Business planning is an important part of setting up or running any organisation. It helps us to establish what we will do, how we will do it and how we will finance our activities. But it can be incredibly difficult to forecast exactly what is going to happen in the future. This means that the business plans we have slaved over for months can very easily become obsolete within weeks, if not days. So here’s an alternative approach: iteration.
Traditionally, business plans are static documents. They are prepared at the beginning of a period of time (usually from one to five years) and forecast what the organisation will be doing over that period. This includes volumes of activity, income and costs. Now, if you can tell me exactly what your organisation will be doing in 18 months time, then this approach will probably work just fine. But if – like most of us – you have little idea how things will look next week, let alone next year, then the standard way of doing things is unlikely to be the right one for you.
In the real world that exists outside of business plans, we adopt a slightly more pragmatic approach. We do something, we see how it works and we then tailor our future plans on the basis of our past experience. If something works well, we do more of it. If it’s a disaster, we knock it on the head and move on. If there are changes in the external environment that have an impact on what we do, we change our activities to reflect the new reality. What we don’t do is just carry on regardless, because that’s what it says in our business plan.*
I call this an iterative process to business planning. Iteration means repeating a process over and over again with the aim of approaching a desired goal, target or result. Each repetition of the process is called an ‘iteration’, with the results of one iteration being used as the starting point for the next one.
Iteration allows us to mould our business planning around the cycles on which our organisations operate, whether they last months, weeks or even days. It also means that we can respond quickly to feedback from our clients, customers and partners, rather than waiting for the next review of the business plan.
It does mean, however, that we can just ‘go with the flow’. We need to have a strong vision of where we want to be. We also need to have some idea of the key actions we will take to get started. And I, personally, always like to have some basic understanding of the resources that we have to play with. But the rest we can figure out as we go along. That’s the value of iteration, iteration, iteration.
* Some organisations do just this, of course, but they generally aren’t around for very long.