Need for proper planning


  • Business
  • Thursday, 09 Jan 2003

UNCERTAINTY can cause fear. The lack of boldness is strategically dangerous in corporation leaders, who would not move until they are assured of every angle, and are liable to miss the boat.  

For, they would plan forever, seeking the 100% assurance which can never come. Their planning becomes planning for planning’s sake and no action would be forthcoming. They would not be able to exploit a pioneer advantage: 

Whoever is first to occupy the battlefield to await the enemy will be fresh and at ease; he who comes second or rush into the fight will be exhausted. (Sun Tzu 6:1) 

Those who occupy the first few positions in the market tend to hold about 80% of the market shares. The goal of being first is worth fighting for. But, everyone would want that prize. Your opponents would not just let you take it. Hence, a big fight is at hand. 

The nature of a pioneer is that his product would be new the first time it comes out. There is no exact precedent, although one can maximise all the factors which could render the product a usable pioneer. There will always be an element of uncertainty which has to be risked. One must weigh the risks and decide how to go about it.  

The leader must be prepared for failure and take the responsibility. But success could well mean that the organisation could seize some 80% of the market share for the product, and this is something worth trying for. 

There was this case of the international pharmacy company which was always looking for ideas to improve its profits. Profits could normally be increased through either increased sales or reduced costs.  

One enthusiastic executive pointed out that the standard most saleable laxative bottle was too large. Customers often did not finish the bottle but left some of the syrup at the bottom. This leftover was wasted.  

Hence, it was suggested that the bottle should be of a smaller size, so as to benefit the customers. The smaller bottle would also be cheaper. Sure enough, sales of units went up. The sales department was elated.  

Then, the hard facts began to dawn. Unfortunately, though customers drank more bottles of the laxative, sale revenues went down. This was because the increase in volume of bottles did not correspond to an increase in revenues, which actually went down. The sales executive was sacked. His sales department was revamped. 

The problem was that the marketing effort did not increase the number of customers and hence the volume of laxative actually consumed remained the same. The company would only derive benefits if there was significant increase in the volume of laxative consumed.  

Any innovation should not just work on savings but must also work to increase the volume of usage of the product. 

It is because of this kind of punishment for failures that many senior executives fear to make decisions which can adversely affect them. Well, let them be, let the more courageous executives come forward. Even if these courageous executives have to leave the organisation, being the forward-looking people they are, they can easily find jobs elsewhere. Identify these more courageous of your talented executives, they can help the organisation surge forward. 

In a sense, by sacking the executive, the top management may be sending the wrong signal. It would make the rest even more cautious and nervous about proposing new ideas. The fear is paralysing their thinking.  

If there should be any sacking, the head of the committee should also be sacked. The rest will feel bitter that it was somewhat unfair that the head was not held accountable and that the blame was passed on to a junior staff. They would not co-operate further, seeing what had happened to one of their colleagues.  

Top management has to weigh a balanced policy about rewards and punishments for new projects. 

Organisations need new ideas to adapt to the changing future. No organisation should risk everything in a new venture. A level-headed policy would be to devote 30% of the revenues of the organisation to promoting new ideas. One increases the chances of success with the 30% efforts if proper planning is implemented.  

Hence, it is a question of proper strategic planning and implementation. 

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