Why plans don’t always work, but planning does

You have to very brave or foolhardy to engage in the Brexit debate, but there are some real lessons for managers to be had from the issues being raised, and one of them is the accusation that plans were not put in place for leaving the EU when the referendum was being organised. The trouble is, planning depends on having forecasts on which to build them, and if the forecasts are wrong (and most people forecast a vote to Remain) then the plans will be wrong or missing.

Forecasting and planning are core functions of management (Henri Fayol’s ‘prevoyance’) and all other functions depend on them. It’s impossible to organise work, monitor performance or co-ordinate resources without having plans in place, whether it’s at first line level or long term strategy. The trouble is, planning can often give an illusion of certainty about the future that is really no more than wishful thinking. Even when there has been an attempt at serious forecasting, using statistical analysis of data, scenario planning and other tools, all too often the fundamental assumptions on which forecasts are based are not stated, let alone questioned and reviewed.

Many years ago, when I was starting out in Marketing, I was responsible for sales forecasting for a kitchenware company. 25% of our sales were as wedding presents and we assumed that people would carry on getting married at more or less the same rate but (this was the mid 1970s – I know, the dark ages!) and the average age at which men and women got married rose quite sharply in a very short period of time. This caused our sales to dip slightly, which we put down to increased competition and responded by discounting and similar promotional strategies. It’s a commonplace that most businesses make their profit on Fridays afternoon; the rest of the week is simply earning enough to cover costs. Unfortunately we made out profit between 4.30 and 5.00 – it was so small. That small dip was enough to turn us into a significant loss. The big advantage of being in charge of planning is you get the first sight of trouble and I did the rat and sinking ship act as soon as I could.

What this taught me (with the 20:20 vision of hindsight) is to be very clear about the assumptions that underpin your forecasts; in particular, assumptions about the cause and effect relationships that will shape how the future turns out. You may not be right about the actual effects, but at least you focus on what is causing them and can monitor these as much as you monitor their effect on sales (or whatever). This shifts the emphasis from the plan (the outcome of the process) to the process itself. It’s the forecasting and planning that matters not the forecast and the plan. It reminds you why you said sales would rise, why we’d need more capacity, why we took on those extra people. If those assumptions prove false, then all the decisions that arose from them are likely to be faulty. The plan wasn’t wrong, it was the planning.

It seems clear that both the Cameron Government and the Civil Service had made a set of assumptions about why people would vote to remain or leave, had pitched their messaging around that (essentially about economic risk or ‘Project Fear’ as it was described) and then developed their plans based on what people would do as a result. If their assumption was wrong (and it looks like it was), then their planning would be wrong (as it seems it was). This is one lesson from Brexit that any manager needs to take to heart and learn from.

Merry Christmas and a prosperous 2017