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Plan Is Only a Guide

June 08, 1986

I spent several years in long-range strategic planning (five-year planning) in the early '70s with Xerox Corp.

A five-year plan is merely a framework for quantifying one's assumptions of revenue and expenses based on past experiences and the best guesses that can be brought to bear for the future.

The more money, talent, research, and total effort that can be brought to bear in making future assumptions (guesses), the more likely they are to be accurate.

These assumptions are not cast in concrete, but are merely set up as a measuring point . . . something to be tracked month-by-month, and year-by-year.

No one knows the future, regardless of the amount of effort/knowledge/research that is put into it.

Hence, the assumptions are set forth as a guide to see how you're doing.

We never, ever, proceeded more than one year into a five-year-plan. It was called the "lump-under-the-rug" concept.

Every year there is a new five-year plan--the lump is pushed out one more year--you never get there.

But you do monitor your assumptions to see how valid they were, and then update them, and go forth from there.

John F. Lawrence's column of May 11 ("5-Year Plans Often Ignore the Real World") says that the "One big risk . . . is that the plan substitutes for the real world."

To me, this could only happen in a very naive company, one which would set forth assumptions for five years, and then not monitor or update them for the entire period.

I don't think this is a valid real-world assumption.


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