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Strategic Planning – Rethink the Planning Cycle

A few years ago we worked with a business unit in a large bank to conduct their annual planning. As they arrived in the room one member of the team said “Ah, the planning game begins again.” When asked for an explanation, he said “Well, we all know the rules of the game. We’re expected to sand-bag our results to make them look like they’ll meet our ‘stretch goals’. Of course, we all know that the real goals are less than the stretch goals, so we have to make stuff up.”

With strategic planning, it’s easy to assume that forcing the process will still produce acceptable results. Frequently, planning is conducted according to the organization’s budget cycle and the calendar for planning is predetermined by finalizing financials and Board submissions.

An alternative to the budget lockstep is start earlier, or not ‘start’ at all. Consider instead the use of an 18-month rolling plan. The idea is firstly to uncouple the planning activity from the budget cycle and secondly to extend the horizon of the plan beyond a calendar year. In this way, the planning activity can be conducted based on another set of assumptions – what’s good for the enterprise, not what’s good for finance.

Of course, budgeting is still critical. The difference is that budgeting is part of the planning cycle; planning shouldn’t be part of the budgeting cycle.


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