Planning with Purpose
Life used to be much simpler. In the past things changed much slower, for instance in the early 1900’s knowledge doubled every 100 years. Then in 1945 life sped up and knowledge doubled every 25 years. Still a relatively stable basis on which to build long term plans with a high expectation that they would come to fruition. Contrast that with the current estimated time over which knowledge doubles, every 12 months. In fact, it is estimated that as the internet of things (IoT) becomes more widespread, knowledge will double every 12 hours.
Peter Drucker, a prominent business guru in the late 20th century, estimated that businesses went through major operational changes approximately every 5 years. For instance, it used to be that start up businesses went from an entrepreneurial basis, one with very little structure and many decisions being made on the fly by the entrepreneur, to one needing a more formal hierarchy after approximately the first 4-5 years. A further change would take place after 8-10 years in business when the business would have to change to accommodate growth; increased competition and changes in the marketplace. However, the rate of change and maturity of businesses now takes place on a much-shortened timeframe because of the rapid increase of knowledge, which is leading to many examples of disruptive business processes and technologies.
So, what does this mean for today’s businesses? Well it means that the traditional way of developing strategic and business plans needs to be revised. We can no longer develop a one-year plan, never mind a five-year plan and expect it to survive the impact of changing processes and technology. If that is the case, does that mean that planning is now a waste of time? The categoric answer to that question is no. We still need to plan but the plan needs to have flexibility built in. So, where do we start?
Most texts on developing strategic and business plans that you read say that you should start with a mission statement. However, I am not a big fan of mission statements as nowadays they have become almost an academic exercise and something that many businesses do because it’s the done thing to do. The original idea behind the mission statement was to outline the companies’ beliefs and purpose against which staff could evaluate the decisions they had to make. In keeping with the original idea, I prefer to write up a Statement of Purpose, which outlines why the business exists and the benefits the client perceives that they get from the business. It is customer driven not company driven and focuses on meeting the identified customer need rather than on profitability. That not to say you don’t want to make money but rather to focus on, what one professor very early in my career hammered into me, “Profits are the reward for meeting the needs of customers. If you focus more on the profits than the needs, your success will be very short term.” The other benefit of having a statement of purpose rather than a mission statement, is that it builds in flexibility and as the needs of your customers change you can very quickly change your product and service offerings to meet those changing needs. The statement of purpose is what will drive all the other planning decisions of the company.
An example which meets the criteria of flexibility and a clear understanding of why it exists, and as a result has been very successful is Buurtzorg Nederland. Buurtzorg provides in home health care to Dutch citizens who are being treated at home rather than in a hospital thus reducing the need for expensive hospital care. Their purpose is stated very simply, as services that improve and make better the lives of their clients. This statement is both succinct and flexible enabling the company to add new and innovative services, as they become available and to maintain its position as a market leader. It is driven by their clients not the company as they are the final arbiters as to whether or not the company has succeeded.
So, my message is this – Defining your business in terms of what your customers want will both provide you with direction as well as enable you to meet their needs as they change.