Beyond being a leader, I am subject matter expert in short and long term planning. That requires not only creating a vision of the future that is unknown (as all futures are), but creating a reasonable range of outcomes in that future while landing on and recommending the most likely outcome. Interestingly, the job really isn’t about being right or wrong. (Spoiler alert: you are going to be wrong) The job really is about creating/setting reasonable and achievable expectations within the constraints of the situation for which you are predicting the future.
Expectations are far more important to organizations than forecasts, predictions, or even outcomes. Oh by the way, this is typically true in your personal life as well. Expectations can quickly make a loss feel like a win or a the inverse, but yet most literature isn’t about how to think about expectation setting – it’s about the details (building forecasts, interpreting the data, measuring outcomes, etc.). Holding the wrong expectations can be crippling to the spirit of an organization or a person, setting up situations of mass overconfidence (when the expectations were far too low) or consistent disappointment (when the expectations are too high). Wildly incorrect expectations will absolute distort real progress, which will damage an organization (and a person) regardless which way the expectations were wildly incorrectly set. To that end, Id like to provide some principles to consider when you are building expectations – with professional examples but just as easily applied to your personal life.
First, once you understand the range of outcomes, you want to consider setting expectations that the most likely outcome – which are often somewhere in the middle of that range of outcomes.
A few key points on this principle: this does not mean the work of forecasting, planning, predicting, etc. are less important. Conversely, they are absolutely vital to creating a smart continuum of potential outcomes. Each component of a system will have a range of outcomes – think of making widgets: a range of how many widgets you’ll sell, a range of widget components you can acquire, a range of skilled workers you can hire and retain to produce the widgets, and thus a range of widgets you can make, a range of shipping/supply chain options on how many widgets you can move to where, and so on. As I tell folks all the time, “if you have one plan, you really have none because no plan actually survives reality”.
Instead, you use the skill of all the folks who do planning to outline the best case, the worst case, and a few scenarios in between. Thus, you really are making several plans…but you only put forward the one you believe to be the most likely outcome based on the information you have. Is it always the middle plan? NO! But if you always find yourself using the most optimistic or pessimistic expectations, you will quickly lose credibility with your audience as they’ll know your expectations have a consistent bias that they can’t trust…or worse, they will take your expectations and adjust based on what they think your bias is making their own separate expectation they are holding you to without you actually being aware of what it is.
Second, you want to clearly outline the factors that could dramatically impact the ability to meet those expectations.
This point is a place where most people lose the audience. This absolutely does not mean that you list every assumption, risk, or concern. This absolutely does not mean you bury everyone with the complicated modeling and effort that went into building the expectations. This absolutely does not mean you must present margins for error and the like which infer a high level of predictability. Everyone should/must understand that these are expectations based off of all of those things relative to your unique situation. This isn’t a “cover your ass” exercise. Instead, your role it to mention the handful of highly impactful assumptions or risks that will drive the biggest variance from expectation.
For example, if your sales outlook for product A is based on a significant price change in Q1 and that price change causes the most variability in your range of outcomes you need to mention it. Conversely, if the change is in Q4 and is minor, then while it is a fact…it’s not a potential driver that can submarine your expectations. The farther you go into your list of disclaimers (and that’s what you are doing in the audience’s eyes – you are distancing yourself from your expectations by outlining all the things that could make it wrong), the less confidence they have in your outlook. And when that happens, they do what I outlined above…they fill the gaps in themselves betting against your work with their own insight.
Third, you want to outline what your early indicators of performance relative to the expectations are, so that there is ample time to course correct when things are off from what was expected.
This should be the most obvious point on the page not meriting a ton of discussion. The concept is familiar and simple. Whatever you setting expectations on, you need to have a plan to measure. Each situation will be different, but the key point is to not build an expectation that can only be measured binarily at the end as yes/no, finished/not, good/bad, etc. Ensure your long term expectation bas built in incremental checkpoints/measures that allow you to consistently track your progress relative to the larger expectation.
Simple (almost dumb) example: if you are building a sales plan (expectation) for the fiscal year of $12M, make sure you know how that distributes by quarters, or months, or even weeks so that you can make sure you are on track. Waiting 11.9 months only to find out you are at $6M is not a winning plan for anyone.
Fourth, you want to clearly outline what actions will be taken to accomplish the course correction that will be necessary from the prior point.
This point isn’t quite as obvious as the above…but it’s related and close. This is basic contingency planning. As I mentioned earlier, “if you have one plan, you really have none because no plan actually survives reality”. This is the way you build out plans B-E or B-Z. You take your key inflection/variation points and have defined plans around what you can do based on how those key levers turn out.
From my example above on point two, let’s assume that you built a most likely plan assuming that customers would buy less of your product once you had that significant price change in Q1. You should absolutely have a concrete plan in mind for other outcomes. For example, how would you INCREASE production if your price change actually pushed you into a more affluent market and your sales actually increased because the value proposition became more obvious to a customer segment that hadn’t considered you prior due to your value pricing? This plan doesn’t need to be fully fleshed out necessarily, but being able to say that based on early measurements of the impact of the price change and research with your manufacturing partners, you will be either able to throttle down production OR increase it by running the production line 24/7 will increase confidence 10x within your stakeholders.
Fifth, remember that expectations are just that…they are thoughtful predictions of what to expect in the future – a thing we can’t actually know – so give yourself some grace when they don’t come true.
Simple point: guessing the future is hard, and then building expectations on top of those guesses is a fool’s errand, no matter how informed your guesses are. It is work that must be done. There is great benefit to being less and less wrong about your predictions and expectations. All that being said, you are going to be wrong. Every day. The best thing you can do professionally and personally is follow principle one with yourself: have realistic expectations about your ability to create expectations! Professionally I have this skill in spades. I understand that much is out of my control so the best I can do is make a decision/set an expectation with the information I have and move on. Being wrong is not only part of the job…it is the job, so I just try to learn from each failure and hone in on a better expectation next time.
Personally, I am terrible at managing my own expectations in some areas (true personal issues, not financial or logical ones, to be precise). I assume many of my expectations will come true just as Ive outlined them in my head, leading to much much much disappointment. It’s a failure mostly on the first principle, but a failure on 1-4…and then 5. Don’t’ be like me there. The conclusion will give you a great way to check how you are personally at setting expectations in your life.
With all that said professionally, the process of building expectations makes some sense right? Personally, Ill give you “homework” to take some time and see if you have internally (or with some help) done all 5 of the above principles on a topic that is critical to all of us for the vast majority of our adult lives, even though we don’t all spend as much time on it as we should (much like most don’t spend time setting proper expectations at work).
What expectations have you set around your retirement? Do you actually know your range of possible outcomes? Can you name a few key factors that could alter your plan? Do you have comprehensive visibility and tracking on your progress to date? If/when you are off track, do you have ideas on how to course correct? Or if you even need to course correct? Does your plan allow you to vary without sending you into a panic about your future? If you can’t answer affirmatively to all those questions, today is a good day to start thinking about your retirement differently…and then take that personal experience and think about the expectations you set in the rest of your personal life and professional life a little more diligently.
View from the Middle 