FIVE KEY FACTORS GUIDE DYNAMIC PLANNING

Dear Friend,

With today’s rapidly economic changes, volatility and change have become the norm and not exception, thus making dynamic planning imperative for organizations. Hence, a more reliable and versatile framework is needed to cope with these changes, now and in the future, where competitive pressures emerge from multiple regions and sources. As a result, organizations need dynamic planning to help them to stay focused on key areas to compete.

Below are the five key factors that guide dynamic planning:-

1. IDENTIFY THE KEY VALUE DRIVERS

These are the main factors that drive success or failure in an organization. Input across the organization is needed. Agreement on key value drivers is crucial in a way that they will help to demonstrate a clear focus on business strategy. Thereafter, execution and alignment of plan with strategy can follow suit before the “acceptable” tolerance range for these key value drivers can be established. Consequently, corrective actions if there is a need will then be taken.

2. INCORPORATE THE SELECTED VALUE DRIVERS INTO DYNAMIC PLANNING MODEL 

Depending on the complexity of the organization's model, software with multiple applications in the market may more likely facilitate the planning process to certain extent.  The choice of technology is not as important as the thinking behind value drivers and model construction. As such, it is clear that dynamic modeling with the right set of value drivers will lead to faster and more accurate resource allocation, portfolio analysis and target setting. 

3. REVISIT AND REFOCUS YOUR PLANNING MODELS IN MATERIAL AND VOLATILE AREAS

The objective is to reduce the integrated planning efforts, thereby helping enable finance to focus on value-add analysis and decision-making. For instance, the organization can plan more focusing on discretionary spending, where return generated will be far better off than non-discretionary expenses.

This is due to the nature that they normally demand too much management attention, and planning in this area was far too detailed for the limited return generated. As a result of this refocus, distribution of resources to areas yielding larger returns is always matched.

4. FREQUENTLY MONITOR THE VALUE DRIVERS

At an early stage, tolerance levels for each key value driver have been defined in the planning process. Any variances that exceed the specified range will attract management attention and action. These key value drivers should be monitored carefully and frequently, as part of the regular management meetings. 

5. RETHINK AND STREAMLINE PROCESSES THAT REQUIRES REVIEW AND SIGN OFF PLAN 

Speed is of the essence in the business context, therefore organizations need to streamline the processes consistently so as to ensure plans are relevant by the time they need to be used. As such, bureaucracy needs to be eliminated so as to increase the planning efficiency. In this regard, the back-and-forth review and final approval of business plans is a lengthy process especially in a large global organization. Both capital and operational planning processes should respond to shocks regardless whether it is generated internally or externally. However, the former is likely to be triggered less frequently because the actions that follow from these decisions have more structural business implications compared to the latter.

Hope the above discussion has given you a good insight of having dynamic planning. 

Together we deliver a better world

James Oh