Business Planning and 'chariots of fire'

Long time back I remember seeing a movie based on a sports theme. It was quite a popular movie and if I am not mistaken (or rather if my memory serves me right) it was 'Chariots of Fire'. What has stuck in my mind was a sequence which I feel has some message for the business world-especially the IT business of the new economy.

Business planning is a fairly established practice. You do it so that you can assess what resources you will require to conduct your business. You also estimate the revenue that you will generate. And where you would ultimately and up from a profitability perspective. Doing so also helps you kind of check how you're doing as you go along.

I've known people to look at the business planning exercise in different ways. Some set a revenue target first and then work back what resources will be required to achieve those targets. Others work from a cost perspective. Their way of looking at it could be to assess what they can afford and then evaluate means of maximizing returns on those investments.

Both approaches, I guess, have their pros and cons. I am sure the same people may adopt these different approaches under different circumstances. So why am I talking about it?

What I find interesting (if I can use this word) has to do with some of the assumptions that we tend to make in a business planning exercise. Many old economy companies have followed a traditional practice of increasing their targets by a certain percentage compared to the previous year's achievements.

But how should the new economy companies plan? They do not have a base to start with. Many organizations, therefore, end up going by broad market projections. The worst thing to do in such cases is,ofcourse, to target to capture a certain percentage of market stores. (No better way to combine the worst practices of the old age and new age.)

Why am I saying so? Well, there is no way that you would generally have to validate these projections. (If you do, I strongly suggest that you should start a research business of your own!) And were known projections to have gone wrong, haven't we? (Remember how even the financial safety ratings pronounced by some leading organizations led to investor losses in the past! And how the developed nations over estimated India's market potential for white goods not too long back!)

I must admit that the projections on number of Internet users worldwide have proved to be much less than actual. But that is no way of justifying such projections. The fact is that the projections were wrong anyway.

So much for start up projections. Does it mean your second year business plan will be more reliable? Maybe! But I don't think you can be sure. Demands have a peculiar way of picking up, or going down. So you may actually end up under planning or over estimating.

Does that mean that the new economy companies are doomed either way? (I am not sure if I can even afford to hint something like that!) Surely there has to be a model that will work for such organizations. And that is what brings we to 'Chariots of Fire'.

The lesson offered this sequence I was talking about is that when you're running a 100-meter dash, you can't afford to look over your shoulder to see how close your competitor is. That is exactly what the challenger in this movie does and in the process loses a vital moment that gives the 'hero' the edge.

I am not trying to draw an absolute parallel here. But the comparison may help to provide us some direction. The new age economy is all about things like 'first mover advantage', speed of execution and all that. Most organizations are trying to get it right. There have been some innovations and many are trying to copy successful models. In this race akin to the 100 meters dash, do you have the luxury of time to see what your competitor is doing? If you do may be you've already lost the race!

In any given situation, there are the real winners and they also ran. In the current evolving new age scenario, broad directions are all that is available. To try to run the organization based on those parameters may well be an exercise in futility.

The new paradigm calls for creating new opportunities. The directions may be there. But you need to create your market place. And that means development work. Orienting possible clients to your way of looking at things and establishing bonds. 

More often than not, this calls for sustained market development activities and hoping to create those sales. It is quite possible that all you will be able to do is do your part in the best manner possible and hope that things work out and the market responds.

Chances are that by focussing on what you need to do from a market development and organizational capability development perspective; you will put in all energies to do it best. And make a mark. The business plan should focus on this. Revenues then are only a bye product of energy spent well. Just looking over your shoulder to see if the revenues are happening or not, probably may not help!