Balancing the art and science of planning

Planning is sometimes described as both an art and a science.

It can entail vastly different activities depending on the organization. As a finance leader how do you prioritize your resources and utilize technology to strike the right balance between the two? While there is no one-size-fits-all approach, considering the growth stage of your company can be a helpful guide:

Startup

Startups are on one end of the continuum. In a startup situation you likely have little to no historical data and may still be working on achieving product-market fit. The majority of resources will be focused on building a winning product.

For a startup, consider a light, more artful approach:

• Establish regular cross-functional conversations to establish core business processes and key metrics early on, especially in sales & marketing (conversion, segmentation, etc.).
• Start collecting and tagging data in ways that will inform reporting later. E.g., ensuring that there is customer-level detail from booking to collection.
• Keep models simple and high-level. Avoid implementing overly structured processes or systems that don’t provide ROI without scale.

Mid-Market

Most companies will fall into the middle bucket, which can be tricky to navigate in real-time, especially when explosive growth, organizational change, or other challenges arise.

In these situations, more of a balanced approach can be employed and technology will play a much bigger role as data volumes and teams grow:

• Combine simple qualitative and quantitative modeling. For example, collect sales forecasts from managers on the ground and triangulate it against deal-based pipeline and HC-based capacity models.
• Sequence cross-functional technology implementations logically - try to tackle accounting and HR systems before moving on to planning, which will rely on both.
• Establish strong business partner relationships and find ways to add value by granting access to consistent data, defining key metrics, or helping to build business cases. Their knowledge will be key to informing any plan.
• Stay lean and focus on using technology to empower resources on other teams. Too much centralization can quickly make finance a bottleneck.

Mature

At a mature company, you’ll have more robust historical data, more resources, and established processes, but also a more complex org structure to manage.

In this scenario, you can entrench your competitive advantage by relying more on science:

• Leverage software to enable structured planning efficiently across the organization. Commit to building custom software if it makes sense; out-of-the-box solutions may be too restrictive.
• Utilize statistics on both internal and external factors to improve forecasting accuracy, adding another data-driven dimension to existing qualitative or internal-focused models.
• Leave some room for human judgment - it can be tempting to try and automate everything, but human judgment  is still important, especially when unforeseen circumstances arise or you are operating in new markets or categories.

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