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February 2013

Getting Your Executives Involved in Long-Range Planning -- Part 1


Benchmarking Your Company's Long-Range Planning Process as the First Step Towards Improvement

If you were given the opportunity to directly influence your company's success, would you take it? Would you want to help on develop the plans, direction, and spending of your organization? Or would you avoid such an opportunity at virtually all costs?

And yet judged by their actions, when given that very chance most executives choose to avoid such an opportunity. Why? Because the very process that seeks to achieve that corporate success, the long-range planning process, is fundamentally broken.

Long-range planning has a significant impact on company success, defining how your organization will operationalize corporate strategies into the specific investments that lead directly to corporate success for years to come. Given its influence, one would expect that participating in a process that shapes the company's future is precisely the activity executives would want to be involved in. Instead we all consider it the most painful processes businesses perform today. Why? Today's process is manual, labor-intensive, and not actually perceived to achieve any of those objectives. Instead it is considered tedious and frustrating, ultimately delivering a plan bearing little resemblance to current business realities. "Data confirms what many finance professionals know about the prevalent capital planning process ‒‒ it is broken and needs to be fixed."¹

Given the dissonance between the importance of the subject matter and the actual process, there is clearly need for change. How do we move the planning process from loathed and shunned to productive and powerful? To something in which people want to participate? Given that, the question we must ask is what defines a good planning process.

What sets the few organizations that do planning well apart? In search of an answer, I looked at the 2012 Benchmark Report: The State of Capital Planning² for start here for two reasons:

  • First, it distills the feedback of finance professionals dealing directly with these challenges. Its findings lead to five practices every FP&A organization should incorporate when looking to alleviate the burdensome nature and improve the quality of the long-range planning process.
  • Secondly, it will serve as its own benchmark for comparison against the upcoming 2013 New Benchmarks in Long-Range Planning Study and Webcast on February 27, 2013.

The Five Characteristics of Best-in-Class Financial Planning Organizations' Long-Range Planning Processes

  1. The priority of the major programs, projects, and initiatives is clearly defined both absolutely and in relation to each other.
    By understanding how initiatives align to strategic plans and the relative priority of every capital project, the organization can more easily allocate (or later shift) resources as needed. The process can consider the reallocation of resources as priorities change, becoming much more streamlined and efficient while providing the visibility to ensure the company maintains alignment with the strategic plan.
  2. The plan is developed iteratively through a low overhead process that emphasizes decision making and collaboration over simple data consolidation.
    A plan collaboratively built with all impacted groups (finance and business units) and a formal approval process for the final plan ensures buy in and agreement on what the major project, programs and initiatives are; and the business case for each. A streamlined and easy process for participants frees them up to iterate and ultimately produce a stronger plan.
  3. Understand how and where people and money become limiting factors for the business.
    When dealing with constrained resources it is important to be able to create scenarios in the long-range planning process to assess how they can be optimized and which mix of resources on each project or initiative make the most sense to help the business achieve its objectives.
  4. The cost (and projected benefits) of each project can be accurately forecasted both initially and adjusted throughout its lifecycle.
    Having a high level of insight and analysis on projects enables an organization to make informed decisions when they are considering whether to shift investments, kill an initiative or reprioritize it. There needs to be a simple way for both the business unit and finance to have downstream visibility into investment performance and ROI on every project.
  5. When a project is completed, the company knows how well it achieved its objectives.
    This insight is valuable in planning for the future ‒‒ not just at a project level, but at a corporate-wide level ‒‒ as comprehension will influence the outcomes of the long-range planning process on a holistic level; thus prompting even more procedural and conceptual improvements.

I invite you to join me during a live Webcast on February 27 where I will participate in a discussion hosted by Bill Sinnett, Director of Research at Financial Executives Research Foundation (FERF), and with new benchmark analysis detailed by Robert Kugel from Ventana Research, to discuss what are to be considered new benchmarks for long-range planning.

In Part 2 of this two-part series, I will compare what we discuss during the Webcast to these best-in-class characteristics of 2012. While I suspect these best-in-class indicators will not vary significantly; I will be interested to see how important they became over the past year in relationship to new benchmark levels.

Will more organizations using enterprise-wide portfolio resource management solutions top the list as "best in class"? Find out on February 27.

Related posts: Closing the Gap between Strategy and Execution Part 1 and Part 2.

1 Murphy, R. (2012). CFO View of the State of Capital Planning Benchmark Study

2 Carlson, M. (2012). Benchmark Report: The State of Capital Planning

Building an Innovation Portfolio -- 10 Key Takeaways [Infographic]


I recently hosted a discussion with Forrester's, vice president, principal analyst serving CIOs, Chip Gliedman and Planview's NDP solution market manager Carrie Nauyalis about innovation and portfolio management, and how the two relate. I've included an image of the visual notes designed during the live event. They provide a visual reference for the topics and key takeaways.

Infographic: Building and Managing an Innovation Portfolio

We Had a Lively Discussion on Five Topics

  1. What an innovation really is and how it differs from change
  2. The capabilities needed to support sustained innovation across the enterprise
  3. Driving innovation forward and who typically takes the lead
  4. How to leverage an innovation network that culls ideas from inside and outside the organization; and last, but not least…
  5. How portfolio management can tie all this together

My 10 Key Takeaways

  1. Ideation is not innovation ‒‒ Innovation is a process that spans products/services, processes/operations, markets/business models, and organization/governance.
  2. Innovation differs from change; innovation:
    1. Is ongoing, not episodic
    2. Often has distinct governance and funding
    3. Implies a greater degree of creativity and risk
    4. Success metrics are different (often the driving principle is "fail fast, fail cheap")
  3. Balancing Risk vs. Reward is key; strive for innovations that drive value
  4. Exploit the entire ecosystem including employees, customers, suppliers, and more
  5. Innovation may be "everybody's job," but to thrive it is best driven, or at least supported, by a single area.
  6. Regardless of where innovation "sits" in an organization, the CIO role is going to need to shift to support the growing trend toward more innovation initiatives
  7. Product Portfolio Management (PPM) helps operationalize innovation throughout the Ideation, Product Planning, Development, and Launch processes. It also helps align projects and other investments with products, and aligns products with brand strategy.
  8. Be sure to make room in your project portfolios for innovation projects, even smaller efforts that may not have a major impact on current business operations, but help enable business change or growth.
  9. PMOs should not only help accommodate and support innovation projects (relaxing their methodology and metrics as appropriate), but should encourage and drive the trend. This can also serve to improve the image of the PMO as a bureaucratic bottleneck.
  10. To drive innovation, you need:
    • A strategy for driving and managing innovation
    • A culture that fosters innovation
    • Ideas! And lots of them!
    • Processes to filter and vet the ideas
    • A portfolio view of your innovation prototypes
    • Governance and control processes for innovation

For more information, listen to the full Webcast discussion Building and Managing an Innovation Portfolio. Meanwhile, I'd like to hear your thoughts. Who drives innovation in your organization? What processes do you have that ensure innovation is considered? What is the maturity level of your innovation program and what challenges are you facing? And lastly, what do you find stifles innovation in your organization?

The Top 5 Priorities for Your PMO in 2013


On January 28th, ProjectsAtWork featured an article by Jerry Manas titled, Were the Mayans Right About Your PMO? In it he covers the 5 key things you need to worry about concerning the fate of your PMO ‒‒ a list of undeniable trends and predictions for the coming year.

The article follows the End of the World Webcast Jerry hosted where he dropped some ancient Mayan knowledge that dispelled all of the "end of the world" myths that were floating around, but also brought to light a startling statistic that indicates that your PMO could face its demise if you don't make these 5 key points a priority in 2013. Did you know that 75% of PMO's are dissolved within the first 3 years of starting?1

In the article, Jerry leverages the doomsday theme as a background to drive the point home that in order for your PMO to avoid becoming a statistic in this New Year it needs to address the following:

Top 5 Priorities for Your PMO in 2013
  1. Floods (Resource Management)
  2. Blindness (Predictive Analytics)
  3. Risky Adventures (Innovation Projects)
  4. Crevices (Portfolio Management)
  5. Beasts (Understand Agile)

Here's a look at the article:

"In December, I presented a webinar dispelling the numerous myths about the Mayan end-of-the world predictions, not the least of which is the fact that the circular sun stone tablet referred to in 95% of the websites predicting doomsday is in fact Aztec, not Mayan. But I did, however, share the more realistic doom and gloom cautionary messages for PMOs in 2013 ‒‒ specifically five things to worry about, all undeniable trends that have been heading our way like a freight train with faulty brakes…"

Continue reading the full article by logging into the ProjectsAtWork site.

What are some of your PMO's priorities for 2013? Share by leaving a comment below.

1Margo Visitacion, "PMOs: Stop Being the Office of 'No,'" Forrester Research, Inc., Nov. 11, 2011