Many strategies and initiatives are failures even before they get started. That could happen due to:
- Insufficient resources to fund it
- Lack of organizational capabilities to execute it
- Political games played between concerned parties
That makes it critical to take the first step. If you start off on the wrong foot, you might fall. Take a step in the wrong direction and you might get delayed. Failing to recognize that there are other travelers are going where you are, and others might get there before you. Not stepping out of the door at all—well, then you just won’t get anywhere at all.
However, when looking at business we tend to get occupied with planning for things happening far out in the future—creating 5-year planning or 10-year strategies. Let’s just agree right away that you have no idea of what’s going to happen that far out. So why do we bother and what can we do instead?
It’s time to start planning the first step
It’s fair that you want to model some financials around your strategy, let’s say five years out. I’m not saying you should stop this, but there’s no point in doing this bottom-up or asking for a ton of details. Just select a few relevant drivers and KPIs, and leave it at that.
You should start planning the first step:
- Put most of your emphasis on discussing the first step when discussing your long-term plans
- Split your five-year plan into six-month increments (or even shorter, depending on the nature of your business)
- Focus more on actions than results
- Make sure you mobilize enough of the right resources (people, capital, and so on) right away; if you don’t have the resources in-house, then you must acquire them
Try and compare this with your budgeting or capital allocation process. How much time do you spend discussing the first things that need to happen to make the numbers come through, as opposed to discussing process and the numbers?
Data gathering and number production will not create any value. Five-year perspectives might be good for looking at your business holistically but won’t generate any value either. It’s what you do next that’ll set you on the path toward success.
FP&A owns the process and needs to own the change too
A lot can be achieved through proper facilitation. What if every template for collecting data for your plan included three bullets on the next steps to take? That could be backed up by assumptions that must be true and trigger points for monitoring progress.
What if your five-year plan was built like a staircase with six months of steps requiring less and less detail the further out you go? That should automatically draw the discussion toward what must happen next for the strategy to succeed.
Shouldn’t this just be a simple fix where a few templates are adjusted, and FP&A can take charge of facilitating the discussion in the strategy room? I don’t see a need for complicating this any further. Do you?
FP&A must own this change. FP&A might not officially own the strategy process but should put itself in the driver’s seat for facilitating it. The conversation in the strategy room needs to change. In this series, we’ve outlined eight specific changes that must happen. FP&A can own all these changes because one way or another, we have major involvement in them. So the question to you is: What is your next step in driving these changes and transforming the strategy process?