We often hear people saying, “In these fast changing horizons, it’s very challenging to plan even for short term horizon, leave aside long term planning.” While this may sound true for most of us, but at the same time, the importance of a carefully designed planning process, can’t be undermined in any circumstance, more so during such adverse times. To sustain & succeed, companies MUST define planning horizons that match the pace of the business and set up regular review meetings to support each planning cycle. This will not only strengthen your companies’ ability to scale up, but will keep People enthused to work up the ladder, writes Anirudh Mendiratta, Growth Head – Dealer Retail Lending, CARS24…
David M Cote, former CEO of Honeywell, wrote, in his book, ‘Winning Now, Winning Later’, “It is never Short Term vs Long Term. You can always balance both & a business that is able to do it, inevitably succeeds.” There’s a lot of talk about Short Term – Mid Term – Long Term planning. An array of solutions from deploying brute force, putting in chasers (more manpower), adopting technology or upgrading your technology to solve for your business issues are advocated. But can business planning be boxed into simple categories?
Anirudh Mendiratta
Supply Chain, as a business function, needs immaculate planning with impeccable solution. But Rome was not built in a day & can never be. To achieve the holy grail, term wise planning with ‘Solution Horizon’ is key. Just like education & wealth creation, problem solving, too, is a journey. It all depends on where you are in the journey. If you are in the nascent stages of your business setup, you seek growth by optimising for the immediate term. Once you are in a matured phase, growth is driven by optimising for the long term. Let me try and elaborate what a solution horizon means with respect to planning.
I remember during my MBA, without even realising, the answer to each Supply Chain problem statement was deploying ERP (funny that I now realise how important it is). An ERP, irrespective of deployment lead time, has the longest solution horizon as it will, in all likelihood, outlive the team that conceptualised & deployed it in the first place. The conceptualisation phase of the ERP will incorporate a lot of short horizon initiatives. Iterated over time, these solutions, albeit short lived, will form the bases for logical building blocks of the ERP.
Let me take an example to explain this further. Assume you want to create a simple ‘Order Management’ module for your product. While the basics of order processing like order placement, warehousing operations, shipping operations, invoicing & customer delivery operations are standard across, the customisations needed to address your product behaviour require a lot of initiatives that need to be tested over short periods of time.
If you are processing a gold ornament, the number of steps & checks during warehousing, shipping & customer handover journey will be very different from order processing of FMCG products like detergents or soap. Food & Beverage will need a very different SOP keeping in mind food handling guidelines for customer experience & safety. It is also essential to note here that the tools used for different solutions horizons vary significantly. Extending our example of the ERP, the smaller horizon initiatives might be led by cheaper, sometimes even patchy technology, that may not be a seamless solution for the user. It may be run on a host of shared sheets (Google Sheets) or manual checks over mails. Feedback or handshakes could be done over Google Forms that may not be scalable. But as you reach the ideal solution, you choose a robust technology stack, which is able to handle multiple users doing real-time information sharing with logical locks driving the flow. This will definitely come at a cost. For Example, the gold ornament warehousing operation may begin by the warehouse operator pushing mails or Google Forms with images of packaged condition of the goods to the shipping partner with a manual POD for handshake. This is a cumbersome process, but much needed for desired visibility in the value chain. Once the feedback for tweaks in the handshake process are incorporated to drive discipline, it can be replicated as a module on the ERP or even an app with multiple access controlled user interfaces.
TAKING THE RIGHT STEP
It begins from brute force for process adoption, to adding people for process adherence, and then eventually getting technology for process standardisation & stabilisation. Does this mean your term wise plan with specific solutions identified over their tenure would help you achieve desired results? Maybe not! The most important driver for this approach, just like any other in business, is People. People, at various levels, in your organisation will drive different solution horizons. This brings us to ‘Accountability Horizon’. As a business stakeholder, you don’t really get to choose the term for which you’re seeking a solution. It effectively depends on your Accountability horizon.
If you’re in the Lower Management, in all likelihood, you are chasing daily/ weekly targets. Here, you can only optimise for the short term. At best, stretch to Mid-term but that won’t really help your cause as you are measured on daily/weekly targets. Brute force is the best fit for this. Establish a process, follow it diligently & make sure you make others around you stick to the same. If you are a city in-charge for warehouse operations for the gold ornament org, you only optimise for dispatch turnaround based on your volumes, so that you don’t miss out on promised timelines. Your localised processes are created for your own warehouse team. This process will have to be followed for every order received. You may penalise the deviations. This is solving by Brute Force.
If you are in the Middle Management,your accountability horizon shifts to a monthly/quarterly cycle. You have a specific type of comfort that the previous cohort did not have. A couple of weeks of performance dip for a brighter quarter can help your case. Here, you make sure you deploy brute force to sustain current levels of performance & then add in chasers (more people to support the growth/process adherence) while redesigning processes. In my view, the life of chasers cannot exceed beyond a quarter. If you are the regional in-charge for warehousing operations for the gold ornament org, you may add a layer of process designers that will review the current hits & misses of each different warehouse & will help you create a standard best practice play book your region. These chasers, with incremental process changes, then also help drive the change with daily reporting on adherence.
Your next overlap comes with the long term solution to make sure a sustainable process is born. Technology comes to the fore here. A structure that can run the current scale in Auto-Pilot & then the next cycle of Brute Force/Chasers can take your KPIs beyond current levels.
MAKING THE RIGHT MOVE
Making yourself and your team redundant for current levels of business is the key output metric if you want your business & your professional career to grow. This is the accountability horizon that gives you the maximum flexibility in order to plan your solution horizons. You will need to run both Short Term & LongTerm programs as your personal growth depends on the same. However, at the same time, this is where most people make or break their careers. Those who are able to pull off this balancing act over a sustained period of time get to the next stage. For those who don’t, well, they don’t perish but get stuck. The manager of the ornament organisation, if she/he is able to maintain performance levels while contributing to the design of the ‘Order Management’ module, she/he will move to the next level of the accountability horizon.
If you are a Senior/C-suite Manager, your accountability horizon HAS TO BE Long term. Immaculate Long Term planning will ensure all the short term results are in order. As David Cote put it, current quarter results should have been planned a year ago! You need to ensure your business stays relevant over the next 3-5 years. The comfort here of a quarterly dip for a good year is present, but it takes a huge effort to convince the board for the same. Indra Nooyi’s vision of Performance with Purpose to cut sugar & salt levels in the portfolio of PepsiCo products was to make sure the company made relevant products for the next decade, not the next quarter.
The next quarter would only get a good performance by selling more of the same products. But will the same portfolio be relevant for the next decade? This question led her to invest heavily for a portfolio redesign while keeping the core of the brands same. It was still, maybe the best salty snacks or potato chips, but with a lot less salt & sodium. It was still the joy of opening a good fizzy soft drink, but with a lot less sugar. The transition in the portfolio could not happen overnight. It has as much to do with the consumer’s ability to accept change (in terms of taste & portfolio) as with the organisation’s internal capability to deliver this change at the right cost.
THE RIGHT FIT
Defining milestones, like % value & volume share, to capture the directional change, is a key management deliverable here. Here, what is desired is as follows…
Technology based solutions
Redesigning org structures
Rethinking accountabilities of functions
Designing conflicting KPIs that expand the organisational web out of the current comfort zone is also needed. Entire functions could be made redundant with redirected focus towards chasing untapped value. If you are the CXO in the gold ornament organisation, maybe you need to figure out how to disrupt the current order management flow to stay relevant! Now, it is time to figure out your organisation’s needs and where you fit in to deliver growth!
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