3 Modes of Planning: A Primer for Captives

In my semiretirement—and I use that term loosely since my wife will say I never really retired—I have been engaged as a facilitator for strategic planning. What I have learned in this role is the term "strategic planning" gets used in various ways to represent multiple types of planning. So, I thought it might be beneficial from my perspective to provide a primer on what I consider to be three distinct modes of planning. In doing so, I have labeled each mode with a description and provided a time frame covered by the specific mode of planning.

My primary reason for writing this article is to provide a definition that can be used by captive insurance companies when seeking to engage a facilitator for assistance with a planning project. I'm sure many captive owners and board members are familiar with prior planning projects that went awry. Too often, in my judgment, this breakdown occurs early on in the project because the captive and facilitator end up talking past each other.

It starts something like this: The facilitator gets a call from the risk manager, captive manager, or captive board chair asking for assistance in a strategic planning process. The facilitator agrees and then proceeds to try to develop a definitive scope and list of deliverables for the assignment. And, most importantly, the facilitator starts with the premise that this is an actual "strategic planning" assignment when, in fact, it may not be. Agreed-upon terminology becomes critical to the success of the project.

When looking at a planning project, I segregate the possibilities by time frame. But that isn't the only option. A standard Google search on strategic planning yields a number of other alternatives, such as the following.

• Strategic planning modes

• Reactive—a look backward
• Inactive—focused on the present (although the name seems awkward to me)
• Preactive—trying to predict the future (similar to scenario planning)
• Proactive—designing the future

• Strategic planning models

• Balanced scorecards
• Strengths, weaknesses, opportunities, and threats (SWOT) analysis
• Needs assessment
• Political, economic, sociocultural, and technological (PEST) analysis
• Objectives and key results (OKR) planning

• There are approximately 16–20 models out there you can research

• Other planning models

• Contingency planning
• Operational planning

As evidenced by the list above, there are myriad methodologies being employed today. Therefore, it is incumbent on the captive insurer to understand what model the facilitator is proposing to use and ask why he or she believes it's a good fit for the problem at hand. I also find that some of these models are better suited to various time frames than others, hence my preference for determining the time frame first and then selecting the appropriate model.

So, how do I segregate the time frames for strategic planning? I use three modes, as follows.

• Tactical—highly predictable goals and objectives, 1 year or less in duration
• Strategic—fairly predictable goals and objectives but open to more variability due to both internal and external factors, 2–5 years in duration
• Generative—highly unpredictable goals and objectives due to heightened volatility in both internal and external factors, 5-plus years in duration; this is where scenario planning and storytelling become most beneficial

Why do I start here? Because as you move out into the future, the predictability of events becomes less certain or more nebulous. Also, from practical experience, I find most boards and management teams gravitate toward shorter time frames.

Tactical plans are the easiest in terms of quantifying goals and objectives, developing key metrics for measurement, and getting feedback on the success or failure of the plan. There is also a demographic factor at play here as well. This is a bit of a generalization, but younger managers want and expect more feedback and the rewards associated with accomplishing a goal or task. Therefore, the idea of having to wait for years to determine what the payoff might be becomes problematic.

Another factor to consider is behavioral. In my 40-plus professional years, I have become a real convert to behavioral profiles. Again, a Google search will yield a series of links to the models that are in use. I am biased toward the DiSC® model, but that's only because I've taken it and used it extensively. The point here is that not too surprisingly, most individuals do not thrive on uncertainty or rapid change (think a slow evolution versus a revolution).

Looking at planning models from a behavioral viewpoint involves longer time frames and an increased likelihood of both uncertainty and change. Naturally, people feel more comfortable debating and planning when shorter time frames are involved. Helping the facilitator to understand how far out you are looking to plan gives him or her a reference point for knowing how unsettled the group is likely to be in both performing the exercise and reaching an agreement on outcomes.

So, the next time your captive decides to undertake a planning exercise, perhaps the proposed classifications may be of use in hiring a facilitator. In future articles, I'll take a closer look at some of the models I outlined above and offer my thoughts on where they fit on a timeline continuum.