A tall but mostly true tale by Tim Berry

Once upon a time there were three entrepreneurs who set out to seek their fortunes. Each of them developed a business plan.

The first business plan was built of straw. It was easy to complete, but it was mostly just puffery. It had objectives like “being the best” and “excellence in customer satisfaction” and “create a revolutionary product” and “Google killer!!!” without any way to measure results or milestones to make anything happen. It had a lot of talk, but very few specifics.

The second business plan was built of sticks. Most specifically, “hockey stick” forecasts. The plan showed sales growing slowly to a point, then forecasting a radical shoot upward, boldly showing a huge growth rate, with no real defined reason for the growth. The sticks piled up higher and higher, neatly stacked but not grounded in any kind of fact.

builtofbrickThe third business plan was built of bricks. Bricks were specifics, especially “ownership” as in specific job responsibilities, specific people in charge of well-defined activities. Bricks were milestone dates, deadlines, budgets, and concrete, measurable objectives.

Then came the big bad real world, as awesome and fierce as any wolf. The real world was phone calls and daily routine. It was business problems and changes in economic environment, customers paying slower than expected, costs going up on one product, down on another. In business school they called it the RW, pronounced “are-dub”. Suffice to say there was a lot of huffing and puffing.

The real world blew the plan of straw and the plan of sticks apart in an instant. The plan of bricks, however, stood up to the real world. As each month closed, the plan of bricks absorbed plan-vs-actual results. Managers looked at the variance. They made adjustments. Each manager kept track of milestones and budgets, and at the end of each month the actual results were compared to the plan.

Managers saw the performance of their peers. Changes were made in the plan–organized, rational changes–to accommodate changes in actual conditions. Managers were proud of their performance, and good performances were shared with all.

And the company who made their plan out of bricks?  Well, they lived happily ever after.

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