Objectives and targets were set at this frequency and were rarely reviewed within this timeframe. Despite the high demands of the task, there was time to gather business data and transform it into relevant management information that was then shared with decision-makers.
That reality no longer exists. Today, strategic-financial planning in itself has become a speciality, an essential competence in companies with multiple business areas or even multiple business models.
Because we live in uncertain and turbulent times, it is no longer viable to plan and manage with long and fixed cycles. To deal with this instability in the management of the company, I advocate the following guidelines in planning and budgeting initiatives:
- Make yourforecast model more robust. Don't just rely on what happened in the previous cycle, but also on the development of scenarios. Identify with your team the most likely scenario and plan accordingly. You can also identify what will have a more negative impact and prepare a contingency plan in case it becomes a reality. In this way, the company will be better prepared to adapt in good time, thus gaining a competitive advantage. For example, Gartner recently suggested two variables for the development of scenarios: duration of the pandemic crisis (long or short) and change in customer/consumer behaviour in the pandemic (significant/non significant);
- Increase the effort for strategic alignment within the whole organisation. Often, this initiative involves adopting a methodology such as the Balanced Scorecard, which increases employees' awareness of their contribution to a common goal and aligns and enhances operational and strategic objectives. This approach should be complemented with a Business Intelligence (BI) tool that facilitates the follow-up of strategic execution through real-time monitoring of key performance indicators (KPI);
- Create an agile and interactive system. Support your planning and control processes (including those described above) with easy to change systems and procedures. You will need this flexibility when market conditions and scenario variables change. Remember, we live in turbulent times. Seize the moment to digitise. Covid-19 has made the benefits of digitising your organisation obvious, and sometimes inevitable. It has never been easier, therefore, to adopt this new procedure that makes it much easier to store and share information. Optimise the remote collaboration system that is indispensable for company planning and the implementation of an agile system;
- Pay attention to leadership. We can have the best IT systems and methods, but without effective leadership there will be no results. Invest in the development of this competence within the company, investing in an effective communication of what the objectives and the strategies to achieve them are. If everyone is prepared to accept the uncertainty in which we live and work, everything will certainly go better.
To deny that the world has changed and to wait for the reality of the last century to return is to waste the time needed to adapt business to the new context. Don't waste time, act now.
Article originally published by PME Magazine
