By Robert Douglas, Europe Planning Director at Adaptive Insights, a Workday company
Planning and execution are the base elements of progress, serving as the framework through which almost every human endeavour – great or small – have been willed into existence. Whether it is building a wonder of the ancient world, or developing the building blocks of the internet, individuals, teams and organisations tend to carry out planning and execution in the same way. By defining strategic goals, allocating resources towards those goals and measuring those resources delivered, results can be analysed in order to improve future strategies.
The rise and perseverance of static planning
Throughout the 20th century the biggest, most successful companies all planned and executed annual corporate strategy in broadly the same way. Once a year, senior executives gathered to define and agree on the company’s goals, plan activities and allocate budget towards them for the next year. These plans then cascaded downwards, throughout functions and regions, for the whole organisation to act in unison, executing the strategy en masse. Functions and regions then reported their performance upwards, and those same senior executives reconvened, measured progress and started the whole process over again. This “rinse and repeat” process seemed instinctual, or even natural, to most.
However, in most businesses, this entrenched a static process―plan, execute, plan again―that over time produces rigid and inflexible plans based on infrequent snapshots that are often out of date before they are finalised. The inefficiencies of this process began to show as the business world fully emerged itself into the digital age towards the turn of the millennium. With the world getting increasingly flat, fast, and data-driven, and the computing infrastructure on which almost every business operates becoming increasingly compartmentalised, commodified, and outsourced as a managed service, the plan, execute, plan again sequence has proven unable to keep up.
Need for speed
Organisations that quickly understood the need for fast-paced and agile planning infrastructures have been pulling away from the pack. For example, Southwest Airlines remained growing and profitable throughout the 2008 crash (and subsequent fluctuations in oil price), as its competitors languished by making quick, smart bets on strategies like fuel hedging, a stringent hiring process, and removing baggage fees. New, lean start-ups, such as Facebook quickly displaced established social media players by being nimble, capturing and leveraging data to create new monetisation models instead of falling back on classic planning and professional management styles used by News Corp that failed to innovate following its Myspace buyout.
The pace, scale and breadth of technology change over the last few decades has been one of the most profound accelerants of progress in human history. Globalisation, fast and ubiquitous connectivity, digital transformation and an explosion of data have made the ways we trade, travel, communicate and work together almost unrecognisable from those only a couple of generations ago. The same goes for how organisations plan their finances, where traditional boundaries of linear planning and execution have been converging at considerable pace.
Adapt – or fail
Over the past decades, long established markets and industries have been disrupted and replaced as manual processes and analogue workflows have given way to sophisticated digital systems and solutions. Gradually, the old guard found themselves in a busier and more complex competitive environment, edged out by younger, more agile, data-rich challengers. For example, a two-person start-up running out of a bedroom can today rent the same full stack technology infrastructure as the biggest businesses on the planet on a pay-as-you-go monthly subscription.
While many legacy enterprises might have been slow to adapt to this burgeoning data and analytics economy that has sprung up, matured, and quickly eclipsed everything surrounding it, it is important to note that it is never too late to start transitioning. There is no denying that updating a business’ planning infrastructure relies on large, sometimes intimidating, investments and technical headaches that many will want to avoid. However, the need for such transitions has stimulated a market for managed cloud services that can carry some of the heaviest load, allowing analysts and accountants to use their expertise effectively and engage in the active and agile planning that is so badly needed in today’s fast-paced world.
The inevitability of agility
Predicting the future is always risky business and the need for active, agile, and augmented planning is clear. Markets are only going to become more competitive, and the business agility that an active planning process offers is going to move from being a nice-to-have differentiator to a deciding factor between those that survive and those that wish they had. While every business will face this radical change in how planning and execution needs to be approached in its own unique way, successful companies will recognise that now is the time to make a change.