This is the final article of a five-part series. Here Mike Reed, Managing Partner at Oliver Wight Asia Pacific explores the mechanisms necessary to ensure that the newly crafted IBP process is successfully embedded in an organisation.
We are now at the point where we have to make Integrated Business Planning actually work! This is not simply a case of saying to people – “as from next month you need to attend these new meetings”. For most people in the company, this will be a whole new way of working. New behaviours need to be established and new disciplines brought into the company. This is not something that will happen in the first cycle. It will take time and it will require strong guidance at all levels of the organization. Everybody, right up to and including the leadership team must adopt new ways of working and new behaviours. Thus it is important to ensure that the process is embedded through effective coaching and via an evolutionary approach rather than revolutionary.
We recommend that companies set realistic goals for the development and evolution of their IBP process. To start with, we find that many companies struggle with moving from a fixed, diminishing planning horizon to a longer term rolling horizon. For many companies, the current focus is on the short term – the next few months for demand and supply planning, with financial forecasts only to the current financial year-end. Moving to the best practice approach of a rolling 24-month horizon can be very difficult. We suggest that the company starts off with simply moving to a rolling plan rather than a diminishing horizon and with a somewhat longer view than current. So perhaps for the first six months of evolution, the new process might only address 12 rather than 24 months. This in itself will be challenging if people are used to short term fire-fighting and there are not a lot of well-developed plans out much further than six months. Another goal to put in place could be the ability to develop the annual budget directly from the IBP process after 12 cycles. This will push the planning horizon out to 18 months in order to ensure that the assumptions supporting the budget are brought into the IBP process and properly discussed. The final milestone could then be the movement to a full 24 months horizon. Perhaps this could be the goal for the 15th cycle.
The change in behaviours required to effectively utilize IBP should not be underestimated. At the leadership level, there will be a need to insist on effective preparation for meetings, compliance with cycle timings, attendance at meetings as per the design and proper behaviour within meetings. Participants will need to get used to the new “drumbeat” of the organization and ensure that they have their recommendations properly prepared for presentation at the meeting and do so in a way that enables a decision to be made. They must also get used to the new discipline of commitment to the plan. That is, on leaving the meeting they are committed to doing what they said they are going to do. Furthermore, their performance against these commitments will be measured and will be visible to all.
It is our experience that it does take several cycles before each of the meetings starts to make decisions. In many companies, the decision making process is not clear and decisions are often made in corridors, around the coffee machine or in ad-hoc meetings. IBP requires a new discipline. In reality, IBP will speed up decision making process in the organization. Additionally, decisions will not be revisited as often. This is because the right people will have contributed towards them and the right information will be made available to make the decision. Furthermore, because the decisions will be made in a transparent forum, there is better opportunity for full and frank discussion with all the stakeholders involved.
Again, the above changes do not take place simply because people are told to attend a new set of meetings. The organization and the individuals within it will need to be coached in order to effectively adopt the new practices, behaviours and disciplines. We also recommend that all cycle meetings finish with a short process critique. Some companies have developed comprehensive process critique pro-formas. For others, the critique is as simple as asking “what went well?”, “what didn’t go so well?”, “what can we improve for next cycle?”
Coaching is required at a number of levels. The leadership team requires coaching so that they can effectively adopt and lead the new process. Process facilitators need to be coached on how to better guide the process, how to work with participants and how to better support the executive process owners. Participants require coaching on effective meeting flow, the kind of information to bring to meetings and how to present recommendations for effective decision making.
Coaching for embedding and evolution should be provided through an external independent party. It is usually very difficult for internal people to provide such coaching because they are usually too close to what is going on. So they may not be able to see whether or not behaviours are changing for the better, or more particularly, where they are not, and an intervention may be required.
Embedding the process through the correct evolutionary approach and with supportive coaching is essential to ensure that the momentum for IBP does not falter. The company, from leadership down to all meeting participants needs to see that the process is gaining a foothold and is truly changing the way that the company operates. This needs to be clear to everybody within the first few months with momentum continuing to sustain out for 12 or 15 months by which the process should have matured to a fully capable state – delivering the planned benefits and enabling the company to achieve its business plan targets and strategic goals.
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