A critical role of management is strategy – interpreting the outside world for the organisation and ensuring it responds appropriately to it.
In the past, this has meant having a long-term outlook. Three, five and even ten year plans.
Unfortunately, the world is changing at too rapid a pace for such time-frames.
Take the taxi industry as an example. Relying on a five-year plan, in light of such disruptive entrants like Uber, would leave it redundant, even obsolete.
Good management, today requires strategic planning cycles of months, not years.
Whilst organisations must still have long-term goals, planning must be short-term.
They must dedicate more of their energies towards observing the changes in the world around them, establish systems to evaluate key indicators and, most importantly, have robust decision-making procedures to respond.
I have argued for a very long time that whilst financial accounting is the globally accepted standard for reporting on an organisation’s performance, it is an ineffective management tool.
Unfortunately, despite advances in management theory and practice a better methodology is yet to be developed.
Until such time one is, it is extremely dangerous for organisations to rely solely on traditional accounting tools for management.
The accelerated pace of change leaves businesses vulnerable if they work to annual accounting reports.
Organisations can no longer work to 12-month cycles. It is far too long a period. They may have to use them for statutory and taxation reasons, but must swiftly abandon them for more real-time reporting mechanisms.
Business and entire industries of the future could well rise and fall within 12-month time spans and managers who ignore this fact do so at their peril.