Some National Hockey League coaches break down the 82 regular game season into 10 game segments.
Some go much further, thinking of and managing performance against a much narrower horizon and breaking it down into single periods of a game. How did the team perform in that period? What worked? What needs attention?
Is performance, measured by each game, getting the team to where it wants to be, to be Stanley Cup champions?
What if we were to apply this approach to farm business management but stretch the horizon much further than one season?
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The “horizon” would be aligned with where farm families see themselves and their farm businesses in the future. This future is captured in a statement that defines the vision for the farm and family.
For planning purposes, it is often thought of in terms of being five years into the future. What if we were to think of the timeline as being 20 years into the future?
Many will read this and think, “are you crazy? Twenty years? We don’t even know what will happen a year from now.”
No argument here. We don’t know the future.
However, there are two types of future: the future that will happen and the future we make happen.
It makes more sense to try influencing what will happen in the future and work to achieve what we would like to see happen rather than simply taking what we’re dealt.
A vision for a business is typically captured in a statement that provides strategic direction and describes what the owners want to achieve in the future.
A 20-year vision or horizon can be thought of as being generational. It differs from a traditional vision and needs to have indicators attached to it, which can be used to measure whether you’re making progress in working to get to where you’d like to be or need to be.
This part is tricky, but it is possible to reach an agreement on what that might look like. It could include:
- size of the farm
- other business units
- who is involved and in what capacity, especially family
- how the business is being managed
- investment required (equity and debt)
The next step is to break the 20 years into five-year segments, similar to what NHL coaches do. What needs to happen in the next five years to ensure that we are indeed working toward the future that we have defined?
This is where the measurement indicators come into play.
To use a road trip metaphor, how do you know you’re getting to where you want to be if you don’t have a road map with towns and cities along the way that let you know you’re headed in the right direction?
Required investment is one of the key indicators, both financial investment and human investment (your time and energy).
Focusing on the financial investment, how much equity (wealth) will be needed at the 20-year horizon, and how much leverage (debt) will be used to get there?
The reality is that every farm is headed somewhere financially. However, the past financial performance may or may not get the business to where it needs to be to be aligned with the generational vision.
Financial targets and investment guidelines should be developed to be able to measure progress in five-year segments. These indicators are then used to measure progress.
Many families I talk to are in fact thinking of the future. They are thinking about how their children might be able to participate in a family-held business, which may include activities other than the farm.
I’m suggesting that they consider advancing the “thinking” into “planning.” It will help by putting substance or structure around the “thinking.”
Things are much different today than they were 20 years ago, and of course they will be that much different 20 years into the future. We can’t guarantee what that future will be like.
For some farm families, it may make sense to try to think forward as opposed to looking back 20 years from now, wishing they had at least thought about doing things differently.
