Why you should hatch your master plan for the 24-36 month horizon
15 April 2016
As we all know, the future will always be uncertain, so it’s vital organisations wishing to thrive, begin to plan more effectively for the longer term.
Focusing on the short term is relatively easy, because we feel we have more influence over it, but leaders who do not focus their attention on the long term, risk storing up problems for the future. Despite this, many organisations still are not looking beyond the next three to four months in their S&OP processes, or at best the end of the financial year.
One of the defining features of Integrated Business Planning (IBP), is the development of a rolling 24 to 36 month horizon to give business leaders greater visibility of future issues that will affect the business; deal effectively with gaps in business performance; and enable delivery of the business strategy.
So often we see organisations that agree the budget after the financial year is in full swing, by which point the business hasn’t a hope of hitting its targets and everybody runs around trying to put out fires? This is not sustainable, and typically causes artificial quarter-end and year-end pushes. However, if you have a well designed and properly implemented IBP process, a two to three year forward view not only identifies financial gaps between the bottom-up ‘latest plan’ and the top-down business plan, but also allows you to rectify them in plenty of time leading to sustainable performance delivery.
This gap-to-plan closure will be a fundamental driver for adopting IBP in the first place and in the early stages of IBP, it allows the leadership to constantly challenge the business. However, once IBP is imbedded into the business, it becomes even more powerful and starts to inform the strategy from a credible information set, so the business begins to challenge the leadership on its ambition and agenda – the virtuous circle.
Organisations with a greater level of maturity in their IBP process can use it to drive performance against the strategy and ensure the business is headed in the right strategic direction. Now IBP becomes a process for running the entire business, improving decision making, increasing responsiveness and aiding collaboration and optimisation.
An effective long-term plan also imbues short term plans with clear future goals, meaning employees understand exactly what their role is in moving the entire organisation forward; thus they can approach their jobs with renewed enthusiasm and insight and the new level of ambition is more than likely to be reached. In this way long-term and short-term plans can be balanced, eradicating firefighting and aligning the organisation to a common and more ambitious goal.
It’s time to get a spring in your step and get fit for the future.