This article is contributed by Guy Kingston
Modern business planning owes it origins to two very different parents.
The first is the obligation to prepare a “Prospectus” when floating a company, outlining the “prospects” of the new venture. Although an early prospectus has little in common with a modern business plan, it might well have contained elements that might find their way into such a plan – a statement of purpose, a “vision” of where the new company intends to be in a few years, an analysis of opportunities and threats, and so on.
A prospectus is primarily a legal and financial document, but it is also a marketing tool to sell the new company to investors. What it is not is a strategy.
The second major influence on business planning is military planning. Many of the early pioneers of business planning were professional soldiers or naval officers who were retired or who found themselves surplus to requirements between wars. They brought the techniques they had learned in the services into the world of commerce.
There is a saying to the effect that “When amateurs talk about war, they talk about strategy; when professionals talk about war, they talk about logistics.”
There is much truth in that. The key to winning wars is less actual fighting than being able to move men and material at short notice and under pressure to the place where they are most needed. The army that does this most effectively will usually win the fighting.
Since professional soldiers devote a great deal of their time and thought to this, they tend to get good at it. Experience has taught them a few simple techniques that are usually very effective in practice. Although there are many famous logistical failures, they are famous because they are exceptional.
This is the military efficiency that proved so useful in the private sector.
However, the downside of professional soldiers being good at logistics because they talk about the subject more than strategy is that they are not so good at strategy.
Career soldiers are not necessarily expert strategists. The skills that make them good at logistical detail rarely come with a view of the bigger picture. Experienced commanders have often made elementary strategic errors that even a well-informed amateur would have foreseen and avoided. Whatever one’s view of the policies of the West in Iraq and Afghanistan, no one can deny that the implementation of those policies has been full of avoidable strategic errors.
Many of the fine military minds that influenced the development of business planning were characterised by the same combination of logistical skill and strategic blindness.
Here then is the great gap between the two sources of business planning: neither was particularly interested in actual strategy.
Those who could draft a good prospectus might be able to conjure up an enticing picture of how things could be, and those in the military tradition could deal with the nuts and bolts of running a business, but the problem of turning the pretty picture into the nuts and bolts was never addressed.
There were plans and plans but no real strategy.
This original problem has never quite been resolved. One sees it reflected in too many business plans today. They are big on the broad vision and sound on the operational details, but have no strategy to turn one into the other – which, one would have thought, was the whole point of a business plan in the first place!
About the Author:
Guy Kingston produces and presents the Mind Your Own Business podcast, offering free business advice to entrepreneurs and business owners. As well as audio podcasts there are more articles like this, compelling videos and a must-read blog. All at www.myobpod.com or you can network and join in discussions on the MYOB Facebook group.
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