Identify your assumptions explicitly in order to improve the success of your strategic planning.
Our modern world is becoming increasingly dynamic. Businesses are failing faster than ever and our plans no longer seem adequate for managing the world around us.
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Trends, themes, forecasts change with such regularity that assumptions have a shelf-life. As soon as a trend seems to be developing and we have committed resources to it, it seems that things will begin to change.
How can we learn to take advantage of opportunities quickly enough? How robust to changing conditions is the plan? A plan is not robust if the slightest change in our initial planning assumptions will invalidate our chosen course of action.
Is there a way we can subject our plans to some testing before hand so that we can estimate how robust they will be in the real world?
By robustness, we consider how to apply the discipline of assumptions based planning which examines a plan before it is implemented to identify critical assumptions and their effect on maintaining the cognitive structure of the plan. It’s called identifying loadbearing members and is something that we use in military planning with great effect.
Examining the assumptions includes stating why it’s necessary to make a given assumption and what the justification for the assumption is.
Adding too many unnecessary assumptions fuzzes up our analysis and gives us the illusion of certainty and completeness in our plans. This is a dangerous road to travel. We should identify what it would take to prove or disprove the assumption. This will give us insight later in the strategic planning process for determining measures of effectiveness and measures of performance.
We should consider the cost of turning the assumption into a fact. It’s not always cost-effective to get to a level of complete certainty before we act. If we have limited budgets, we can’t get to certainty on everything, and so we should prioritize based on the value of information.
We also need to know the last time the information is of value in order to program our intelligence gathering assets properly. It may be that the cost of validating the assumption is greater than the potential reward for knowing the fact and we’re better off just making our best assumption and moving on.
By critically examining our assumptions upfront, we greatly improve the likelihood that our plans will be robust and effective when put into practice.
The technique of assumptions-based planning is a proven method for improving the quality of your planning process.
The Important Role of Assumptions in Strategic Planning
Ken Long, Chief of Research, Tortoise Capital Management
finance: http://www.tortoisecapital.org
my ebook: http://www.amazon.com/dp/B004D9FFW2
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