I have had people query the need for thorough preparation of the strategic part of their financial plan. It really is not all that hard to see.
You cannot design anything complicated without a clear idea of what you want. From a building that works, to an easy to maintain appliance, to a cleverly organized kitchen, to a beautiful painting, design matters.
Design is about function – what the resulting construct will do. Every part or function needs a planful tool to make it happen. Things designed without function in mind run unnecessary risks. It might not work at all. At best the plan or building or song or machine will be less efficient than it should be.
Every plan begins with a vision.
Other questions include who, where, when and why, but they tend to be less important in the beginning.
You must develop the strategic vision before you can address tactics – the how questions.
Absent clear vision, tactics are indistinguishable one from the other. If you don’t care where you are going, any road will take you there. The three questions above allow you to choose effectively among tactics. The questions point out inherent conflicts, priorities and timing. Answering them fully helps to provide a clear way to choose a particular tactic and also to understand why it works for you.
The plan that results is a combination of the strategic answers and the tactics chosen to implement. It becomes the mission. Neither the collection of tactics nor the strategic vision is, by itself, a plan.
A plan is similar to making stainless steel. When you know the specific purpose, you mix the ingredients by a recipe that provides the required material. None of iron, chromium, nickle or carbon will suffice by themselves. It is the specific mixing of them that makes the product.
Some ingredients in stainless steel are more expensive than others so there may be tradeoffs. With a clear vision, the tradeoffs are well understood. Perhaps a redesign should occur. Maybe some timing changes.
“What if” is an important question, possibly the primary question. If you design a plan with a minimum number of possible bad outcomes, you automatically work towards one that will be both successful and elegant.
Elegant plans are efficient and effective. Spend time on design in the beginning. It is easier and much less expensive than spending time on retrofit and repair later.
Don Shaughnessy is a retired partner in an international public accounting firm and is presently with The Protectors Group, a large personal insurance, employee benefits and investment agency in Peterborough Ontario.