Planning Horizon
Categories: Company Management
You go to the doctor for a routine check-up and get some sobering news: You picked up a parasite from a toilet seat at the mall, and there's a worm-like creature in your belly, growing at an exponential rate. Right now, it's about the size of a hot dog. By tomorrow, it’ll be the length of an average garden hose...you'll probably be bulging at the seams and in excruciating pain.
Within a couple days, the worm will likely have burst through your body, leaving you as a pile of goo as it slithers off to the mall to lay more eggs in the bathroom. But for now, you're in the hot dog stage. You can still move around. You can still do whatever you want.
How are you going to spend that last day? Brush your teeth? Finish your taxes? Politely return all the work emails sitting in your inbox?
Probably not. More likely, you'll empty out your bank accounts and catch the fastest flight to Vegas after passing several Dunkin' Donuts shops. Okay, same doctor's visit, different result. Everything checks out. You've going to live a long life. That's the good news.
The bad news? Teeth brushing, tax doing, email returning. All that stuff is back on the itinerary. Your time horizon matters. You make different decisions when you look only at the short-term than you do when you have a longer time line to worry about. Which brings us to the difference between planning horizon and infinite horizon.
A planning horizon is the length of time into the future that a strategic plan covers. Think: Stalin's five-year plans. Or, in a slightly gentler vein, a company's strategic quarterly plan. Or your program to lose 20 pounds in 20 days.
An infinite horizon refers to the long-long term. Staring wistfully out the window to an unknowable future. Maybe a time of robot servants and flying cities. Or maybe conquest by bug creatures from space. Who knows?
So...how does this notion come into play in real life? Think about Uber. In the ride-sharing company's planning horizon, they envision transitioning from humans using their own cars...to company-owned self-driving vehicles. It's not going to happen tomorrow. It's a long-term goal. But it's within the planning horizon.
But on the infinite horizon, someone might invent teleportation. Cars, self-driving or otherwise, might become irrelevant. Uber's plan is shot. And maybe a good thing, too. Self-driving cars might be nice. But they're no match for conquering bug people from space. Hopefully, we'll just be able to teleport out of here when that happens.
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Econ: What are Planning Horizon and Infi...5 Views
And finance Allah shmoop What are planning Horizon and infinite
horizon All right people You go to the doctor for
a routine checkup and get some sobering news after you
turn your head and cough you picked up a parasite
from a toilet seat at the mall And while there's
a worm like creature in your belly growing at an
exponential rate well right now it's about the size of
a hot dog By tomorrow it will be the length
of an average garden hose and you'll probably be bulging
at the seams in excruciating pain Within a couple days
the warm will likely have burst through your body Leaving
you is a pile of goo Is it slippers off
to the mall to lame or eggs in the bathroom
But for now you're in the hot dog stage You
can still move around You can still do whatever you
want But you're thinking How are you going to spend
that last day Brush your teeth Finish your taxes politely
return all the work emails sitting in your inbox Ari
The whole bunch of donuts Yeah probably not More likely
you'll empty out your bank account and catch the fastest
flight to Vegas Okay same doctor's visit Different result Everything
checks out You're going to live a long life That's
the good news The bad news No teeth brushing tax
doing email returning all that stuff all back on the
table all part of your itinerary Now in your life
your time horizon matters You make different decisions based on
Well when you look on ly in the short term
than you would if you were looking at the longer
term a long timeline toe worry about things Which brings
us to the difference between planning horizon and infinite horizon
Okay a planning horizon is the length of time into
the future that a strategic plan covers Think Stalin's five
year plans and you know old Russia or in a
slightly gentler vein a company strategic quarterly plan Like the
next thirteen weeks here's what we're going to dio or
your program to lose twenty pounds in twenty days Yeah
good luck with that An infinite horizon refers to the
long long long term staring wistfully at the window to
an unknowable future may be a time of robot servants
and flying cities are maybe conquest by bug creatures from
space Who knows So how does this notion come into
play in a real life today Well think about uber
in the Ridesharing company's planning horizon They envision transitioning from
humans using their cars to company owned self driving vehicles
It's not gonna happen tomorrow It's a long term goal
but it's within their planning horizon But on the infinite
horizon while someone might invent teleportation like cars or self
driving or otherwise would then become irrelevant And uber's plan
is shot And that's maybe a good thing too for
uber because while self driving cars might be nice but
they're no match for conquering bug people from space hopefully
we'll just be able to you know teleport our way 00:02:39.685 --> [endTime] out of those problems