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I remember once sitting with the company CEO and going over my spreadsheet estimates of project timelines, sales projections, and department growth. At the end
by MrTonyD 11y ago
I remember once sitting with the company CEO and going over my spreadsheet estimates of project timelines, sales projections, and department growth. At the end of it all I said to him that I didn't know if any of this was really worth looking at, since it was all just guesses.
His response was that in the early days of the company they had tried doing things without plans, and that bad plans were much better than no plans.
I learned something that day.
- thanatropism 11y agoNo, nene, no. "No plans" means exactly "by chance". Bad plans can do considerably worse than chance. What organizations need to learn how to do (and unfortunately to this day Excel isn't particularly enabling) is sensitivity analysis. One of my corporate parlor tricks is to render valuation spreadsheets (which are typically cashflows dependent on scenario parameters) into Matlab and giving each unknown parameter a distribution from three-point estimates (min/most likely/max). The difference between good plans and bad plans is the probability that your best valuation exceeds your WACC or the turnkey price to be paid or some such method. People are often impressed that the difference between good and bad plans even exists.
- clairity 11y agocrystal ball for excel can do monte carlo simulations for what you describe but with a real probability distribution for each input. it's expensive though (as is matlab, which is what i did my master's thesis in =)
- danieltillett 11y agoI wish this was not sold by Oracle.
- thanatropism 11y agoYeah. There was a long yadda yadda yadda I didn't feel like detailing on why/how we calibrate beta distributions for three-point estimates. What's more: Octave (free as in Stallman) is slow but runs Matlab code transparently.
- 1812Overture 11y agoDwight Eisenhower said "Plans are worthless. Planning is everything." I like that a lot.
- danieltillett 11y agoI have always loved this quote too - the thing about planning is not that you can actually workout what to do, but you cut down on the novelty you have to deal with when faced with a new situation. Your brain can only handle so much new information at once and planning lets you handle new problems better as you just have less new to handle at once.
- xivzgrev 11y agoI worked in strategic planning for a startup, and the process forces people to think through issues and come up with hypotheses. then, what actually happens happens, and you can adjust hypotheses. and you learn from that, and adjust your own guessing for future.