Pillars of Planning: Plan to the Right Horizon
Every corporate plan has a beginning and an end. The time between the two points is the planning horizon. It’s the amount of time an organisation will look into the future when preparing a strategic plan.
There are two ways to approach planning horizons:
- Plan ‘to the wall’, such as a fixed financial year
- Plan to a horizon that matters, a horizon that varies from business to business and even department to department.
So where do you begin?
One of the most important things to consider is uncertainty and volatility. How predictable is your industry? The more uncertain and volatile, the shorter the planning horizon needs to be.
Let’s say your business depends heavily on digital marketing. The next time Google or Facebook change their algorithms, your business would change overnight. This kind of high uncertainty would benefit from a shorter planning horizon.
But perhaps you run a cafe. The price of your average flat white isn’t bound to change any time soon, and the business can plan on a longer planning horizon.
Another factor to consider is how much reliable information you have at your disposal. A well established and regulated industry like agriculture with data going back several decades will give you a large amount of reliable data, some of which will be future-focused.
Planning horizons are unique
Determine your planning horizons on a case-by-case basis to the unique requirements of your business, and determine the frequency of review meetings up front. This will ensure your planning process gives the business focus and alignment across all functions of the business.
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