Planning as we know it is dead… Long live… WHAT?

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We’ve all been there. The long hours of information gathering, molding data into measurable KPIs, and forecasting performance for the coming quarter, year, or even three and five-year plans. The constant revisions have to be factored in from stakeholders with different agendas and motivations. The relief of signoff.

Then the reporting cycle begins, and at every period end, the inevitable variances come under scrutiny. We spend countless hours discussing why real-life has diverged from the predictions set in stone by the Board, and how to force operations back into line to satisfy stakeholders and markets.

The finance function’s crystal ball is cloudy, we explain. The predictions made during the budget cycle cannot be perfect and become less and less accurate as the time between planning and performance increases. By the time you reach the extreme reaches of the five-year plan, many of the headlines in the signed-off forecasts will be largely educated guesswork, and susceptible to major changes in the operating environment.

There have been many strategies over the years to develop new and more useful ways of planning. Contenders have included everything from activity-based costing to rolling forecasts, each with its advantages and drawbacks. But what could we do, and indeed what should we do, instead?

Planning in the age of the “Next Normal”

The planners and forecasters who set out to predict the future from around 2015 onwards had a nasty surprise in early 2020 with the advent of the pandemic. Five-year plans were suddenly cast to the four winds. Investors who might have requested a ‘hockey stick’ performance as new products reached maturity found themselves with anything but the return they expected. Markets were thrown into confusion, the existing crystal balls useless to predict performance. Welcome to the ‘Next Normal.’

The last two years have taught the finance function to be an agile partner to the business. We have had to think on our feet, gathering and interpreting real-time data for effective decision-making. Where the business needed to pivot to survive and thrive, finance has been there to light the way.

Whither planning in the age of the Next Normal? It has become evident that traditional budget cycles cannot help us in times of rapid change. What is certain is that we can expect more disruption in the future. As the environment in which a business operates shifts and changes, so must finance change the planning paradigm.

Long live… What?

In this short series, we will start at the very beginning. We’ll look at the history of planning. How did we get to where we are today? What were the drivers of traditional planning behavior, and what are the key elements that we can take into the Next Normal?

Next, we’ll review some of the contenders for the planning crown. How do traditional budgets shape up against rolling forecasts and agile planning techniques? What are the pros and cons of each for finance and for the wider business?

From there we can start to define the new paradigm for planning, and find the right planning approach for effective business partnering in the Next Normal.

How do you approach planning in your business? Let us know in comments about your experiences of different techniques and expectations, the elements you’d take forward, and the things that you’ll be glad to leave behind. Planning as we know it is dead? Long live… well let’s see!

This was the first article in the series "Planning as we know it is dead". While you await future articles why not read our latest series "FP&A Transformation Talks" below.

FP&A Transformation Talks

FP&A & Strategy - A marriage made in heaven

Setting the FP&A team of the future

What roles do you have on your FP&A team?

The FP&A Transformation Process: A deep dive

The Vital FP&A Transformation Mindset

The secret sauce of FP&A transformation

You can read a lot more articles about FP&A, Business Partnering, and Finance Transformation below. It all start's with “Introducing The Finance Transformation Nine Box ”?where you set the ambition for your transformation. You should join the?Finance Business Partner Forum ,?which is part of the Business Partnering Institute's online community.

How Finance should use its seat at the table (the last article in a series about the "Unfair Advantage" of Finance)

The ultimate guide to decision-making for finance professionals ?(the last article in a series about the decision-making process and how Finance should impact it).

The Mindset Change Checklist For Finance Professionals ?(the last article in a series about the mindset change that finance and accounting professionals should make to become business partners)

It's Time To Decide If You Want To Be A Business Partner ?(the last article in a series about the personality traits of business partners)

All Successful Business Partners Are "Leaders" ?(the last article in the series about our new capability model)

Should We Keep Talking About Business Partnering? ?(part of a 17-article series where we deep-dive on the WHY, WHAT, and HOW of business partnering by putting it on a formula)

Your Journey To Successful Business Partnering Explained

How To Create Value Through Business Partnering

Everyone Can Adopt A Business Partnering Mindset ?(part of a six-article series about FP&A Business Partnering)

From Business Partner To Working Within The Business ?(part of an article series where I interview finance professionals about their careers in FP&A and Business Partnering)

Is Your Product Optimized For Value Creation? ?(part of a toolbox series where we look at what tools FP&A professionals should leverage to drive value creation)

How Business Partners Turn Analysis To Insight ?(part of case study series where I interview business partners about how they drive value creation using real cases)

The Future Of FP&A: Two Ways To Take The Reins

What Is The Accounting Profession Paradox?

What Defines A Finance Master?

The New Career Path For Finance Professionals

How Finance People Can Be More Successful

The CFOs Roadmap To Transforming Finance

How To Become A Finance Business Partner

Financial Analyst vs. Finance Business Partner

Finance Business Partner Is A Bullshit Job

How Business Partners Keep A Plan On Track

Anders Liu-Lindberg ?is the co-founder and a partner at the?Business Partnering Institute ?and owner of the largest?group dedicated to Finance Business Partnering ?on LinkedIn with more than 10,000 members. I have ten years of experience as a business partner at the global transport and logistics company?Maersk . I am the co-author of the book “Create Value as a Finance Business Partner ” and a?long-time Finance Blogger ?on LinkedIn with 67.500+ followers and 150.000+ subscribers to my blog. I am also an advisory board member at?Born Capital ?where I help identify and grow the next big thing in #CFOTech.