Starting situation – budget negotiations get out of hand – not enough focus on strategic planning
In an owner-operated family company, all the planning department staff were fully occupied by the annual budget loops. This meant that in reality the planning had a short-term focus, even though, officially, there was supposed to be long-term planning. However, this was achieved simply with an undifferentiated extrapolation. No efforts were made to dovetail and coordinate long-term planning with corporate strategy. Furthermore, there was no clear agreement within the company on suitable planning performance measures.
Project approach – lean planning means focusing on the essentials
In order to optimize planning, the relevant management processes needed a new and consistent focus. A planning system was implemented that streamlined the planning process and improved planning quality. On the one hand, focusing on the central value drivers meant that it was possible to considerably reduce the scope and depth of planning at the individual operational levels. On the other, introducing a rolling forecast made the planning more flexible and strengthened its forecasting function. In addition, the optimized planning system formed the basis for efficient management of long-term performance.
Finding – secure long-term planning to achieve strategic goals
If a company’s planning process has a short-term focus, there is a growing risk that it will descend to the level of “hockey stick planning,” which can lead to wrong strategic decisions being taken. This is why it is essential to integrate a long-term focus into the planning process that is in accord with the corporate strategy.
- A purged planning process with a long-term focus
- Development of a lean planning process with focus on central value drivers
- Introduction of a rolling forecast