The Perfect Plans…For Disaster

May 17, 2005 - 09:18

Everyone has a plan each year, but what about having a few backup plans

Okay, so you’ve spent months planning for the upcoming season, reviewing last year’s performance, both the good and bad; making all of the adjustments needed to maximize your successes; putting in new systems and procedures to ensure that your production proceeds flawlessly; reviewing your sales histories so you’re forecasting is as accurate as possible; hiring all of the right people for the right jobs and training them to achieve not only proficiency but excellence; and working out advertising plans to make sure you’ll have the right products at the right time at the optimum quality to achieve an incredible sell through at retail. This is probably the best job of planning your season that you’ve ever pulled together; now all you have to do is execute your perfect plan, sit back and watch all of your planning efforts fall into place. Wouldn’t this utopian view of your world be wonderful if it all really happened like this! But we’re realists, and we know all too well there are many things that can go wrong — Mother Nature not cooperating; your customers having cash flow problems and not being able to take all of the product you planned for them; an infestation of some critter that affects one of your crops; someone spraying too much or too little PGR in a greenhouse; your production manager being hired away by a competitor; a major buyer change at your largest customer who has new ideas he wants to implement mid-season; new rules being forced on you as you implement your “pay by scan” management process; or new governmental regulations being announced to address potential drought, water runoff or spraying restrictions resulting from complaints by your closest neighbors or to appease some uninformed legislator.

The Perfect Plan

Too often we plan for perfection in an imperfect world, and we wonder why we don’t achieve the results we expected. In our industry, there are too many variables to ever expect that we’ll be able to execute the perfect plan.

You, as growers, have become extremely adept at reacting to the challenges you face everyday; you’ve learned to think on your feet and compensate for almost everything that’s thrown at you. You’ve demonstrated that you can turn lemons into lemonade and pull almost limitless rabbits out of your hat to make things happen. You have truly turned a science into an art…and I say this with the utmost respect and almost reverence for the abilities you have honed to an almost incredible level.

One of the key phrases in the last paragraph is “reacting to the challenges.” One of the basic tenets of a plan is to develop a reasonable expectation of what will happen under normal circumstances, then develop actions to address these anticipated circumstances. Reacting is what we do when these expectations don’t materialize or when other factors come into play that don’t let the plan evolve as we expected.

Developing Multiple Plans

Until recently, most companies only developed one basic plan each season or year, the optimum or utopian type that I described earlier, and then reacted to the variables as they presented themselves during the course of the season. The good news is that they had a plan…they knew what they were producing, how they were going to produce it, and where and when they were going to sell it. But when the unforeseen variables presented themselves, the plan went out the window and a sometimes knee-jerk reaction mentality takes over.

Progressive companies are starting to put together multiple plans…the ideal or optimum plan and contingency plans. The difference between the two is that the optimum plan details what we would like to see happen if the stars, the moon and the planets are all perfectly aligned, and the contingency plans anticipate scenarios that might likely happen, giving you the opportunity to formulate responses in advance of a given situation actually developing. The major benefit of contingency plans is that they help avoid knee-jerk reactions because you have thought about the situation under more controlled conditions with the luxury of time to consider all of the action options, removing a lot of the emotionalism that enters in to the reactive decisions we make. Contingency planning formalizes responses to potential situations, leading to better decisions for your customers, your sales and your bottom line.

While this contingency planning process doesn’t eliminate or anticipate all of the potential problems that may inhibit your achievement of the optimum plan, it should cover at least the major “what ifs.” Many of you may already be doing this unconsciously, playing devil’s advocate to the major assumptions you make when you put together your optimum plans. The difference is that, in addition to challenging the assumptions, the contingency planning process forces you to think about possible actions and responses to these situations, developing solutions before the problem even raises its ugly head.

implementation

Hopefully, your optimum plans incorporate the thinking of all of your key managers, have been communicated and have buy-in from all of your employees, so everyone knows what direction you’re heading and how you plan to get there. Once you have this plan in place, lock all of your key employees in a room, and as a group identify all of the possible and potential problems and challenges to achieving your optimum plan. What is each manager’s worst fear on what could go wrong? Don’t try to determine the likelihood of any one of these really happening, just write them all down as they surface.

Next, go through the list your team has developed and rank the concerns in terms of likelihood of occurring and the potential impact on the optimum plan. The ones that rank highest in both categories are the ones you should develop fairly detailed response/action plans for. The others that rank further down the list of importance or likelihood to occur should be given shorter discussion and kept on the back burner so they can be brought back for discussion if situations change.

What might you surface as potential issues that deserve contingency planning? How about, in today’s high-tech inventory/order-processing world, how would you react to a complete systems crash when you couldn’t see the retailer’s on hands and couldn’t receive EDI orders?

If you had a crop failure for an important customer’s upcoming ad, how do you handle the situation? Do you just call the buyer and say “oops” and buy the product from a competitor so you can service the order (probably at a higher cost, but you satisfy the buyer) or refer the buyer to your competitor to handle the order (you still satisfy your buyer but give an entrée to your competitor)?

Anticipating these “what if” scenarios and coming up with contingency plans will help you respond to the problems and make better decisions faster, more intelligently and more profitably, with less stress, aggravation and emotion.

Contingency planning isn’t about planning for disasters; it’s really about planning for success under difficult situations…

About The Author

Stan Pohmer is president of Pohmer Consulting Group, Minnetonka, Minn. He can be reached by phone at (952) 545-7943 or E-mail at spohmer@pohmer-consulting.com.

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