Planning by the few for the many

Not only do business leaders have to develop, lead and inspire corporate plans that sometimes involve billions of rand, thousands of people and multiple business units, but they have to be able to deal non-violently with subordinates who think planning is deciding where to have lunch tomorrow.

In my last Industry Insight, I started discussing the management cycle, a series of building blocks that allow corporations to monitor and manage their performance on the macro and micro scale. The first step I mentioned was modelling the organisational structure, including all the links and interconnections in a business to provide an overall view of the company while being able to drill down to specifics.

The next step in the management cycle, as you can imagine from the introduction, is planning. Actually, one can`t separate planning from budgeting and forecasting, so bean-counting should be part of the planning process.

It is only recently that the technology to create and maintain models for thousands of interlinked operations was developed.

David McWilliam, MD, Cognos South Africa.

During the days of Henry Ford, top-down planning was the way business was done. Management decreed what was to be done and how, and the staff merely followed orders. In some industries this style of management may still work, but it is unlikely to achieve much in the information economy, where intellectual capital is an asset.

This "planning by the few for the many" scenario does not gain any commitment and buy-in from employees and creates a serious disconnect between the boardroom and the field staff and even their management. With the correct business model in place, however, management can break down its designs and distribute individual plans and forecasts to the various units of the organisation.

Through this process of communication and coordination, bottom-up input is gained and added into the corporate vision. Logic dictates that when data from the front lines is mixed into the equation, the whole strategy takes on a new immediacy, because the reality of the business trenches is catered for, not the way managers see the world from their leather chairs.

To manually create individual plans with input from each division takes time, more time than any management team has available. The only way to do this is to use technology. The same systems that allowed us to design our business models will enable us to create an overall strategic plan and divide it into operating plans for every discrete element of the business. It is only recently that the technology to create and maintain models for thousands of interlinked operations was developed.

The fact that large corporations are able to factor their plans and goals into this corporate performance management (CPM) solution and get answers and guidance immediately instead of over days or months is literally a miracle of modern technology. True CPM applications make the process of breaking the overall plan down into the myriad activities, decisions and initiatives required to achieve the organisation`s goals in a simpler fashion - but still requiring time and effort from management, this is not an Internet-type "make a million bucks in three days" scenario.

The difference is that the software tool handles the chores and admin while managers can do what they are supposed to do - use their brains to plan for the future of the company, making use of more information than they ever could before.

Given the industry, it`s only natural that for every one CPM program doing the job well, there are half a dozen delivering promises. Here are some functional points that will be included in effective solutions:

* The system will integrate top-down planning with bottom-up validation and engage the entire company.

* Feedback is via easy-to-deploy templates that allow contributors to enter data in language suited to their skills and business segment. Financial and consulting terms are left out to avoid confusion.

* As with the business model, individual business components are linked and can interact in real-time.

* The ability to track the entire planning process and show the status of every participant is critical. This promotes dialogue among participants, shortening cycles.

Planning and budgeting is not a pleasant task: it requires effort. Sometimes the same job has to be done many times, especially when incorporating the thoughts of people on the front lines. Nevertheless, it needs to be done. Efficient enterprise planning takes an overall top-down view and breaks it down into bite-size workable chunks for the individual units to comment on before incorporating this into the overall plan again - and a task on this scale can only be accomplished effectively with a properly designed CPM application.