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Bank of England still needs to ‘see the job through’ on inflation: Pill

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By Robert Douglas, European planning director at Adaptive Insights, a Workday company

The old, static model of planning and execution can no longer keep pace in today’s fast, data-driven, multi-dimensional business environment. Modern businesses are complex systems, made up of a collection of interconnected inputs and outputs that, together, form an intricate operational engine. And, with the pace of business only continuing to accelerate, real-time insights from around the organization are required to make better, faster decisions. Companies still managing financial planning with static spreadsheets and traditional, annual planning processes will be challenged to keep up.

Static planning is a silent killer

Unless businesses actively look out for them, the symptoms of static and spreadsheet-based planning can be hard to spot. The aches and pains are the manual processes, duplicated effort and consistent inaccuracies, which feel innate to the process because businesses do not know there is a better way. That is why so many companies are still stuck in this process, but while the outward signs are not dramatic, the cumulative underlying damage can be fatal.

Static planning can hamstring agility and strangle innovation, costing the business millions in inefficiencies and missed opportunities.Operating with a “status quo” mentality, organisations will gradually be outpaced by competitors, resulting in an impact on customers and results.

The challenge is that for many companies,the current planning process feels like it’s working, or at least that the results it produces are acceptable for now. Static planning feels stable and comfortable, like an old shoe. It’s often easier for finance teams to maintain a business-as-usual process—a tried and tested methodology that has been around for so long that everyone just accepts it. So, planning remains a huge time drain, version control is a nightmare, and everyone is miserable.

There are three key issues with static planning:

  1. It is too top-down

When success was dictated by order, discipline and coordination at scale, it made sense for a small group of senior executives to own every decision in the planning and execution process. However,today’s business environment is too large and complex for one-way or “top down” planning to work successfully. Flat, fast-moving organisations produce too much information for a small group of decision-makers to meaningfully process. Senior leaders no longer have the cross-functional visibility and insight required to identify opportunities and risks at the level needed.

  1. It is too slow

Static planning typically happens on a rigid annual schedule, with periodic reviews to assess progress against predefined milestones. But annual plans are usually out of date by the time they’re complete, given the average annual plan takes 77 Days to complete, according the Association of Financial Professionals. And, updating strategies, financial plans, and operational plans once or twice a year does not work when the rest of the business functions in real-time.This isn’t just a frequency problem. Static planning doesn’t have a real-time mechanism—it can only give snapshots of business performance, which makes it a fundamentally backwards looking activity.

  1. It is too limited

Static planning is extremely limited in scope.  Business strategy is viewed in purely financial terms—and even then, usually only according to a very small set of financial data. However, corporate financial data is just one part of the operational puzzle. Planning happens all over the organisation—functional departments have their own datasets siloed within specific modelling and transactional systems.It is impossible to make truly strategic decisions with a partial view of the wider organisational environment.

Planning today inevitably needs to company-wide, meaning that it is impossible to make truly strategic decisions with the partial view of the wider organisational environment offered by a static planning process confined to finance.

Innovation is a critical component of success

Businesses today rely on innovation, not only for success, but for survival. In the data-driven economy, no market or industry is insulated from disruptive, new services, efficiencies and insights. As such, if you are not disrupting the business, you are waiting around to be disrupted. Static planning can hinder agility, strangle innovation, and cost the business millions in inefficiencies and missed opportunities.

What’s needed is a new model of planning and execution that’s built for complexity, drives participation, and leverages executional data in near real-time. This is the opposite of static planning, called active planning. Where static planning is stop-down, siloed, slow and limited, active planning is collaborative, continuous and comprehensive.

Active planning will empower businesses

Active planning is about listening to what data is telling the business about its goals, performance, resources, customers, competitors, and the wider market. It empowers teams and operational leaders, the people closest to the work, to create functional plans optimised for the on-the-ground reality. However, crucially, active planning makes these plans visible to the rest of the business; they are integrated with – and accountable to – other business activities and signed with the wider corporate plan.

The result is a single, unified, high-fidelity view of the business environment at all levels. And, this is how modern organisations will achieve the necessary business agility in today’s fast-moving world.

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