Management and 5 year plans

I just saw some of the videos on MSNBC regarding the US economy, including the much-respected Alan Greenspan admitting to a mistake in a model that he had where banks can be trusted to look after themselves and how companies are now facing not just a credit crunch (lack of cash) but insolvency (debts more than assets). Actually, the hard truth is that bankers look after themselves.

Most businesses work out rather detailed 5 year plans. Well, at least most executives have to do a detailed 5 year projection every year. The economy in Sep 2007 last year was starting to realise the effect of the subprime mortgage problem.

With the current economy, it just destroyed all the hardwork all these executives have put in while working out the 5 year projections. All destroyed because the economy is different from what we thought it would be.

My point - most detailed 5 year plans are quite a waste of time and energy. Yes, they may show some indication of the direction when introducing a new product or service, but it is with too many assumptions on your product, technology, economic, consumer demand, etc.

Assuming that the plan is realistic, the only way to make it useful for more than 3 months is to have:
a. regular (at a frequency that the assumptions can change) reviews to check, verify and adjust the assumptions.
b. management that are realistic enough to adjust the projected results accordingly.
c. shareholders who can accept that as the assumptions change, the results of the company is expected to change. For better or for worst.

Unless a, b and c are made true, 5 year plans are just an feel-good exercise in the name of management responsiblity.

1. Should we maintain the act of doing 5 year plans when it is relatively useless if not reviewed? Or should we use it properly and do the reviews?
2a. For those few that are already doing the reviews, are we realistic in adjusting the assumptions we make about the market, product, demand, technology, etc?
2b. For those that dont believe in 5 year plans, what are the alternative models can the board use to evaluate and review?
3. Do you have a top management team or board that can accept a reduction revenues and profits? Or will they tell you to work harder to achieve what is not-too-realistic?
4. Do you think that in some (other people's) cases, the messenger will be shot?