With a new fiscal year fast approaching, many business leaders are in the thick of budgeting, forecasting, and planning. However, if the chaos of the pandemic has taught us anything, it’s that annual plans — where leaders plan once and walk away — are no match for today’s dynamic business environment, Businesses that still rely on this outdated technique will find it hard to react, respond, and compete strategically in the years ahead.
Chris Baker is the Managing Director for EMEA at Anaplan (opens in new tab).
Market shocks, like the aftermath of Brexit, labor shortages, and the supply chain crisis, as well as Black Swan events like the ongoing global pandemic, have showcased just how quickly complexity and change can render even the most well-thought-out business plans (opens in new tab) irrelevant. In fact, in a recent business survey, more than 53% of respondents said they adapted their company’s services and activities during the pandemic in order to maintain or drive performance.
Stability is a thing of the past, and while it is impossible to accurately predict the future, businesses need to think: how do you plan strategically for the unexpected?
Bring order to the chaos by saying so-long to spreadsheets
If business leaders want their companies to remain competitive and resilient, they need a shift in mindset when it comes to their planning tools. Parsing through hundreds of Excel files to compile company data (opens in new tab) for an annual budget, for instance, will likely leave you with a budget that is irrelevant or outdated before Q1 has even ended. Static, siloed tools like spreadsheets (opens in new tab) that require extensive manual effort make it nearly impossible for companies to pivot in real-time to meet market volatility or disruption, and often leave them many steps behind the competition.
For forward-looking businesses, increasing the investment in digital tools and prioritizing a more continuous, real-time approach to planning must become a priority. Ditching the “plan and walk away” mentality will make it easier for leaders to identify the levers that will help their business pivot and adapt and will help ensure plans are agile enough to meet the needs of the business as those needs shift.
Data can help… if you don’t drown in it first
A key element here is data. There is so much data available to businesses today, but without the right approach we risk drowning in it. Oftentimes data — be it company, external, or third party — is stuck in siloed spreadsheets or disconnected tools and systems. Aggregating this data can feel like untying a scrambled ball of headphone wires while on a run – hard to untangle, impossible to use, and often takes more than just one set of hands. This deluge of data can leave companies bogged down in the quagmire of labor-intensive tasks, like compiling and manually analyzing data, which not only waste resources, but leads to inefficient decision making and slow reaction times.
Taming the large amounts of data available to businesses – the fabled “data lakes” – is the foundation of planning effectiveness. This applies to data flowing continuously into the business from the outside world, as much as it applies to internal data. When companies start leveraging predictive analytics and business intelligence (opens in new tab) capabilities – like Machine Learning (opens in new tab) – first- and third-party data can be automatically integrated into their forecasts and plans. With actionable, real-time data in hand, leaders can uncover new opportunities to drive performance, from identifying new markets to taking advantage of shifting consumer sentiment before the competition. Plus, with plans that are more predictive and data-driven in nature, businesses can prepare for the impact of future disruption and feel confident in their ability to pivot if and when change occurs. Adaptability is becoming more accessible with technology, but prioritizing true transformation, not just one-off digital tools or solutions, will be key.
Be resilient, not reticent to change
Changing the way we think about planning can be a scary concept, especially at a time when many businesses are still grappling with the shocks of the past two years. But setting your business up to withstand and thrive in a dynamic environment has never been more critical. To find a competitive edge or cope with unexpected disruption, the mindset shift needs to be towards continuous, dynamic, and real-time planning.
If business leaders can move beyond the annual plan, they will quickly see that a good modern plan still hits even a moving target.
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