Why the 3-Year Business Plan has Died

Why the 3-Year Business Plan has Died

Sometimes in the business world or classroom you’ll hear a boss or professor talk about a 5-year business plan or a 3-year business plan. Today it’s a quick identifier that they are out of touch, but 10 years ago these plans were fairly standard. What happened? Why did these long-term plans die out and should they have? Let’s break down why the multi-year business plan has gone the path of the dinosaurs and what it means for the rest of us.


The Death of the 5-Year Business Plan

In 2000, the 5-Year Business Plan was the gold standard. Every business had to have a course of action for the next five years or else they were doomed to fail. But as we all know, things changed. This time, however, they changed faster than ever. We had the 9/11 terrorist attacks that disrupted every company in nearly every industry. The 2008 recession blind sighted nearly every CEO and Strategist. The increasing rate at which new disruptive technologies reached mass popularity tossed countless companies aside. Long story short: every market became wildly more unpredictable. In five years your country could be at war or an app could’ve made an entire industry obsolete. It no longer made sense to plan so far ahead and so the 5-Year Business Plan died out.


The Rise and Fall of the 3-Year Business Plan

Long-term strategic planning did not die out entirely. Instead, the business world made a (now regrettable) compromise. “What about 3-Year plans instead of 5-Year plans?” they said. And so, two years were removed from the strategic discussion. There was one major issue, though. Did the strategy meetings become shorter? No. Did the plans become shorter? No. Just because companies weren’t planning as far ahead, didn’t mean that they were being more realistic. Instead, the plans for the next three years became far more detailed. The extra time was spent making more specific plans instead of less planning. Looking back on it, the practice was entirely counterintuitive. The 5-Year Business Plan died because of widespread unpredictability, so there was no reason to assume that the next three years were somehow more stable.


Is the 3-Year Business Plan dead? No. It’s a begrudgingly stubborn relic of a business world failing to cope with the almost incomprehensible speed at which technology moves. The truth is that an app can still replace an industry overnight. Smart businesses are learning to function moment-to-moment. Enormous Big Data programs are being built to generate insights and actions in real time. Momentary “trends” are beginning dominate how the world around us works. As often as people complain that Millennials look at Facebook or Twitter too much, the world has never moved faster than it does right now. This speed has created a need for information on a more frequent basis. Consequently, it has eliminated the realistic possibility of predicting years ahead. 

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