What Shape Are You? Start Planning Your Strategy To Match

Slalom Consultant Andrew Houston

Slalom Consultant Andrew Houston is an experienced Finance and Strategy consultant with more than 15 years of experience working with leaders across a broad variety of industries to define and implement solutions to key business issues.

There is an old quote that goes something like ”if you put two economists together in the same room you will get at least two different opinions”. Well, Russ Banham recently got 26 of them together for an article titled “Shape Shifters” that appeared on CFO.com, and as you might expect they offered widely different points of view! (See the full article here.)

Banham asked the 26 economists to provide their forecast as to the shape the economic recovery will take (i.e. U, V, W…). True to form the economists all came back with very well thought out responses that varied greatly – some reaching into the lower case alphabet for inspiration (h shaped recovery), others going further afield for inspiration (√ shaped recovery).

While an interesting read, I think the article helped demonstrate a several important points beyond the potential direction of our economy, namely:

  • Forecasts are educated guesses – actual results will differ;
  • Forecasts vary – even equipped with the same facts different people will come up with very different views of the future; and,
  • The unreliability and uncertainty surrounding the “dark art” of forecasting makes planning very difficult.

So what is an organization to do? A few best practices come to mind in terms of running an effective planning process and being responsive to actual events as they unfold over the life of the plan. The best practices include:

  • Set a plan – Every organization needs goals and targets on which to focus. But don’t follow it blindly. Monitor progress regularly, look at leading indicators for indications that actual events are different from plan assumptions, and most importantly, adjust course as necessary.
  • Adopt rolling planning – Rolling planning forces some of the discipline articulated in the point above. It keeps the organization constantly focused on the next 12 to 18 months instead of just to the end of the fiscal year…there is nothing magical about December 31!
  • Develop scenarios – Scenario planning helps identify and prepare for a set of distinct potential future outcomes. Understanding how the organization would ideally respond to each scenario prepares the leadership better for adjusting their plans to fit actual events, and helps them understand what capabilities and resources the organization needs to improve to become better prepared for the most likely outcomes.

Sound easy doesn’t it?! This obviously only scratches the surface in terms of better planning and forecasting. In subsequent posts we will examine planning best practices in more detail.
So what do you think, what best practices have I missed, what issues to you want us to discuss, what have you seen being done well (or poorly) in your organization?

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About Andrew Houston
Slalom Consultant Andrew Houston is an experienced Finance and Strategy consultant with more than 15 years of experience working with leaders across a broad variety of industries to define and implement solutions to key business issues.

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