Experts have criticized planning in businesses for years now. Leaders let out sullen sighs when it comes to charting a course for the future. Statistics prove that we generally manage to realize less than 10 percent of our plans. So far so bad. But what should we do about that? Should we just try not to think about the future? Or can a small business-owner from the south west of Germany be a role model for how to intelligently engage with a turbulent market? A smart entrepreneur should value his staff’s intelligence. Join me as I accompany a business trying to develop a modern controlling system.
Why change your perspective?
Friedrich Dürenmatt once wrote: “The more you plan, the more likely you are to encounter serendipity.” Why should we take this statement seriously? A transformation of the leadership culture was necessary with one of my clients. We want to engage with the challenges of our time with intelligence and a sense of responsibility. Commercial feasibility is a difficult topic in this regard. Firstly, we require a candid and transparent accounting system. Secondly we expect our colleagues to engage with risks in a future oriented way. After all, we need to connect the profit mindset with future-oriented thinking, just like with planning. We want strong profit potential and high quality feedback.
Why call it a wager?
The very term arouses distrust in many people. It makes us think of horse races. But the term actually is very useful for helping us deal with an uncertain future. It contains hopes, probabilities, opportunities as well as risks and losses. The latter tends to obscure planning as soon as we begin the execution phase. It is only possible to act intelligently if you consider the risks all the time. Besides the future perspective, planning also pertains to control. In comparing our planning to our present results we find out if we are on course or not. If we fail to plan how will we ever know if we are being effective? What we needed was a reliable feedback system..
How will the wager work?
Instead of excessive planning the staff coordinates directly the needed steps. They choose the course of action that will bring the best results in their work. For example they could figure out how to reach a new segment of the market. Whenever the idea is mature, the business resources devoted to other client groups will be diminished. This creates capacity for the execution of new ideas. Without feedback the team will begin to feel insecure around this point. They ask themselves: “But if existing clients are neglected in order to possibly gain potential ones, then surely it would be better to have a more precise plan, right?”
The nature of a wager is to endure unpredictability and to respond reasonably instead of stupidly stiffing to a once made plan. We make this possible in the company by showing the staff that their efforts have consequences.
How does dynamic feedback work in the context of self-management?
At this point experts tend to recommend competitive comparisons. The company is compared with its competition in key areas. If it fares well then that is considered a successful endeavor. Unfortunately it’s hard to come by the statistics of small and medium businesses. So maybe we should go back to the original plan?
No! We want to develop an internal agile feedback system with a client. We start by making a critical path analysis. In our case it showed that the assembly capacity limited the potential output. On this basis we could achieve the maximum theoretical turnover. The factors included:
- Working days among service employees (excl. vacation and sick-days) plus
- Maximum possible external turnover from external service providers
= Service-capacity in assembly days
- Ø assemblies per assembly day
- Ø total turnover per assembly
From that we can deduce the following:
theoret. max. turnover = service-capacity x assembly days per assembly day x total turnover per assembly.
This value is different every day because it is contingent on fluctuations, sick days, holidays and independent decisions. In this sense employee suggestions are successful if:
- The service-capacity increases (without decreasing the service quality)
- The daily assembly capacity is increased
- The turnover per assembly is increased (without linearly increasing expenses).
What should we consider in the feedback system?
We assign quality and quantity to the team. The actual turnover is viewed in contrast with the possible costs in the same time frame, on a weekly (bars) and monthly (lines) basis. We can deduce the quality from the actual current situation in the process (internal and external).
In this way we can show people: you are working in a specific qualitative context, with or without payment. And how will this continue in future? We take the previous month’s results into consideration in the new month. This allows us to compare two current situations. If the necessary success is not present, then we’ll change it. We change our own behavior instead of theorizing about the politics of planning. The mirror of reality allows us to move faster.
What do we stand to gain?
Fewer discussions about why we need certain things. Nowadays we get more questions about how we can intelligently deal with a problem. There is an increasing level of responsibility. The employees know you should change something and then consider the feedback. If we are successful then we change our wager for the better. Or if we are stupid, for the worse. With this new perspective the communication culture is a vital part of success. Instructions, controlling, incentives etc. are counterproductive. We need an understanding that constantly generates suggestions, and then we need to use our feedback to create new suggestions. In this way we can do without the classic understanding of planning and controlling. We must empower employees to control themselves. Instead of discussing why plans have failed, the leadership has time to help people to improve their work. So my appeal to you is: plan less, place more wagers, and in so doing you will increase the chances of your success.
At my client we build up relational competences on an increasing number of staff members. Solving conflicts, decision making on every day level as well as on structural and strategic regards takes place among employees. It is expected that they know how to deal with them. What used to be associated only with leaders requires unselfish moderators, mediators, change agents, coaches etc. This makes all the communication more professional and avoids a clique mentality.
My client therefor avoids classic, strategic planning and controlling. Instead we empower staff to control themselves. Instead of long discussions why plans fail the leaders have time to support people in improving their work.
We startet to use wagers combined with the dynamic feedback system around 18 months ago. Since then we have made several improvements. We can see that more and more employees are concerned with improving the company. Changes are rooted in success/failure in the ideas that they spring from. This decreases the opposition to the need for the changes. When we call for our colleagues to engage with us they do so in an energetic and intelligent way. It’s too early to say if this will have commercial success. But things are looking like the wager will tip in our favor.
More information and practical examples can be found in the latest book by Dagmar Woyde-Koehler and Gebhard Borck:: »Wetten statt Planen«. At Amazon it is available in German as paper back and eBook.