We always dedicate lots of time to planning at our companies with long, structured processes that require time and energy. However, the outputs (their effectiveness and quality) of planning processes are often disproportional to the effort put in. This is often a cause for great dissatisfaction.
Therefore, it becomes essential to have flexible processes and instruments that can guarantee a swift reaction to anything new resulting from changes to the competitive situation and the company strategy. It is even more important to have mechanisms that can anticipate (wherever possible) probable future events by switching from a predictive to a proactive approach.
Over the years, we have learned to understand that analytical yet late forecasting is not what you actually need; it is much more useful to understand developments, to be able to adopt effective action plans for these developments and to be able to react. Our performance planning methodologies move in this direction.
Our Performance Planning is characterised by three fundamental concepts:
The inclusion of non-financial indicators (Key Performance Indicators) as drivers for future investment decisions is now a common practice. Nowadays, the real challenge for companies is establishing a methodology to support the development of a performance planning system that includes these indicators in the database used and relates them to economic-financial data (Key Financial Indicators). What is the process to identify the right KPI and to integrate them with KFI? Following an initial phase of finding out information and mapping, you can codify, albeit partially, different variables that offer explanations of typical economic indicators. Next, this qualitative information – which can be summarised into result drivers and sales levers – must be linked to a precise framework that characterises the nature of the information, which can be standardised for the specific nature of the business and the relevant client.
PICKING UP ON TRENDS
Traditionally, performance planning models have heavily focused on expected company results, on their estimates and understanding. However, for many companies, this over-focus on results as the only calculation item is a limitation, at the expense of including a series of context measurements.
In modern economic trends, there is a strong emphasis on this need for balancing and it is therefore necessary to provide organisations with levers to improve their planning systems.
The inclusion of “external” measurements to the company, both macro-economic (the performance of GDP, the rate of inflation, or the employment level) and specific to its relevant industry (from technological aspects to the level of competitors), considerably reduces the “myopia” of many implemented action plans, providing more accurate estimates for current and future company needs.
BRINGING RESULTS AT EVERY STEP
Time is a precious resource and, in a fast-changing environment like today, companies need action plans that provide consistent results quickly. Waiting for the development of all the different steps required to develop a forecasting system is no longer a viable option. Companies therefore need to adopt a flexible approach that leads to the creation of “products-projects” that can be separated into several phases or modules, encouraging the continuous production of consistent outputs and a comparison between the formulated hypotheses and the results actually achieved (therefore having the possibility of “adjusting” the current system).
- Competitive Analysis – knowing how to read the competitive situation and seize its endless opportunities
- Strategic Plan – giving yourself a future and being able to translate this into a feasible and monitorable action plan
- Restructuring Plan (company crisis management) – knowing how to reinvent yourself by making the most out of your own distinctive resources and reinterpreting them in an effective, sustainable way
- Budgeting & Forecasting – predicting your results in a flexible, dynamic way
- Cash Flow Modelling – predicting your financial trends in order to manage your relationship with the capital market as best as possible
- One Touch Budgeting – using technology to launch smart forecasting processes
- Operational Planning – knowing how to predict purchasing and production requirements by effectively integrating them with the company planning cycle