Plans can go astray. Check your course and expect the unexpected

It’s midyear. This is high time to assess how your business is doing versus your strategic business plan and expectations. You many need to make adjustments or even big changes in your plan based on your progress and current and expected - and even unexpected - events and trends. Here’s why.

Plans can go astray…

My friend Mike was running the first leg of a three-day stage race in a large forest in Arkansas. He missed a trail marker, took a wrong turn, got lost, tried to double back, and got more lost. He finally emerged from the woods two days later. He had slept on the ground on two chilly nights clad only in running clothes, had eaten little, and had run many, many more miles than the three-day planned total of 90 miles. The organizers, realizing Mike was nowhere to be found, cancelled the third day of the race and instead sent the runners out in scouting parties to try to find Mike. When Mike emerged into a parking lot later on day three, to say the least he was embarrassed and very apologetic to the race organizers and his fellow runners.

Plans can go astray…

I had planned the creation of my publishing company and our new regional/lifestyle magazine for a rapidly growing suburban Chicago county down the paperclip. Backed by 26 investors, our staff of 12 worked hard to bring a monthly, suburban version of highly successful Chicago Magazine to life. And, indeed, we did, publishing 15 high-quality information-packed issues distributed to 25,000 households. But too slowly we realized that our revenue projections were off, not because they were “wrong” in the plan, but because things had changed: The Chicago Tribune unexpectedly introduced a zoned edition for the county, capturing some lower-end advertising that we had expected to come our way, and an equally unexpected recession was cutting into the advertising dollars that we had expected to glean from higher-end advertisers. Within a few months, rather than pour more money into the venture, we closed our doors, licked our wounds, and went on to other ventures.

Plans can go astray…

In 2012, Fisker Automotive, led by Henrik Fisker, was racing to launch its luxury plug-in hybrid, the Fisker Karma. But the company relied on a single battery supplier, A123 Systems. When A123 Systems unexpectedly declared bankruptcy, Fisker suddenly did not have batteries for its vehicles. Karma production ceased, and Fisker, unable to resume production, saw its financial position rapidly deteriorate. Just a year later, Fisker was forced to file for bankruptcy.

Plans can go astray…

In 2020, Live Nation Entertainment was a frontrunner in the live events and ticketing industry. Then without warning the COVID-19 Pandemic brought its business to a standstill. Widespread event cancellations and venue closures led to a staggering 98% drop in Live Nation's revenue in Q2 2020, plummeting from $3.2 billion the year earlier to just $74 million. The company had to furlough 9,000 employees and issue $1.2 billion in debt to survive. Live Nation's debt hit $5.1 billion by the end of 2020, 36% more than the prior year. The Pandemic's impact was devastating. Live Nation’s expectations for 2020 were to build on its strong performance in 2019, with early 2020 ticket sales up 10% year-to-year, and to continue double-digit growth in sponsorship and advertising revenue, which had increased by 17% in 2019. Instead, the company's full-year revenue for 2020 was $1.86 billion, down 84% from $11.55 billion in 2019, and it reported a net loss of $1.72 billion for the full year 2020, compared to net income of $69.9 million the year before.

Moral #1: Things change

As these stories are meant to vividly illustrate, things can change quickly and that quick change can derail your progress or at least call for big changes in plans. The moral here is that you need to be on the lookout for big change, reading the tea leaves, testing the wind, listenting closely, especially looking for change will not be in your favor.

Moral #2: You need a process

The strategic plan implmentation process embedded in our FastTrack™ Strategic Planning System is designed to keep you moving down the road laid out in your plan. It calls for you to be consistently reassessing what’s happening or is likely to happen that might require you to change plans lest you hit an unanticipated wall or get caught in an unseen trap. As you can see in the beta web-based version of our strategic planning and implementation system (https://www.forrestconsult.com/planlens) or read about in my book on planning, AHEAD: Strategy is the way to a better future (https://www.amazon.com/AHEAD-Strategy-way-better-future/dp/0578284529), we recommend creating an implementation plan, having monthly plan check-ins, holding quarterly progress assessment sessions, doing an annual plan assessment, and replanning annually.

Moral #3: You need a risk and contingency plan

A best-practices approach to plan implementatlion involves proactively identifying potential obstacles to your plan's success. For each big risk, you should describe how you might prevent it (mitigation) and what you will do if it occurs anyway (contingency). You should periodically review and update this plan (at mid-year if not quarterly).

Here are some risk and contingency examples from real plans:

Risk: Data breach compromises customer information

• Mitigation: Implement multi-factor authentication and encrypt sensitive data

• Contingency: Have a crisis communication plan ready and offer identity protection services to affected customers

Risk: Key supplier goes out of business

• Mitigation: Diversify supply chain and maintain relationships with backup suppliers

• Contingency: Activate alternative suppliers and adjust production schedule to minimize disruption

Risk: Negative media coverage damages company reputation

• Mitigation: Foster positive relationships with media and proactively manage brand image

• Contingency: Deploy a pre-prepared crisis PR plan and engage in transparent communication with stakeholders

Risk: New competitor enters the market with a disruptive product

• Mitigation: Continuously invest in R&D and stay attuned to market trends

• Contingency: Accelerate innovation efforts and consider strategic partnerships or acquisitions

Risk: Economic downturn leads to reduced consumer spending

• Mitigation: Build a diverse product portfolio and maintain a lean cost structure

• Contingency: Adjust pricing strategy and focus on value-driven offerings to retain customers

Risk: Regulatory changes disrupt business operations

• Mitigation: Engage in proactive government relations and stay informed of potential policy shifts

• Contingency: Adapt business processes to ensure compliance and explore new opportunities created by the changes

Risk: Talent shortage impedes company growth

• Mitigation: Develop a strong employer brand and invest in employee training and development

• Contingency: Explore alternative talent pools and consider outsourcing or automation for certain roles

Risk: Cybersecurity attack halts business operations

• Mitigation: Implement robust cybersecurity measures and conduct regular employee awareness training

• Contingency: Have a detailed incident response plan and maintain offline backups of critical data and systems

So what about our “plans go astay” examples?

To avoid getiing lost and to up the odds of recovering quickly after getting lost, my friend Mike could have:

• Studied the race course map thoroughly before the event

• Carried a compass, GPS device, or detailed map during the race

• Packed some emergency food, water, and a lightweight emergency blanket

• Agreed on a check-in plan with race organizers in case of getting off course

So our new regional/lifestyle magazine would have been less likely to die from lack of revenue, we could have:

• Conducted more frequent market research to identify potential competitors and economic trends

• Developed a more diversified revenue model, with less reliance on advertising

• Launched the business in scaled down fashion to make us more agile

• Created contingency plans for economic downturns or unexpected competition

• Set up regular plan check-ins to catch and respond to changes more quickly

To reduce the risk of failure, Fisker Automotive could have:

• Diversified its battery supply chain by partnering with multiple suppliers

• Conducted thorough due diligence on the financial health of key suppliers like A123 Systems

• Developed in-house battery technology to reduce reliance on external suppliers

• Created contingency plans for potential supplier disruptions or bankruptcies

To protect its dominant events business, Live Nation Entertainment could have:

• Developed comprehensive contingency plans for large-scale disruptions such as a Pandemic

• Invested in virtual event technologies to adapt to situations when live events are precluded

• Maintained a more conservative financial approach with lower debt and increased liquidity

• Diversified revenue streams beyond live events, such as through more media partnerships

The big lesson

Don’t sail blindly in a fog thinking you are on track and that your course is still the best one. Check frequently to be sure that you are on course, be ready to change course quickly if the wind changes or obstacles emerge, and have contingencies prepared in advance so you can rapidly respond to unforeseen or unanticipated change.

Plans can go astray…

My friend Bill was at the helm of a big sailboat in this year’s Annapolis-to-Newport race, on the ocean sailing seemingly on course, but in fog. Despite instruments and apps, it was a great surprise when a fishing boat emerged from the fog less than 100 yards off the bow, trailing a huge net. Were my friend not a great, quick-witted sailor, it might have been a calamity for the boats. As it was, after quick maneuvering and negotiation with the fishing boat captain, Bill got clear of the net and steered the sailboat back on course to Newport.