The concept of a five-year plan, common in large corporations and government procurement, was created by Joseph Stalin for the Soviet Union. This rigid, top-down model routinely fails because it cannot adapt to a dynamic world and stifles the rapid iteration necessary for innovation.
The ubiquitous corporate "five-year plan" is not a benign business tool; its conceptual creator was Joseph Stalin for managing the Soviet Union. This framework is fundamentally ill-suited for a dynamic, capitalist environment, routinely failing because its iteration cycle is too slow. The persistence of this model represents a "hand coming out of the grave" of central planning.
OKRs and SMART goals are repackaged versions of Peter Drucker's 1940s "Management by Objectives." This framework was designed for simple, repetitive tasks on an assembly line, making it fundamentally unsuited for today's complex, knowledge-based work where problems have no single right solution.
Top-down mandates from authorities have a history of being flawed, from the food pyramid to the FDA's stance on opioids. True progress emerges not from command-and-control edicts but from a decentralized system that allows for thousands of experiments. Protecting the freedom for most to fail is what allows a few breakthrough ideas to succeed and benefit everyone.
Corporate creativity follows a bell curve. Early-stage companies and those facing catastrophic failure (the tails) are forced to innovate. Most established companies exist in the middle, where repeating proven playbooks and playing it safe stifles true risk-taking.
The act of a small committee deciding the "correct" cost of money is analogous to communist planners setting prices for consumer goods. This approach assumes an impossible level of knowledge and control over a complex economy, a model that has consistently failed throughout history.
Contrary to the popular bottoms-up startup ethos, a top-down approach is crucial for speed in a large organization. It prevents fragmentation that arises from hundreds of teams pursuing separate initiatives, aligning everyone towards unified missions for faster, more coherent progress.
LEGO's CEO has settled on a four-year strategic planning cycle as the ideal cadence. He finds three-year plans create a constant sense of urgency, while five-year plans feel too abstract. A four-year horizon is long enough to execute major initiatives but short enough to remain tangible and relevant.
Stalin's purge of his officer corps before WWII wasn't just paranoia; it was enabled by a Soviet belief that people are interchangeable and hierarchies of expertise are meaningless. This ideological lens allowed him to rationalize destroying his military's most valuable human capital, revealing the danger of combining paranoia with "blank slate" theories.
Large corporations can afford lobbyists and consultants to navigate geopolitical shifts, but their size makes strategic pivots notoriously difficult. This creates opportunities for agile startups and SMEs, which can adapt their strategies and organizations much faster to the changing landscape.