I’ve become a huge fan of Carey Smith’s monthly column in Inc magazine. Within his November 2022 column (“If You Don’t Plan for the Long Term, Plan on Failure”) Mr. Smith covers several important aspects of the planning picture. The article sites a wide variety of reasons to support long term planning and warns of the consequences of not planning with specific examples.
First off, Smith says “Everything you need to know about doing business you can find in Aesop’s Fables.” While I’ve heard this before, I never considered the validity of this statement. That changed due to the mention of Fable 373 – “The Ant and the Grasshopper” which set the tone for entire Inc column. The grasshopper does not put food away during the summer only to be forced to beg the ant for food during the winter.
Here are some of the main lessons that follow:
- The pandemic led to short-term thinking at many companies. They increased their production “as if there were no tomorrow.” This represented a major failure to understand the market dynamics for their industry.
- Using the example of Peloton and their ramping up due to the pandemic forcing people to exercise at home, the column mentions mistakes Peloton made on the way up:
- Excess spending growth
- Excess headcount growth
- Once the vaccines became available and people headed back to the gym, some of the mistakes made by Peloton on the way down were:
- Massive layoffs – causing lower team morale.
- Outsourcing production – causing quality control issues.
- Selling on Amazon – exposing their customers to many lower priced options and paying Amazon’s 15% commissions.
- When I was in the fashion industry, I saw many, many award-winning designers who ultimately failed because they started to believe their press releases and hype, as Carey Smith says, “Getting high on their own supply.” This led to:
- Shortsighted decisions.
- Lack of realistic mid-range and long-range planning.
So, what can you do in your company to avoid these pitfalls?
- You need steady progressive thinking rather than bold initiatives. Before I joined ActionCOACH, I was engaged to rescue a few companies. One of the common elements of those rescues was clients getting the into their predicament by trying to hit grand slam home runs. The clients also thought that if they could do just one thing, or introduce one killer new product, or get one new major customer, all of their problems would be solved. That never works, the is no “silver bullet.”
- Be willing to listening to knowledgeable advisers.
- Take measured, not major steps and do not make irreversible investments.
“Nobody, but nobody, ever cost cut their way to greatness.” – Carey Smith
- Moderate your beliefs, your spike in demand is the result of many, many factors, not necessarily your brilliance.
- There are almost always ups and downs in every marketplace, don’t expect to blue-sky your business. The good times simply do not last forever.
- Don’t over-estimate the value of your organization.
The ant in the fable tells us that summer will turn to fall, and fall will turn to winter.
If you need assistance to avoid the pitfalls mentioned, or any other challenges you or your organization is faced with, I can help.