This article will concentrate on improving these tasks and processes and ensuring that the strategy is aligned with the reporting, planning, and analysis.
Every company has many tasks and processes, but a key question to ask the team is whether there is a purpose for them and if it has an impact on the decisions being made in the organization. At the same time, can managers make the correct decisions with the information being provided, and are they capable of knowing when a decision is important? As an example, one response that should never be stated is, âWe donât know why we do this process, but we have performed it this way for years.âÂ Processes like that must be challenged for organizations to continually improve and impact decision-making. This article will concentrate on improving these tasks and processes and ensuring that the strategy is aligned with the reporting, planning, and analysis. Closing the loop refers to tying these processes together.
This chapter will concentrate on the reality that a company should always strategize, which leads to planning, and then an analysis of the data, which may lead to operation changes. The operation changes may then lead to strategy changes, and the process continues. This blog will concentrate on specific examples later on, but this series concentrates on the best practices of strategy, planning, and analysis.
Planning, which encompasses budgeting and forecasting, articulates the values used to evaluate growth as well as how capital, both people and money, will be distributed across the organization. The development of the budget and forecast will be more effective when it is connected to the corporate strategy. Connecting the strategy and planning enables employees to comprehend the strategic objectives and targets, which will ensure that their decisions take the corporate strategy into account. The communication of the strategy must be consistent and ongoing. The comprehension of the strategy leads to better performance across the organization, as the employees will allocate resources to match and surpass the goals and objectives of the organization.
Harvard Business Review research reveals that, on average, 95% of a companyâs employees are unaware of, or do not understand, its strategy, and 85% of executive teams spend less than one hour each month discussing strategy. These numbers should scare all executives into working to improve these numbers internally. If the employees are closest to customers, vendors, and partners and in charge of daily decisions, then how can they be effective if the majority of them donât know the strategy? Also, how can any improvements be made in the strategy if executives are spending less than 5% of their time developing and improving the strategy? It is just not effective, and it will impact revenue and profitability without changes. One other statistic: less than 10% of strategies effectively formulated are effectively executed.
Setting strategy is not only integral; it is a mandatory criteria of any successful business. But the steps to implement the strategy and track the success of the strategy are just as important. An executive can create a strategy that will increase revenue and profitability by 20%, but it is futile if it is not communicated or executed properly. The first step is communication, and below are simple steps to improve it across the organization:
- Change it up: confirm that the message to employees can be understood and acted upon by every employee. Ask questions, have fun games, and continually discuss it during meetings and company presentations. Try to find creative ways to communicate the strategy rather than a consistent way.
- Narratives: use stories and examples, from employees and managers, to emphasize the strategy and how it is working.
- Inspire, Educate, and Highlight: motivate employees by showing successes across the organization. Get quotes from customers, vendors and partners and demonstrate how the company is doing versus its goals.
- Deliver in Many Ways: executives, managers, and employees should help communicate the strategy to everyone. If employees regularly converse about it with other employees, then there is ultimately success.
- Think Outside the Box: employees have many different ways to communicate, so it is important to try many different ways, such as using social media, blogging, and one-on-one conversations.
- Invest: if initiatives and strategy could be implemented more successfully and efficiently by investing money, then most companies would do it immediately. So determine what the cost and payback is and then move forward.
The strategy and the plan must be completed prior to setting a budget or forecast and before analyzing the financials.Â Below are some steps to ensure that the strategy is finalized:
- Visualize: document it in ways that will be visual to employees rather than simply writing it out.
- Communicate: see above for the details.
- Limit the Initiatives: if there are too many strategic initiatives, then none of them will be completed; therefore, only have two to three initiatives and then multiple tasks to support them.
- Assignment: one person should be assigned who is ultimately responsible for each initiative.
- Manage: the initiatives need to be managed, which includes documenting the tasks, creating a timeline, assigning resources, and monitoring the success. Meet weekly or bimonthly to review the initiatives and ask the following three questions: 1) âWere the promises made at the last meeting met?â 2) âWhat will happen prior to the next meeting?â and 3) âAre there any impediments or risks to completing the initiatives?â
- Set Goals: the goals should be aligned with the strategic plan and should be measurable and achievable. If goals are not measurable, then consider changes to the operational or financial structure to accommodate the need.Â As an example, if there is a specific KPI in the companyâs industry and it is not possible to track, then look into ways to make this happen.Â Without a way to track and measure goals, then there is no way to know what success is and whether the company achieved its goals.
- Rewards: there should be rewards for the employees that complete initiatives that drive profitability and revenue growth.
- Decisions: it is important that decisions are being made, but if a decision is not correct, then the management team works to fix it. Decisions are made with the best information at the time, but no one should be stubborn about changing up an incorrect decision. Donât hope that it will change if all of the information is stating that the direction is not correct.
If you want to learn more about creating a closed-loop planning, analysis and reporting process, read part two of the series.Â Solver enables world-class decisions withÂ BI360,Â aÂ leading web-based CPM suiteÂ made up of budgeting, reporting, dashboards, and data warehousing, delivered through a web portal.Â Solver offers BI360 through cloud and on-premise deployment and is reinventing CPM with its next generation solution. BI360 empowers business users with modern features including innovative use of Excel in the model design process. If youâre interested in learning more,Â our team is excited to hear about your organizational needs and goals.