David Sokol, Warren Buffet’s Mr. Fix it, indicated his team meets to work on a five to ten year plan each year. Many companies overlook the need to do long term planning, and in fact long term planning can seem passé as technology and the pace of change render forecasting to be so difficult.
Whether you are doing long term planning or not you may wish to heed the insight Sokol offered on why Mid American Energy, Net Jet and Berkshire Hathaway companies do five to ten year planning each year.
In the planning process Sokol indicated that you first hope that the first two years are accurate. The rest he said is directional. They do it every year to look at the risk the business is facing. They want their leaders to be thinking through things, what types of threats are coming in terms of technology, government, environment, land, permits, etc., Anything that could be a risk to the companies long term growth or cause obsolesce is discussed. One of the values gained through the long term planning process is discovering how well their executive team is thinking things through. It raises the visibility for succession planning. An executive team member who comes up with new surprises or who misses opportunities are threats may not be suited to a higher position in the company.
Each year they set 35 goals. Fully one third of these are financial in nature, ten are aspirational and the remaining ten are internal.
The annual planning process is intended to raise their trust in themselves for the future. It helps them to do their homework and prepare for any and all eventualities.
In Sokol’s book Pleased But Not Satisfied he mentions that once you have your priorities in order and goals established most of the heavy lifting has been done. The next step he says is thinking through a detailed execution plan. Four simple words, plan, execute, measure and correct he feels can evolve an organization from good to outstanding. It’s a simple concept to Strategic Discipline: Meeting Metrics and priorities.
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