget it."
I've heard similar statements from countless customers and partners around the world. Technological innovations are occurring at an unprecedented pace.
The result is that long-term planning is dead. We need to be thinking differently about the way we run our organizations if we're going to succeed in this new world.
How planning died
As I wrote in The Open Organization, traditionally-run organizations are optimized for industrial economies. They embrace hierarchical structures and rigidly prescribed processes as they work to achieve positional competitive advantage. To be successful, they have to define the strategic positions they want to achieve. Then they have to formulate and dictate plans for getting there, and execute on those plans in the most efficient ways possible—by coordinating activities and driving compliance.
Management's role is to optimize this process: plan, prescribe, execute. It consists of saying: Let's think of a competitively advantaged position; let's configure our organization to ultimately get there; and then let's drive execution by making sure all aspects of the organization comply. It's what I'll call "mechanical management," and it's a brilliant solution for a different time.
In today's volatile and uncertain world, our ability to predict and define strategic positions is diminishing—because the pace of change, the rate of introduction of new variables, is accelerating. Classic, long-term, strategic planning and execution isn't as effective as it used to be.
If long-term planning has become so difficult, then prescribing necessary behaviors is even more challenging. And measuring compliance against a plan is next to impossible.
All this dramatically affects the way people work. Unlike workers in the traditionally-run organizations of the past—who prided themselves on being able to act repetitively, with little variation and comfortable certainty—today's workers operate in contexts of abundant ambiguity. Their work requires greater creativity, intuition, and critical judgment—there is a greater demand to deviate from yesterday's "normal" and adjust to today's new conditions.
Working in this new way has become more critical to value creation. Our management systems must focus on building structures, systems, and processes that help create engaged, motivated workers—people who are enabled to innovate and act with speed and agility.
We need to come up with a different solution for optimizing organizations for a very different economic era, one that works from the bottom up rather than the top down. We need to replace that old three-step formula for success—plan, prescribe, execute—with one much better suited to today's tumultuous climate: try, learn, modify.
Try, learn, modify
Because conditions can change so rapidly and with so little warning—and because the steps we need to take next are no longer planned in advance—we need to cultivate environments that encourage creative trial and error, not unyielding allegiance to a five-year schedule. Here are just a few implications of beginning to work this way:
- Shorter planning cycles (try). Rather than agonize over long-term strategic directions, managers need to be thinking of short-term experiments they can try quickly. They should be seeking ways to help their teams take calculated risks and leverage the data at their disposal to make best guesses about the most beneficial paths forward. They can do this by lowering overhead and giving teams the freedom to try new approaches quickly.
- Higher tolerance for failure (learn). Greater frequency of experimentation means greater opportunity for failure. Creative and resilient organizations have a significantly higher tolerance for failure than traditional organizations do. Managers should treat failures as learning opportunities—moments to gather feedback on the tests their teams are running.
- More adaptable structures (modify). An ability to easily modify organizational structures and strategic directions—and the willingness to do it when conditions necessitate—is the key to ensuring that organizations can evolve in line with rapidly changing environmental conditions. Managers can't be wedded to any idea any longer than that idea proves itself to be useful for accomplishing a short-term goal.
If long-term planning is dead, then long live shorter-term experimentation. Try, learn, and modify—that's the best path forward during uncertain times.
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