Change of plans
You’ve been there before. You’ve studied the past season’s wins and losses, the successes, failures and missed opportunities, studied the marketplace, analyzed the competition and your customer behavior predictions, read all the economic forecasts and listened to all the pundits’ prognostications, went through your SWAT analysis and put together a realistic plan and a strategy that you can successfully execute. Your team is on board, your merchandising, marketing initiatives, inventory assortments and buys are in sync with your grand strategy and your confidence is soaring. You’ve never been this ready!
And then — usually due to an external event, something unforeseen that was impossible for you to anticipate during your planning process — comes out of left field and blows your carefully crafted plans to hell and back. What’s your next step? How do you respond?
Chances are that you may have read or heard the famous line, “The best laid plans of mice and men often go awry” from the poem To a Mouse by Robert Burns, which describes the scenario I’ve related above pretty well. The message Burns was delivering was, while planning can be futile, never give up. (By the way, this poem was written in 1785 and we still don’t have the answers to our current plans versus results dilemma!)
Putting a Plan in Place
Okay, so you’ve developed a plan based on the best assumptions available; what do you do with it? In some cases, it goes on a shelf in your office, never to see the light of day again. In other cases, the plan is treated as an indisputable gospel and you follow it to the letter, ignoring whatever externality is working against your plan even if it leads you over the fiscal cliff. Others, however, treat the plan as it was intended: A dynamic and fluid plan of action based on the best assumptions available at the point in time the original plan was created.
The plan can be used to benchmark current performance against the plan, more easily identify trends and see how the original assumptions compare against current reality. And then you can either establish new assumptions that better reflect current conditions or change your end goals (i.e., sales and/or profit for the season or year).
A plan is meant to be adapted or revised based on changing conditions or influences. It’s like a map with different ways to get to your final destination. I’ve never seen a perfect plan, in which every assumption made was 100% correct and no new challenges, obstacles or unanticipated external influence raise their ugly heads as the plan was rolled out; operating under this premise is almost a certain guarantee of failure!
Variations on a Plan
There are some other variations of planning that I’ve been involved with that work, especially in situations where there’s a lack of hard intelligence on which to base assumptions, and in constantly evolving and complex challenges.
A little background before I get into the details of this concept. Those of you who have read my L&GR articles in the past (thank you!) know that I’m a big believer in the leadership training and principles of the U.S. Marine Corps. While what you plan for — generally focused on sales and profit — is important to your company, USMC planning frequently involves higher-stake missions dealing with the lives and welfare of its Marines while still achieving their original goals; thus, mission planning is critical to their success or failure.
During their leadership training, all Marine officers’ study (yes, leadership can be taught and learned!) is summed up in its 11 Leadership Principles; Principle No. 8 states, “the leader must be able to rapidly estimate and make sound decisions based on that estimation.”
Based on their experience, they know that they usually have good enough intelligence to effectively and plan about 80% of their mission with confidence, the operating environment for the last 20% is too fuzzy or has too many unknowns to plan in advance, so the final decisions must be made on the scene. The leader may have some idea of what to anticipate, but not with the level of confidence that he can commit these ideas to the mission plan. The keys to succeed in an 80/20 environment are adaptability, flexibility, excellent assessment and decision-making skills, as well as the training and confidence to quickly change direction and operate in different environments.
Making Modifications
By now, you’re probably wondering why this guy is writing about plans when we’re already knee-deep into the spring season — and that would be a very valid question! It’s because the customer and their buying attitudes and behaviors you based your original plan on have dramatically changed to the point where — if you haven’t adapted or modified your original plan to address your “new” customer — you risk not achieving your initial financial goals.
If there’s one word to describe the mental state of today’s consumer, it’s uncertainty. And history shows that when there’s uncertainty, consumers are slow to spend (and consumer sentiment is dropping rapidly, showing a propensity to not spend and a weakening of confidence in their personal financial future). This state of mind is driven by some of the following:
They see lots of reorganizing, downsizing, and spending freezes in D.C., but can’t connect the dots or see a cohesive plan of what the government will look like when it’s all done, and how all the changes will affect their personal lives.
- Fear of rising unemployment. Not only the elimination of government jobs, but positions in the private sector that are supported by government funding.
- Wage stagnation. Higher unemployment and fewer available positions equals lower or stagnant wages.
- Tariffs. Inflation is already growing without the impact of tariffs, so the fear is that tariffs will drive inflation even higher, especially on consumables and household essentials, imported fruits and vegetables, and big-ticket items like autos, high-ticket entertainment, and appliances. Some consumers are buying the high-ticket products before tariffs go into effect (full disclosure: I traded in for a new car in February to avoid potential post-tariff price increases) that will take discretionary dollars out of the market that could have been spent on our products.
- Federal funding. Fed funds currently support some of a state’s programs and services (in 2024, Fed funds were 14.4% of the state budget in Minnesota, not including competitive bid funding for things like new bridges and highways). If this Fed funding is cut off or reduced, the funding burden will revert to a state’s citizens.
Okay, I think you see the picture: The fear is that, in a period of wage stagnation, there will be fewer discretionary dollars available for the consumer to spend on nonessential categories like ours. Not the prettiest picture for us, but not a disaster, either — if we are ready to change our plan to deal with our current consumer living in our current environment.
So, blow the dust off the plan you put together last year and, knowing what you now know, either update and adapt your original plan to what’s really happening today or create a whole new Plan B.
We’re fortunate that your customer genuinely likes what you offer them; it’s time for you to show them why our products are important to them — important enough to spend more of their limited discretionary dollars with you.
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