Business Planning

How Optimism Kills Business Planning

Are you knee deep in business planning? Consider that the very ideas that support how you grow your business and where you should invest likely already exist. However, you may be overlooking them.

It’s natural this time of year for CEOs and Executives to reflect on their organization’s performance during the past year. Considering whether the year was good, mediocre or poor, most of the CEOs that I’ve worked with are able to sustain an optimistic view of what the new year will bring. This makes sense, but have you considered that being too optimistic can actually limit our ability to assess what needs to change?

Don’t misunderstand me here, I’m all for being optimistic and in fact wrote earlier this year on how a realist is a pessimist in disguise. The problem is this optimism lets us (and those around us) off the hook too easily.

There are three ways in which optimism can kill business planning:

1. Optimism shifts our attention away from cause. If sales were down what were the contributing factors? An optimistic view might lead us to believe the result was due to the loss of a key customer account. The outcome was the loss of the customer, however the issue that requires resolution is why there was an inability to predict the customer departing and how any these factors might further impact other customers.

2. Optimism supports static rather than a dynamic strategy. I can’t tell you how many business planning meetings I’ve been involved in in which strategies or key objectives are dismissed as a result of optimism. “This is just a one off situation” or “This hasn’t happened before, so doubtful it will happen again” are optimistic statements that result in an unwillingness to consider how existing strategies need to change.

3. Optimism diminishes a sense of urgency. Although being optimistic can maintain a positive attitude, where the factors above exist optimism can also diminish any sense of urgency. Slower then expected growth that is tied to market factors rather than poor processes or ineffective planning can mask the need for rapid action.

While you reflect on how the business performed during the past twelve months, consider asking “why” and “how” more often.

If revenue was flat, why?

If the contributing factors included the loss of a key customer account, why was the account lost?

How might these factors influence other customers? Why wasn’t this cause predicted?

Optimism serves motivation, but it should limit our ability to effectively assess and understand our performance shortfalls and opportunities.

Do you need assistance in creating an effective business plan? Learn about the Business Planning services I offer.

© Shawn Casemore 2015. All rights reserved.

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