Tuesday, April 12, 2016

Multi-factorial Planning: Tricky Paradox or Timely Paradigm?

There is a general view that the greater the level of planning the greater could be the success of execution. Experts feel that Indian executives and firms plan less and aspire more as well as evaluate less and execute more, causing firms to be burdened with infeasible targets and unviable plans. Experts also propose Japan as the ultimate model of planning-controlled-execution and USA as a balanced model of planning-optimised-execution.  It is a moot point whether adopting of either Japanese or American model of business management would lead India to achieve better execution. That said, there are several perspectives of planning and execution that have emerged from global and Indian practice that are worthy of notice. Prior to moving forward on the topic, it is useful to consider what planning entails.

Planning typically requires data on the past, expectations on future, awareness of firm strengths and weaknesses as well as environmental opportunities and risks, analytical framework and a few other related inputs. Planning influences, and is influenced by, the length of the value chain. By nature, planning has deterministic ends but iterative processes. It is difficult to separate planning and execution. By and large, planning is considered a staff function while execution a line function. While planning is considered the starting point and governing platform of execution, planning is also considered to be a seasonal activity to be carried out by lean-staff at best. The question then is whether planning should remain a seasonal or continuous exercise, and in either case with narrow or broad participation. This post discusses some relevant issues and proposes a few contrarian thoughts as well.

Planning is disruptive

One of the paradoxical aspects of planning is that it is as much an enabler as it is an inhibitor. Without planning, goals cannot be established, strategies cannot be developed and execution cannot be effected. However, based on the inputs that are factored in, planning can also be inhibitory in nature. Given the current scenario of lead times in infrastructure and long gestation of projects, planning is essential to mitigate risks. At the same time, factoring in of the current delayed implementation of infrastructure projects can inhibit the very launch of a project. Planning tends to regulate as well as disrupt one’s thinking. If one asks a professional planner for advice on a new business venture, one would be inundated with more questions than answers. The questions can start from multiple business definitions to myriad aspirations that could be set. Executives must learn to use planning as a controlled accelerator rather than as a disruptive decelerator.  

Planning is not aspiration

Many confuse aspiration to be a goal or even a plan. One aspiration for a firm, for example, could be that the firm would launch all products successful in one market in all the balance global markets as well. This, however, is no more than an inspirational thought that could galvanize the organization into a new futuristic path. Believing in the aspiration as a goal could, however, lead the firm to a series of non-prioritized helter-skelter initiatives across the globe which the organization could fail to support. Structured prioritization coupled with a continuous reality check helps tame the aspirations to feasible and viable plans. The founders and CEOs have a major role to play in this moderation as they tend to be the primary customers for unbridled aspirations, and many times themselves the generators of mammoth aspirations, in organizations. Planning would be optimal when planners are blessed with creativity to dream but also accountability to aspirations.

Analysis is debilitating

Planning tends to be full of data points. For someone planning investments, the data points could include returns over the last several years of various asset classes, performance of individual funds, expected economic growth of domestic and foreign countries, likely expenditure profile of the investor, likely and emergency healthcare requirements and so on. Neither can all the data be captured nor can the analysis be mounted, let alone perfected. Notwithstanding the rise of big data analytics, it becomes impossible to factor in all relevant data points in a manner that they can complement human judgement which is so essential. Typically, deployment of larger than required planning formats tend to be highly debilitating to purposeful forward thinking.

Planning is visualization

Nothing can be farther from truth than to imagine that planning is best made only on paper or computer. In fact, the best plans of consummate planners are first visualized, and then only perfected on paper or computer. A consummate planner (all professional planners not being consummate planners!) has deep knowledge of the subject, and understands what it takes to achieve a goal. As a result of this deeply embedded knowledge, the consummate planner tends to get all the components of a plan in a visual framework in his mind. A consummate planner who is charged with the mission of producing a million smart phones as a green field project can visualize the site, factory and organization infrastructure as well as R&D, manufacturing and R&D value chain along with financial needs. This visualization leads to a healthy debate between the planner and the promoter on what is doable and not doable, and leads to a more purposeful and more relevant planning.

Planning is iterative

The most challenging part of planning is that a plan will always be a sum of moving parts. There could be changes even before the ink on the paper dries, euphemistically speaking. The answer to this challenge does not lie in either abdicating the planning process or getting overwhelmed by continuous analysis. The answer lies in being open to changes all the time. The best planning template would comprise a solid and stable core but flexible and adaptive peripherals. As an example, planned development of new expressway should always be firm on the alignment and lane sizing but should be flexible on development of social and industrial infrastructure alongside the expressway. A demand and revenue maximizing model for the peripherals would de-risk the core and keep the project on track. Reverting to the smart phone project, one could make a choice as to which of the three critical value drivers, viz., design, manufacturing and marketing (but not all the three) would be the solid core and which would be considered for total outsourcing, joint development or leveraged development.   

Planning is organizing

Planning and execution may be two sides of a coin but the coin itself is organizing. More than execution, planning is organizing. A plan without elements that cannot be organized cannot be a plan at all. Organizing here refers not only to factor inputs and resources but also to people. It would, for example, be impractical to plan a one lakh employee coding unit in USA when neither local STEM candidate pool nor HB1 visa limits can support the formation of such an organization. It may similarly be audacious to plan an Intel-competing semi-conductor plant in India without organizational clarity on how the technology and material value chain can be built and how people skills can be marshaled. Another rhetorical question, for example, could be whether Make in India would be successful without Skill India. Planning for Make in India must therefore be led by planning and executing for Skill India. A good planner would have a complete understanding not only the business value chain but also the organizational elements.   

Planning is addictive  

If execution is challenging and instantly calibrated by results, planning is addictive and could lead to perpetual procrastination. Professional planners tend to get cocooned with their own plans, and move from one plan to another rather than follow a plan-execute-plan cycle. It is not uncommon for planners who see their plans tripping with poor results plan for higher results rather than identify and resort to corrective actions. This approach is complemented by an executive leadership which hates to be identified with failures. As a result of this tricky combination of compulsive planners and escapist executives, planning tends to become an end in itself in certain firms. It is easy to separate firms which plan only for planning sake from firms which plan with an execution focus. The former survive more by make-believe (though not for far too long) while the latter prosper by value creation.

Timely paradigm

Planning is an essential foundation for building a strong and viable superstructure. However, planners must not lose sight of the ultimate goal of building lasting value on ground as opposed to the easy temptation of scaling up value on paper. To be able to do that, the tricky pitfalls of planning need to be avoided by resorting to a smart platform of planning interlaced with execution. The paradigm works with a leadership that integrates planning and execution, and looks at planning and execution on an end-to-end basis. The paradigm involves drawing up plans with a long term horizon, ensuring a solid core and flexible externalities. The leadership must watch not only how others are executing but also how others are planning. Korea succeeds not merely because of their speed in execution but more essentially because of their productivity in planning. An integrated paradigm of timely planning and speedy execution tends to be industry leading, and globally competitive.

Posted by Dr CB Rao on April 12, 2016   

1 comment:

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