When your best-laid plans go awry, as they sometimes do, you'll need to scramble to get things back on track.
When your best-laid plans go awry, as they sometimes do, you’ll need to scramble to get things back on track. This is the conundrum often faced by businessmen in today’s volatile business climate. A plan is made to guide a business in how to go about achieving its objectives. It sets up the benchmarks against which to measure the progress of the business in much the same way that milestones along the road tell you how far you’ve gone.
But business plans are developed based on specific circumstances present during the planning period. What happens when circumstances change? Managers often tend to become enamored with plans that have been set. After all, a lot of time, effort, debate and compromise go into the development of business plans and little room, if any, is built into the plans to allow for changes or adjustments.
What Factors Call for Adjustment of a Plan?
There are small changes and big ones during the time frame for which a plan has been made. The major changes that call for adjustments to a plan are the:
Economy – A sudden shift in economic conditions will invariably call for adjustments in a plan. Changes in the currency exchange rate, GNP or GDP, consumer spending, employment data and credit facilities are among the various economic conditions that will demand adjustments in a business plan.
Regulations – Pharmaceutical, food, banking, automotive and agricultural industries are among the major businesses that are immediately affected by changes in government regulations. Changes in tax laws, of course, impact every business. To comply with new regulations, a business must adjust its plan from R&D investment spending all the way to profit targets.
Physical Environment – Natural disasters which affect the production and distribution facilities of a business, or any of its major markets will necessitate changes in a plan. An agricultural business will, obviously, be significantly affected by hurricanes, fire, floods or volcanic eruptions. But even a retail outlet will find its business influenced by road construction or new traffic patterns. On a grander scale, the partition of an entire nation will result in fundamental changes to a plan.
Customer Perception and Behavior – Negative publicity about a specific industry will call for changes to a business plan. A business in the fashion industry will be affected by shifts in consumer preference of color, material or scent. The emergence of fads will provide opportunities not included in the original plans of a business.
Emergent Strategy Takes Care of Changes
A business plan is generally based on strategies that are “deliberate”. This means that the strategy is intentionally developed with a specific mission, vision and plans to achieve the objectives of a business. In a way, a deliberate strategy is “fixed” and gives a business guidance on how to proceed.
Because changes do occur in a business environment, a consistent behavior develops in an organization that tries to accommodate these changes in order to achieve the overriding objective of growing a business. This has come to be known as emergent strategy. In effect, it is an unintended pattern of behavior based on finding out what works. This, in turn, evolves into part of an organization’s strategy.
Advantages of an Emergent Strategy
Adapting emergent strategy as part of the overall business strategy gives an organization these advantages:
Taking Advantage of Opportunities – An organization can grab opportunities not previously recognized as they occur;
Keeping Options Open – Organizations remain open and do not commit to early decisions and investments;
Continuing to Learn – The environment to learn and experiment is encouraged;
Encouraging entrepreneurship – People are allowed to try out things to find out what works;
Overcoming Resistance to Change – The time to build support for a strategy adjustment is provided.
The Ideal Combination
A combination of a deliberate strategy and an emergent one in an organization results in plans with room to adjust. The deliberate strategy will help the business control its direction while the emergent strategy allows for and encourages trial and learning. The deliberate strategy takes care of the basic direction for a company but the emergent strategy capitalizes on unexpected results and folds them into the overall corporate plans.