Venetian blinds: why every plan dips then climbs

Take the last five years of plans, draw each one's revenue line on the same chart, and add what actually happened. Each plan starts a little below the last one's promise, dips or flattens for a year, then climbs to a number nobody reached. Laid on top of each other they look like venetian blinds. The actual line runs underneath all of them. Most businesses have this chart and have never drawn it.

It is the most self-observable strategy fact an owner has, and one of the least examined, because examining it is uncomfortable for everyone who signed a plan.

Why it happens

The plan is a negotiation, not a forecast. The Board wants growth, the executive wants an achievable number, the divisions want budgets, and the number that emerges is the one everyone can live with in the room. It is set from ambition, which is next year's, rather than from trend, which is the last three years'. Nobody in the negotiation is asked to show that the curve has ever happened before.

Then the year runs, the plan is missed, and the miss is explained. There is always an explanation: a lost contract, a weather event, a competitor's price move, a delayed launch. Each one is true. Each one is also a one-off, which means the next plan starts from the same curve, because the underlying model has not been touched. Nobody puts last year's plan beside last year's actual and asks what the plan got wrong about the business.

The dip is the giveaway. A plan that dips before it climbs is a plan that knows this year is already lost and is buying credibility for the climb by conceding the near term. It looks prudent. It is the same optimism, moved one year to the right.

What it costs

The obvious cost is credibility. A Board that has seen five blinds stops believing the sixth, and the executive's real forecasts, when it has them, are discounted with the rest.

The less obvious cost is that the strategy is built on the plan. Where-to-play choices, investment cases and hiring plans all rest on a revenue curve that the business's own history says will not happen. Money is committed against the climb. When the climb does not arrive, the initiatives funded by it are cut halfway, which is the worst of both outcomes.

And the momentum case never gets written. A business that genuinely projected its last three years forward would see where the current course leads, and that view is exactly what the plan exists to avoid. The blinds are a way of not looking.

The one-page fix

Put three years of plan-versus-actual on one page: for each year, the plan's revenue and profit, what actually happened, and the gap. Then set next year's targets from that record. If the last three plans were each missed by a similar amount, the honest starting point is the trend. Any ambition above it must be tied to a named initiative with an owner and a date, not to a curve.

Discuss the page without blame. The purpose is not to find who was wrong. It is to find what the plan keeps getting wrong about the business. A customer churn rate assumed lower than it is. A price rise assumed to stick. A sales ramp assumed faster than any the business has achieved. Those are the strategy's real assumptions, and the blinds are where they show.

Explain resets. When the target changes, say why in one sentence that references the evidence. A reset that is explained builds credibility; one that is quietly absorbed into next year's curve spends it.

The five stages

Whether plans are checked against what happened is one of the practices in a stages-of-excellence strategy assessment. At the bottom, every year's plan shows a dip then a climb and nobody compares. One step up, misses are explained as one-offs and the next plan starts from the same curve. In the middle, last year's plan is put beside actuals once a year and discussed without blame. Above that, three years of plan-versus-actual sit on the table when the next plan is set. At the top, for three years running the plan has been close to what happened, neither missed nor comfortably beaten, because the targets start from where the current course honestly leads.

Most businesses are at the bottom two. The move up is a page and a meeting.

Three tests

Before the next planning round, answer three questions. Does the last three years' plan-versus-actual exist on one page? Was the last plan's miss explained as a one-off or as a fact about the business? And does next year's plan start from the trend or from the ambition? A business that answers no, one-off and ambition is about to add another blind.

Do your plans start from the trend or the ambition? Take the check. · What is a momentum case? · The stages of excellence in strategy