In times of economic prosperity and a booming market, many businesses can survive and thrive even though they put very little energy into mapping out their future.

However, in times of economic stagnation, business managers need to be a lot more certain about how they use their resources in order to generate return and ensure survival.

Therefore, in times such as these, with high interest rates, a volatile oil price and general economic uncertainty it is critical for managers to invest some time in mapping out their future by engaging in some form of business planning.

Business planning is one of the most discussed and debated topics within business books and magazines. Most books and magazines lay out the key steps for developing a business plan and highlight the contents of a business plan document but very seldom do they capture the inherent tension that any manager needs to deal with in the business planning process.

Business planning is a process riddled with paradox and any manager leading this process, needs to be aware of the important trade offs and needs to manage those conflicts effectively.

Managers need to manage the tension between focusing on the future and being effective in the present, between focusing on hard issues versus focusing on the soft issues, between being optimistic versus being realistic and between being focused on only one outcome versus allowing for alternative outcomes.

This article will highlight the nuances embedded in some of the most powerful paradoxes embedded in the business planning process.

The purpose of a business planning process is to map out a path for the future of a business, to set goals and to establish what the people in the business will do to achieve those goals. In this process it is easy to get caught up in where the business will be in five or ten years time without worrying about where the business is now and how it will get through the next year.

Some groups engaged in the planning process will get stuck talking about issues in the distant future, drawing them away form actionable steps in the short-term while other groups risk getting so focused on the short-term steps that they don’t consider where those steps are likely to take them in the longer term.

The manager leading the business planning process should therefore regularly force people in the process to cycle between discussing and focusing on longer term, big picture issues and short-term, immediate action times.

Paradox #2: Business planning requires one to create excitement and energy around the soft issues of vision, innovation and culture while also accounting for the hard issues of financial return and technical specifications

If you have a bunch of accountants in the business planning team, then there is a high risk that you will become absorbed in the financial issues relating to business plan.

If engineers dominate your team, they may be overly concerned with technical aspects of new products. If marketers dominate the team they may become overly engaged in blue sky thinking and talking about how they plan to rule the world.

A successful business planning process requires that both hard issues (technical and financial) and soft issues (vision, innovation and differentiation) be discussed, debated and integrated into the company map.

The manager responsible for the overall planning process should ensure that the team is made of people that represent different ways of thinking and that each of those people has their say as issues are discussed, debated and decided upon.

Paradox #3: One purpose of engaging in a business planning process to get others energised and optimistic about the future but one also needs people to keep their feet on the ground and be realistic about what can and can’t be done

Business planning teams that are overly excited and ambitious about the new business or product they are launching, risk getting into a state of hype and over optimism as they go through the planning process.

This may blind them to some of the realities of what they are doing and cause them to make unrealistic assumptions about the future. Some business planning teams may however be dominated by a devils advocate, causing the team to always err on the side of caution.

This can mean that the process fails to excite and motivate people because very few exciting opportunities are embedded in there as they focus too much on what is probable as opposed to what’s possible.

The role of the manager leading the process is to ensure that both the optimists and pessimists have a voice and are allowed to debate their perspectives in a healthy way. 

Both the optimistic and realistic perspectives should be integrated into the final plan.

Paradox #4: Large, diverse teams can provide valuable insights into the future of the business but having too many people involved can mean that decision making is slow and ridden with conflict 

Smaller teams tend to make decisions quicker. In smaller teams there are fewer peoples’ perspectives to listen to and integrate and as a result there tends to be less conflict.

In making important decisions about the future of business it is tempting for the leader to use a small team so as to avoid conflict and indecision. In this way the leader has greater control over the outcomes of the decision making process and can ensure that the process does not drag on too long.

Keeping the team small can however mean that useful perspectives and insights are not taken into account. An exclusive process may therefore provide for quick decisions but it does not necessarily allow for the best decisions.

In order to allow for the best decisions to be made within a reasonable amount of time the leader of the process needs to ensure that the team is big enough to get all important perspectives but not so big that a decision can never be reached. 

Paradox #5: Establishing a single goal in a planning process can get a team really focused and make them resolute to achieve that outcome, but in a volatile environment an organisation may be better served by having multiple possible outcomes contingent on uncertain events

Planning is about discussing and deciding on the desired outcomes from an activity and then putting processes in place to achieve those outcomes.

Some business planning teams will focus on a single outcome, being very specific about what they plan to achieve and not giving themselves any other option but to achieve what they set out to achieve. Other teams may feel that focusing on a single outcome is restrictive and inflexible and they therefore create a vague plan with many possible outcomes.

As a manager, you need to be conscious of the path that you choose: single outcome with no alternative or allowing for multiple outcomes with more flexibility.

Less volatile environments with little technological change allow for more definitive plans whereas highly volatile environments with rapid change may require a business plan with more flexibility.

Certain management teams are also better off dealing with the ambiguity of multiple possible outcomes than other teams. You therefore need to match your environment and your team to the flexibility of your business plan.

Although, these are not the only tensions that are likely to arise in a business planning process, these five paradoxes cover some of the major conflicts that the manager responsible for a business planning process needs to confront.

If business planning were an easy, clear-cut process then almost everyone would get it right first time around.

The reason that so many people fail to establish meaningful plans that set their business on a winning path is that they fail to recognise and manage the ambiguity inherent in the process.

Recognising and managing the paradoxes highlighted here is crucial to building an effective competence in business planning so that your business can survive and thrive in uncertain times.

Greg Fisher (CA) SA, MBA (GIBS) is an associate faculty member at GIBS. He is currently researching Technology Entrepreneurship at the University of Washington in Seattle. Greg is presenting a two-day executive education course at GIBS entitled: Crafting Your Business Plan on 26 & 27 August 2008. For details and bookings contact Vivienne Spooner, Tel:  +27 11 771 4275,
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SOURCENOTE: University of Pretoria’s Gordon Institute of Business Science; www.gibsreview.co.za