No Plan Survives The Meeting with Reality and Appearances are Deceptive
It may well be that I was the best-performing salesperson in Europe that year, but I can’t claim that I was also the best. It was a stroke of sheer luck on which I didn’t have the slightest influence.
We have to dig far back in history to find the source of the statement that plans never hold. According to Wikipedia, it was Field Marshal Helmuth Karl Bernhard Graf von Moltke (October 26, 1800 – April 24, 1891) who first recognized that military reality is so complex that no plans come close to covering more than one battle at a time.
The tactical outcome of an engagement forms the basis for new strategic decisions because victory or defeat in a battle changes the situation to such an extent that no human acumen can look beyond the first battle. (Moltke)
After more than forty years in business with goals, plans and budgets, I must acknowledge that it fits civilian life perfectly as well.
In December 2018, I wrote a lengthy article on how I set goals and plan my activities. I still use that method, but it does not mean that I reach the goals I set. Instead, I deliver some other results :-).
I didn’t publish any new books in 2019
According to my plan, I should have published two books in 2019. First Going Global on a Shoestring, on which I have worked for a long time and then a book on leadership and management, which I should write with Bo Nielsson.
None of them got completed.
Was it lousy planning?
No, the plan was perfect, but the reality changed, and I chose to adjust my priorities.
In 2018, I published the book 5,460 Miles from Silicon Valley – The In-depth Case Study of What Became Microsoft’s First Billion Dollar Acquisition Outside the USA. It was the English version of Fra Damgaard til Microsoft (from Damgaard to Microsoft), which came out in September 2017.
What my plan for 2019 didn’t foresee was that the releases in 2017 and 2018 also boosted sales of my previous books Building Successful Partner Channels and Management Consulting Essentials, as well as the number of inquiries that the books combined would generate.
Keynotes, articles and workshops.
So instead of releasing new books in 2019, I wrote and published articles and ebooks for Bilagscan, The QBS Group, Uniconta and RamBase. I delivered several keynotes on the topics that my books cover and ran a series of workshops with companies where some wanted to improve their international revenue generation capabilities and others their sales through partners. I also worked on Going Global on a Shoestring but didn’t finish it. The leadership and management book didn’t get much attention, either, since Bo Nielsson was tied up elsewhere.
I could have chosen to decline the many opportunities, stick to the plan and get at least one book completed. But I did not.
Working with companies on practical issues is an essential source of insight into today’s current challenges. The work requires substantial research and the solutions entail having to position the companies in their overall market and industrial picture. In doing so, the assignments make a significant contribution to my books. They provide valuable background.
My advantage is that through my work, I gain insight into many companies’ situations and challenges, including how they choose to tackle them. It consistently confirms my thesis that no two companies are alike and that what works well in one place does not necessarily work well elsewhere. When you come in from the outside, as a consultant and facilitator, you better stick to the solution discovery process. Most business executives have a great fondness for action and prefer to jump directly to Execution, preferably based on the expert’s advice.
But that’s not how business works. Hither we have no Newtonian laws. There are too many unknown variables. I do not recommend that you analyze yourselves to death and commission lengthy consulting reports. I recommend that you document your assumptions and expectations so that you can adjust the course when the outcome of your activities differs from what you have hoped for.
Objectives, plans and budgets
One thing is how I run my little shop. I am my own boss and can decide for myself whether I will adhere strictly to my goals and execute according to the associated plans or instead grab a so-called opportunity. What about companies that have employees, managers, a board of directors and the whole shebang? Where there are bonuses and other contractual obligations based on the plans and the budgets?
If you run a shop that has found a business model that works (that means that you are not a startup), then it’s probably best to stick to the plan and not be distracted by new opportunities. It is a rule of thumb, however, that is difficult to manage in practice. Opportunities come in many different flavours; sometimes it would seem downright silly to ignore them (read about Damgaard Data’s collaboration with IBM). The problem is that the outcome of opportunities is tough to assess precisely in advance. What appears to be a golden egg often turns out to be a waste of time and money. Rarely the opposite.
If you grab an opportunity (which is equal to accepting that your activities deviate from your plans), then you also need to revise the parts on which your employees get measured. Otherwise, there will be tears and trouble when the year is over (see note 1).
When the uncertainty is complete
I have worked with startups and new business ventures for many years. Setting goals, detailing plans and developing budgets that are likely to hold is practically impossible. I usually claim that it’s like implementing a business model shrouded in dense fog.
Still, you have to make a bid for what to do, estimate what it will cost and suggest what you can expect to achieve.
Having taken my fair share of successes and failures, I recommend being very careful with documenting your assumptions. As mentioned, the plans and budgets never hold, and funnily enough, most new initiatives come at a higher cost while revenue drags behind. As the person responsible, you must explain why there is such a big difference between plan and outcome. If you have documented the assumptions for both the revenue and the cost sections of your project, then you can more easily point out which of them did not hold. And you can adjust both plans, budget and activities based on the insights gained. If you have not documented the assumptions, then you are exposed to justified criticism. When one does not reach her goals and cannot explain why, then it is due to either poor planning or poor execution. Maybe both. If you want to avoid this and instead learn something about your market and your industry, then you have to be extremely meticulous (as in insanely fussy) with documenting your assumptions. The numbers in your budget sheet do not say anything.
Successes are made when budgets are set
If you believe that success is something that is achieved by hard work, will be decided by the end of the year and that can be read from your results, then you are wrong. It is created before the fiscal year begins. It is created while setting goals, detailing plans and defining budgets for the coming period.
In most companies, it is worthwhile fighting like a lion to get realistic (I recognize that as a very subjective issue) goals, plans and budgets. It is paramount that you sincerely believe that, with the budgets allocated and the plans defined, you stand a good chance of reaching the goals. Don’t start with the objectives and an Excel sheet detailing turnover and expenses. Start instead with an assessment of the market and the industry (the business model environment). Get a measure for the size of the market and how you believe it will develop in the coming budget period. You must at least keep your market share. An increase can only happen if you have a strategy and plan that is better than your competitors’.
Remember that your competitors all want, and some also plan, to increase their market share. You obviously don’t all reach that goal!
With an objective in mind, you can then detail what it will require to get there. Budgeting and planning are typically very iterative processes since you may not be able to get the resources needed to achieve the first set of objectives you have outlined.
Your boss and especially your CFO will whip you into making more revenue and accepting fewer costs than with which you are comfortable. Don’t give in and don’t try to please anyone. Set your goals, plans and budgets based on your current situation, market assessment, and what you believe is realistic with what you have. Be prepared to find yourself another job if someone tries to pull a budget over your head. If someone comes up with a so-called management objective, then you need an escape route, or it is time to activate your LinkedIn profile and network.
Be careful with too much sandbagging
Sandbagging is a well-known phenomenon in large companies. In the big annual budget circus, some salespeople manage to negotiate a low revenue target and reasonable expenses. They have knowledge that the managers and the CFO do not have. Typically, they know of some large customer investment plans that they keep to themselves.
When the year comes to a close, they have reached 180% of the budget and can collect a sizable bonus. But now budgets have to be laid again, and a result of 180% will raise the expectation level for the next period accordingly. In that situation, I can predict some tough budget negotiations.
It’s OK to sandbag a bit. If you increase your market share, no one can claim that you have not done well. But stay below 110 per cent. If your results start to cross this line, then be transparent about it and offer to adjust the budget. There will inevitably come a day when it goes in the opposite direction, and then it helps with a positive balance on your goodwill account.
Note 1: Appearances are Deceptive
In 1981, I was a newly minted account manager in the Danish subsidiary of Control Data Corporation. In the middle of the year, one of my colleagues was appointed sales manager, and I took over his clients. They were added to my bonus plan, but the budget was not adjusted. Whether it was a mistake or deliberate, I do not know.
At the end of the year, one of my new customers decided to renew their mainframe park and placed a five million Euros order. That amount went straight into the revenue line of my bonus plan and triggered a huge bonus.
I became the best-performing salesperson in Europe that year, and in 1982, the lady and I went to Hawaii with everything paid for. My boss didn’t reach the same level and had to stay at home. He wasn’t happy with that. He quickly recovered from his disappointment, because it wasn’t his money that sponsored the bonus and travel. Now he could boast of having one of the firm’s best salespersons in his team, and that earned recognition.
It may well be that I was the best-performing account manager in Europe in 1981, but I can’t claim that I was also the best. It was a stroke of sheer luck on which I didn’t have the slightest influence.
I tell the story because it shows how grotesque and random reality develops sometimes. In the course of 2020, I will write more articles, revealing some of the many unusual experiences I have had throughout my professional career. What looks like hard work and professionalism on the surface is often garnished with a substantial portion of sheer luck.