If Your Business Plan Won’t Fit On The Back Of An Envelope, It May Be Too Long

“I’m wary of doing a business case on the back of an envelope when there are so many uncertainties….” That’s what I heard from a client earlier this week. I had to disagree. If there are so many uncertainties, then “back of an envelope” is probably the only way to do it.

The danger here arises from mistaking two things which on first sight look very similar but are in fact fundamentally different; complexity and uncertainty.

A complex situation is one which seems on the face of it impossible to understand and predict, but could in fact be understood and predicted with enough information. An uncertain situation is one which seems on the face of it impossible to understand and predict but is in fact impossible to understand and predict, no matter how much information you have.

An example of a complex situation is the behaviour of a large computer program. My word processor may do strange things on my new machine, and I may struggle to explain why. But if I had enough time and enough information I could work out exactly what is going on.

An example of an uncertain situation, on the other hand, could be as simple as the behaviour of a ball in a roulette wheel, or as complicated as the course of history.

At this point we could take an interesting (to me, at least) detour into complexity theory, but it would be more useful to stick to the practical implications.

A lot of business planning problems arise because we mistake uncertainty for complexity. Things seem unclear, so we look for more information. That doesn’t really help, so we look for even more. And soon we find ourselves in the grip of analysis paralysis. This is bad, but is in fact the less bad outcome of mistaking uncertainty for complexity. The worse outcome is that our additional information gives us a sense of security. Because that sense of security is illusory. When lost in thick fog it is better to fumble blindly forwards than to charge ahead as if we could see clearly.

So what can you do? Being in uncertainly isn’t necessarily fun. But I have two pieces of good news.

First of all uncertainty, over time, does tend to evolve into complexity. And then, maybe, into simplicity. When you can’t plan, the best thing is to do something, something that takes you in roughly the right direction and generates more information. Things will probably become clearer later.

Secondly, remember that often when the future is uncertain it’s because it has not yet been created. It will be created by someone. And that someone could be you. What is the future for recreational space travel? I have absolutely no idea, but it will be created, or at least strongly influenced, by the players who take up the challenge.

So there is the really important thing about uncertainty. Uncomfortable as it is, it represents a brief window of time in which you get to choose what the future will be. You may find that inspiring, or terrifying, or both. But grab that envelope, make your plan, and make a start.

Source: http://www.forbes.com/sites/alastairdryburgh/2016/05/14/if-your-business-plan-wont-fit-on-the-back-of-an-envelope-it-may-be-too-long/#343096b07393

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s