The post-modern corporation

Anyone who has done any strategic planning or written a business case knows that planning requires one to forecast the future.  If you want to assess the financial viability of some new product or company, you need to make an estimate of the likely revenues of the company, and this requires making a prognosis of the level and nature of demand for whatever it is the company plans to provide.   “Taking a view on the future” is what the M&A people call this.
The problem is that the future is uncertain and different people may have different views of it.   There are usually many possible views one could take, and stakeholders are not always able to agree on which is the most likely.  Financial planners typically deal with this uncertainty by developing a small number of scenarios: often called a best case,  an average case, and a worst case.    These scenarios are very rarely ever the actual “best” or the actual “worst” that the planners could conceive.  More typically, they are the best or worst “plausible” cases.  Similarly, the middle case may not be average in any sense of the word, but simply a case the planners happen to favour that is somewhere between the best and worst.   Often the average case is the best the planners think they can get away with, and they contrast this with an outlandish upside and a still-profitable downside.   As with other human utterances (eg, speeches and published papers), effective business planners take into account the views of their likely audience(s) when preparing a business plan.
For telecommunications companies operating in a regulated environment, there is a further wrinkle:  the fifth “P” of telecoms marketing, Permission.  To gain regulatory approval or an operating licence for a new service, telcos in many countries need to make a business case to the regulatory agency.  Here, the regulators may have their own  views of the future.  Quite often, governments and regulators, especially those in less developed countries, feel they are behind in technology and believe that their country has a vast, untapped market ready for the taking.   Sometimes, governments have public policy or even party-political reasons for promoting a certain technology, and they want the benefits to be realized as quickly as possible.   For these and other reasons, governments and regulators often have much more optimistic views of likely demand than do the companies on the ground.
Thus, we have the situation where a company may prepare different business plans for different stakeholders, each plan encoding a different view of the future:  an optimistic plan for the regulator, a parsimonious plan for a distribution partner and yet another for internal use.   Indeed, there may be different views of the future and thus different plans for different internal audiences also, for reasons I will explain in my next post.   Living with uncertainty, the post-modern corporation treats its view of the future as completely malleable — something which can be constructed and re-constructed as often as occasion or audience demands.
In my next post, I’ll talk about the challenges of planning with multiple views of the future, and give some examples.
Reference:  This post was inspired by Grant McCracken’s recent post on Assumption-Hunting.  

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