Why single-use business plans suck

Back in the early '90s I joined a season-long NFL football pool with some friends. The format was simple: before the season started, you filled out the entire schedule for the coming year, circling the team you thought would win each game. Then you watched the actual season play out. Each time one of your predictions proved correct, you got a point. The person with the highest point total at the end of the season was the winner.

This is harder than it sounds. A lot changes during the regular season — players get hurt or go into slumps or get suspended for misconduct, new stars emerge, teams have good chemistry or they don't, coaches inspire or alienate their squads. Everything changes, but your preseason picks stay the same.

I've participated in this pool nearly twenty times now. It's a tradition among my friends and family, and the bragging rights involved are not trivial. We still remind my friend's dad about the year my five-year-old daughter beat him out for third place despite having picked the winners based on either the cuteness of the teams' mascots (Go, Dolphins!) or the desirability of their hometown as a vacation spot (Yay, San Diego!).

Over the years I've done better than most, winning four or five times now. But I've also felt my interest in the pool wane, and when I send in my picks next year it will be a friendly obligation, not the act of enthusiasm it once was.

The trouble with the football pool is the format. There's just too much chance. No matter how much expertise I have and research I do (way too much for an unpaid observer, let me tell you), I don't have what I need to accurately forecast what's going to happen in week 16. I don't need more preseason data — I need regular-season data.

I'm not the only one. Here's a snippet from Gregg Easterbrook's annual "bad predictions" wrapup over at ESPN.com:

Six of the top 10 teams in last June's ESPN.com's 2006 power rankings failed to make the playoffs. Last July, "SportsCenter" had football pundits Mike Golic, Sean Salisbury and Mark Schlereth spend a week producing an elaborate complete-season forecast. Their predicted Super Bowl winner? The Carolina Panthers, who failed to make the playoffs. They forecast Indianapolis would lose in the first round of the playoffs, while the Redskins, whose actual finish was 5-11, would be the league's third-best team. Four of the group's predicted postseason entrants (Atlanta, Carolina, Pittsburgh and Washington) failed to achieve a winning record.

What does this have to do with business planning? Ideally, nothing -- except an awful lot of companies still prepare their business plans as if they were football pools.

You know the drill. A company needs a business plan to get financing or to satisfy partners or to legitimately try to plan their activities. A flurry of effort produces a document, which satisfies the short-term objective. Then everyone gets busy, time passes, things change. By the time someone takes a fresh look at the plan, it looks a lot like my pool does in January. ("I picked the Falcons? But Michael Vick's in prison.")

A better model for business planning — and football pools, for that matter — is what Tim Berry, our president, calls the "plan as you go" method. Sure, you need a "preseason" plan to organize your activities and get started. But once you see how that part of the plan fares in the real world, you can learn from that, and change course as necessary, so you're not still picking the Saints to win in week 4 after their offensive line has fallen flat and they've dropped their first three.

Like Tim always says, your business plan will be wrong. The value comes in learning where it is wrong and making the changes necessary to still achieve your objectives in the long run. Call it the fantasy football model.

Josh Cochrane
Director of Online Marketing
Palo Alto Software

Comments

[Beth Anne Whalen]

Great post, Josh. Good analogy drawn with the football pool. I enjoyed reading it.

[Kristen Langham]

Great post! I really enjoyed reading it and thought the football pool analogy was perfect and one so many can relate to.