Businesses that cling to old methods of planning are about to be left behind. The geopolitical and economic landscapes are shifting at the speed of a 24-hour news cycle, and organizations that are unable to keep up face a difficult future.
Outdated planning processes, defined by long planning cycles, siloed efforts, and too little time for strategic analyses, are no longer fit for this dynamic world. To thrive, businesses need to respond to changes in real-time.
Collaborative, Comprehensive, Continuous
Our recent research, “Organizational Agility at Scale: The Key to Driving Digital Growth,” finds that only a small group of elite high-performers is able to do just that. The global survey of 998 C-suite and senior business executives reveals that very few organizations have embraced an active planning process—planning that is collaborative, comprehensive, and continuous.
“Traditionally, organizations have built up their budgets, plans, and forecasts along functional lines,” says Tom Bogan, CEO of Adaptive Insights, a Workday company. “But business processes no longer respect functional boundaries.”
High-performing organizations know this, which is why they are planning in a way that allows them to be more responsive: anticipating different scenarios and quickly correcting their course as needed. This is active planning, and it equips these organizations to respond to opportunities and flourish in today’s economy.
They are also winning at digital—our research shows high-performers have made the most progress deriving a large proportion of their revenue from digital streams (46 percent compared to 25 percent of all respondents).
In the following sections, we look more closely at active planning, and find out why continuous planning—a key characteristic of active planning—is critical to success in this increasingly digital world. We also investigate how leading organizations have overcome key barriers to achieve this agility at scale.
“Traditionally, organizations have built up their budgets, plans, and forecasts along functional lines. But business processes no longer respect functional boundaries.”—Tom Bogan, CEO of Adaptive Insights, a Workday company
The Barriers to Active Planning
“A continuous approach to business planning has many advantages,” says Bogan. “Plans need to be consistent if resources are to be allocated efficiently and to avoid performance objectives in one area having unforeseen consequences in another.
“Continuous planning recognizes how important these interrelationships are,” he adds. “And the enabling technologies that allow different functional—and often interdependent—areas to collaborate during the planning cycle.”
But the majority of organizations still have a long way to go to build out the capabilities they need to respond to market changes in real time, at scale.
According to our research, the three main barriers to more comprehensive, real-time planning are inflexible legacy technologies (28 percent), lack of relevant employee skills (26 percent), and a bureaucratic culture (25 percent).
Just as continuous planning provides the foundation for organizational agility at scale, a clear approach to strategy and execution is what will allow continuous planning to succeed.
Less than one in five (18 percent) say their approach to strategy and execution enables them to react with agility and speed to market shifts. The remaining majority that are not able to react in this way are at risk in today’s volatile economic and geopolitical landscape.
On a more positive note, those that have made significant progress implementing a technology strategy to support their move to continuous planning are five times more likely than those that have made no progress to say their organization reacts with agility and speed to market shifts (22 percent and 4 percent respectively).
The Steps to Active Planning
Many organizations have realized the importance of active planning in our increasingly unpredictable business climate. Now, they need to work out where and how to start.
To embrace active planning, organizations must:
- Speed up planning cycles to overcome legacy IT constraints. Use the right tools and technologies to bring together transaction and reporting data in real time for organization-wide oversight.
- Harness the skills they need to respond with agility. Acquire the skills that help them to overcome siloed planning and prevent internal misalignments.
- Put an end to bureaucratic culture and give power to employees. Empower those closest to the point of action to ensure that planning occurs at the right level of the organization and plans are up-to-date.
Together, these three capabilities form the basis of an active approach to planning that is comprehensive, collaborative, and continuous.
Get an overview of “Organizational Agility at Scale: The Key to Driving Digital Growth” findings or download the full report.