Business Planning Is A Complex Process Part I

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Published December 13, 2016

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Planning is often a misused term to describe the internal discussion that should be had to align the vision for a long term focus.

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We have become a “planning” rich environment where we want to create separate processes to sub-optimize each aspect of a business.  When does a business ever talk in a homogeneous way to develop one view of strategy and direction?

“By failing to prepare,
you are preparing to fail”
Benjamin Franklin

As we have all learned, planning is a summarization of a desired result. Planning encompasses all of the best thinking concerning the issues and risks visible to reaching the desired end position. By its nature, it is only as good as the experience of the team and the ability of the team to foresee issues that may impede on their progress.

Given the uncertain nature of the process, how sophisticated does the process need to be?  When is too much detail a distraction versus a helpful guidepost?

Real Life Example

 As we all plan for the holiday’s, we have a vision in our head of the travel plans to complete, the gifts to purchase, the family traditions to continue, and the environment you foresee experiencing.  As we plan for this holiday, we create a plan of when and how to complete each task.  We align family members to complete certain tasks in the expectation that the “perfect” family experience will be generated.

Little time is spent preparing for the unplanned events that could derail the experience such as, Sally coming down with the flu, Johnnie breaking up with his girlfriend of three years, the car breaking down on the way to the holiday event, the 12″ of snow that fell right before the big trip.  If you tried to plan for each of these encounters you would become paralyzed with details that would make the endeavor overwhelming.  You tackle this as most families do; you set the high level plan and expect you will manage through the day to day troubles as they arise.

All attendees are guided by a common value.  They are driven by a love for each other and a desire to share time with each other.  The objective of the entire event is to rekindle their relationship with each other and “enjoy” their presence.  This common alignment on values helps the group navigate the unexpected activities they are bound to encounter.

Business Application

Where most businesses fail, is in the alignment of the team to a common set of values and / or visions of tomorrow’s business.  Unlike the clarity in the above example, many businesses become overwhelmed with shipping products today and as a result fail to align on core values which help them manage the unexpected.  What unexpected event will your company deal with?  How will you respond? 

Every business does a level of planning.  They develop a very high level Profit & Loss (P&L) recognition of how they will sustain their business.  Oftentimes, the shareholders mandate this roadmap of profit to ensure the team understands their need to generate a return on the investors’ investment.  This very high level roadmap is similar to the overall plan for the event, how you will reach your location, the money you can spend for the activity, and the activity objective.

Businesses must go to a level below this to ensure the entire business (e.g. HR, IT, Supply Chain, Manufacturing, Sales, etc.) is aligned to differentiate themselves from their competitors and deliver on their financial goals.  The complexity of their interactions requires a level of detail and precision to minimize cost and ensure that corporate assets are used for long term goals.

As a result, business planning is a complex process that must ensure all teams are aligned from a vision and culture perspective regarding the vision of tomorrow.  Without this alignment, internal strife ensues over limited resources; teams position themselves for success without regard for their process partners.

Business Planning

Since the beginning of the industrial revolution, every business has been working to streamline their operations as a means of reducing cost and optimizing profits.  The advent of the “Information Age” has provided the tools, insight, and visibility to plan the entire supply chain.


Figure 1: The Evolution of the Tools to Manage Supply Chain Costs

Many businesses fail, however, to recognize the need for ownership and commitment at the lowest levels within the business to reduce costs.  They manage business plans at a high level; failing to involve all levels needed in the discussion making process in order to deliver operational plans to optimize all aspects of the business.  As a result, the collective “discussion” that unlocks the true potential is skipped for expedience in completing the planning “task”.

Types of Planning

Business planning is a commonly used term to cover the creation of a cost and output vision for each team.  It is most commonly called the Annual Plan and is reduced to a headcount recap, projects list, and any capital needs.  With so much potential, many businesses squander the opportunity to engage in meaningful dialogue with their teams on long term objectives / goals.


Figure 2: Integrated Business Planning Coordinates All Critical Activities in Planning

At a high level, planning happens in many forms:

  1. Integrated Business Planning (IBP)
  2. Sales Planning
  3. Sales and Operations Planning (S&OP)
    1. Demand Planning
    2. Supply Planning
    3. Operations Planning
    4. Collaborative Planning and Forecasting Replenishment (CPFR)
    5. Replenishment / Staff Planning
  4. Budgets
    1. Cash Flow Planning
    2. Creditor Planning
  5. Investor / Shareholder Planning


Done successfully, all levels of planning can be used to create an effective discussion with teams to align on strategic objectives.  Businesses in “turn-around” mode rely on this alignment to save their “struggling” business.  If your planning does not include all of the above elements, you are not allowing the entire business to engage in managing the business.

All too often teams work in operational silos and they optimize their own process without regard to the impact to their process on their partners up / down stream from them.  They shrug off inefficiency / cost to their partners so they can hit their “budget” objectives.  Unfortunately, many senior managers are so removed from the actual day to day activities to recognize when this occurs to correct the behavior and align all teams to deliver the best process.

The planning process is the right time to stop, take a breath, step back, think, and plan strategically.  It can be a great time to reassess the team and their objectives, developing the right long term strategy and aligning with their partners.

The level of detail required in the planning process is based on which process you are invoking.  The more precise the process being completed, the deeper the level of detail required.  Overburdening a higher level process with too much detail will only serve to overburden the process and cause paralysis.  In the end, each stage of the process must enable a holistic and comprehensive dialogue, invoking a constructive alignment of goals, values, and agendas.

Navigating A Business Plan 

“In preparing for battle I have always found that
plans are useless, but planning is indispensable.” 
General Dwight D. Eisenhower

I cannot tell you how many articles I have read that talk about the difficulty in navigating today’s uncertain world.  What most have failed to recognize, however, is that the uncertainty in the marketplace is the new norm.   Gone are the days of consistent and prolonged growth.

The only way to deal with the anemic and / or sporadic growth is to develop a consistent dialogue within the business to “read the tea leaves”.  Also, needed is the development of the right short term responses, having a clear long term vision of tomorrow.  If the business can develop a common long term vision of the business, what appears to be short term troubles can be smoothed causing less internal churn and concern.


 Planning is often a misused term to describe the internal discussion that should be had to align the vision for a long term focus.  Unfortunately, in most businesses planning has been reduced to the dreaded budget discussion, where people fight the need to reduce costs.  As a result, the top side challenge for efficiency is received as a fight to protect headcount, rather than a need to align the strategic vision.

What are your corporate objectives and how do they impact your planning?  What are you doing to make your business better?  Are you willing to take on work even if it helps a process to the left or right of you because the overall business benefits and it helps reduce overall costs?

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