Many people will probably agree that are short-term advantages of running one’s own processes within a business function without too much interference from the others: you can plan things exactly how you want, and it is faster as you don’t have to spend time listening and aligning priorities or opinions with others. You make your plan, communicate it, and only align in case major differences are spotted. And that is another thing. In many cases, it can be difficult to spot differences if plans are done in different dimensions, volume versus value and SKUs versus brand, customers or profit centres.
Many organisations run like that, let’s be honest. Of course, there is coordination, but in reality, plans are not well-aligned, especially when it comes to integrating tactical planning all the way through Marketing, Sales, Supply Chain and Finance. Even if plans are communicated, it’s typically through a waterfall approach where information is passed on to the next department, but without a real feedback loop, and without working holistically to find the best way forward.
Three major obstacles to change
To sum it up, turning one’s old S&OP process into Integrated Business Planning (whereby tactical plans across portfolio, customers, production resources are aligned and calibrated against shared business targets) is not an easy transformation, and companies will typically find themselves struggling in at least three areas:
- First, the alignment of plans in itself can be difficult, including agreeing on a common plan and working jointly on gaps, issues, risk and opportunities. The old saying that ‘If you want to go fast, go alone; if you want to go far, go together’ still holds true, and many departments are unfortunately used to going fast and therefore reluctant to move into a process that is perceived to be slower and more difficult.
- Secondly, IBP is a long-term and forward-looking process rather than a retrospective, short-term focus, meaning that you must be proactive rather than reactive. Again, in a change perspective, for some organisations thinking holistically about the future is perceived too burdensome and slow, especially if you’re used to putting out fires daily – and being rewarded for it.
- And finally, IBP is a fact-based decision process focused on risk and opportunities that impact performance, rather than a detailed walk through of everything that happens at the moment. Again, for some organisations this transparency of IBP around impact to the budget and strategic targets can be threatening, especially if decisions are usually made with gut feeling or based on suboptimal criteria that might not even be communicated or revealed.
Collaboration requires people to behave differently
Although resistance to change is a natural human instinct, most people that start to work with IBP eventually realise that the collaborative aspect of joint planning is in fact a game-changer when you finally start to reconcile your product, demand and supply review in a monthly drumbeat – and when you come together across functions to prepare scenarios and recommend decisions to the executive team.
Of course, all of this can’t be done without the leaders of the organisation walk the talk, role modelling the commitment from the top. In this sense, leaders (and the executive team in particular) have a huge role to play in developing and communicating an IBP vision in a compelling way, while also demonstrating commitment to realising the vision, as well as identifying their own gaps in behaviour and capabilities in order to pave the way for change.
At the end of the day, organisations don’t change unless individuals do. No matter how incremental or radical a transformation the organisation is taking on, the success of any initiative ultimately lies with leaders and employees behaving differently, embedding new behaviours and telling the stories that inspire a cultural change.
Four ways to get started
Working every day with my Deloitte colleagues to help our clients implement IBP, I’ve seen organisations approach business transformation in many different ways: from progressive leadership to old-fashioned hierarchies, from behaviour-driven to IT-driven transformation, from working broadly with IBP to starting with just a few elements and working from there.
Across these different approaches and circumstances, however, here are three ways to think about change and how to embrace IBP in 2023:
- Make the change meaningful: Few people want to change just for the sake of change, meaning that there has to be a clearly articulated rationale that captures the hearts and minds of people, containing both the emotional and factual drivers for change. To do this leaders should not only work to clarify the direction and path for change, but also igniting the passion among people and building that shared sense of purpose and commitment to take the organisation to the next level when it comes to collaboration.
- Make sure to have the right IBP role models: In transformational change, leadership is even more important than during incremental change due to the complex, multi-dimensional nature of the activities undertaken. The importance of role models and change champions cannot be overestimated. In general, companies that intentionally manage their cultures through change champions outperform similar companies that do not.
- Ensure that the right capabilities and skills are available: No one can change without having the necessary skills, knowledge and capability to do so. When embarking on an IBP transformation, even experienced employees and leaders may need to realise that they will need to learn and implement a new skill set. The same goes for the executive team!
And finally, creating sustainable change also means having the right reinforcement mechanisms in the organisation and feeding appropriate assessment criteria into the performance management process to hold departments accountable for their results. For some, this might sound old-fashioned in a modern, purpose-driven organisation, but all experience shows that true cross-functional collaboration is so hard to achieve, so at least we should reward those that actually foster teamwork, knowledge-sharing and transparency – and ultimately are ready to sacrifice their own agenda to see the whole organisation succeed.
