“Whatever plan you are making is wrong”. I still recall these words of the CFO in my first organization on a day I was building a revised forecast and the balance to go for that year’s target. My inputs were the usual, the actual achievement of the previous month and a fresh set of inputs from various departments.
At first I thought he was commenting on my capability but then he added a comforting note, “The minute you hand it over to me, the variables that made that particular plan would have changed. Hence it is best to revise the plan regularly.”
Most of the companies follow a robust process of detailing out an annual plan and continuously work on revising it, especially to take decisions for the immediate short-term period.
It allows different teams to align and work on achieving the one common goal for the company, details out the resource requirements for achieving that goal and provides a way to know levers that impact the business which could be either controllable or non-controllable.
The planning exercise is also an amalgamation of a top-down strategic vision held by the top management and a bottoms-up approach which involves gathering inputs from the execution teams at large. This allows target setting for various individuals and departments which when achieved would reasonably allow for achievement of the organizational targets.
The external factors like environment, government policies, and industry competitiveness are estimated and used as variables along with all the internal drivers that help to manufacture and deliver the product or service to the consumers.
Through the plans, the management is more aware of where it wants to go, what gaps exist and what needs to be done to fill those gaps. As businesses continue to revise their estimates and measure actual performance against them, it offer a means to course correct and take necessary action allowing the management to continue moving closer to the vision of the organization.
In and around March 2020, businesses around the world had to accept a new paradigm in the external world – Lockdowns. It became an even bigger VUCA (Volatile, Uncertain, Complex and Ambiguous) world with organizations getting into multiple scenario building with changing micro and macro ecosystems.
The challenge of the external environment being in a constant flux had taken a new dimension – that of an existential level impacting variables at a basic human level, with employees, sales force, customers grappling with their own lives.
At such times, one often questions the rationale of the whole exercise as the robustness of the plan is in question ever more. And yet, the importance of revising and building multiple scenarios is heightened to enable a more practical and strategic approach to respond to the changing dynamics.
How many times did your organization change its plans due to the pandemic? How did it help the business? With which plan was performance evaluation done?
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