People have asked me frequently what the right time horizon is for a strategic plan. Is it 3 years, 5 years, less, or more?
The short and simple answer is 3 years. For most companies and most industries, this is a good practical middle ground between looking into the future, and staying realistic, and therefore for a strategic plan.
But the real and more nuanced answer is better captured in this HBR article by
. As the figure and the underlying article show, there are different horizons, all with different purposes:
1-2 years: Tactics. This is the timeline for incremental operational steps that can be taken with relatively high certainty.
2-5 years: Strategy. The typical timeline for strategic plans. Data and evidence still have their place but decreasingly so. Uncertainty starts to creep in.
5-10 years: Vision. This is where we start really venturing into the unknown. You can describe a high-level vision, but there’s no linear way to get there anymore.
10+ years: Systems-level Evolution. Here we really enter the area of futurists. The point is not prediction and planning anymore, but seeing the realm of possibilities.
All four horizons are useful, but for very different reasons. The first two help you prepare for concrete actions and allow for linear, step-by-step planning. The latter two, on the other hand, are more speculative and require a more explorative approach.
So, before you decide that your company needs a “Strategy 2025” or “Strategy 2030,” think about the nature of this strategy and what you want it for.