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How to get over the planning mountain

20 April 2017

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getting over the planning mountain

Integrated Business Planning (IBP) is a game changer; our transformative techniques introduce a decision-making process that realigns the tactical and operational plans for all business functions. Roles are defined, individuals are held accountable and organisational goals are derived from and driven by one set of ‘true’ numbers which help to realise the ambitions of the business.

Although many organisations recognise the benefits that IBP can bring, not all make the most of it. One of the predominant themes of IBP is ‘planning ahead’ – the clue is in the name! However, the annual planning mountain is one that has proven hard for many organisations to conquer, with few reaching the summit on their first ascent.

With this in mind, I’ve put together some tips to not only improve your IBP process, but to help get it off to a flying start.

Tip #1: Use rolling horizons

Typically, most organizations begin the year with a 12-month horizon, which is better than no horizon at all. However, as the end of financial year looms closer, many businesses make the mistake of making the short-term the absolute and only priority. The focus shifts solely onto hitting end-of-year targets, with little recognition of the trade-offs being made despite the rapidly approaching subsequent year.

Avoiding last-minute panic is simple; use a 24-month rolling horizon. In contrast to a fixed horizon, a rolling future-forward plan compels organizations to consider the forthcoming year multiple times before it occurs. This minimises the risk of surprise when the new financial period begins, as the assumptions underpinning the forward-future plans are already outlined, understood and have been reviewed several times.

Similarly, a rolling horizon means that stakeholder expectations are discussed a lot earlier than in the traditional budgeting cycle, relegating the budgeting process to a ‘significant non-event’. As the budget has been consistently monitored throughout the year, goals are regularly set and realigned with each monthly review. This top-down approach also helps to determine the validity of the forward-future plans.

Tip #2: Use future big events to keep leadership focused on long-term plans

Short-term problems instigate a sense of urgency by definition, often requiring immediate attention. However, this can create a risky situation whereby the leadership predominantly focus on short-term firefighting at the expense of a longer-term view. What organizations need to understand is that the best-in-class look further out into the future to identify potential issues, plan for them, and so reduce problems in the short term.

The key is getting leadership team on board with the concept of planning ahead, and the easiest way to do this is to direct their focus on future ‘big’ events, such as seasonal occasions such as Chinese New Year and Christmas. Or, ‘big’ potential issues that are almost inevitable, like planned price increases, expiry of long-term contracts or even Brexit! The referendum on whether the United Kingdom would leave the EU only had the possibility for a binary outcome – in or out – and yet, a lot of companies were caught out by the result.

The questions you need to be asking yourself are: - When do we need to start working on particular events/potential issues that we have identified in the future? - Are we ready? - What issues are most uncertain? - Have we got a plan in place? - Is there an alternate plan?

IBP eliminates the element of surprise; the planning process addresses potential issues and offers solutions by not only having a Plan B, but a Plan C and even a Plan D. By starting to look further out, issues cease to exist by the time it gets to the near-time.

For more tips on how to get the most out of your IBP process, you can listen to a free full-length webinar by clicking here.

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Stuart Harman Linkedin

Stuart Harman

Partner, Oliver Wight International

Stuart is based in Sydney, Australia but has spent 20 years working in key change agent roles in major manufacturing organisations around the world. Whilst gaining deep knowledge in a number of industries including metals and FMCG he has developed extensive experience in improving and linking processes across organisations and supply chains to enable the successful deployment of strategy.

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