“I love it when a plan comes together.”
- Colonel John “Hannibal” Smith
CEOs don’t plan the way they used to. They can’t. Business today moves too fast, which makes adapting and pivoting in real time the new way to work.
Not long ago, it was typical for a company lock down a specific time horizon for business planning. For some, it was a year. For others, three years or more. It made sense; some companies are primarily cash-flow driven and have no choice but to operate by short-term plans, and others are more defined by long-term investments and R&D projects.
But as the 17th Annual PwC Annual Global CEO Survey reveals, at least half of all CEOs are thinking that, no matter what their current planning time horizon happens to be, they’d be better off with a different one.
As the graph shows, many CEOs seem to believe their planning horizons are in need of some adjusting. PwC surveyed more than 1,300 company leaders from 68 countries. Twelve percent of those CEOs operate on a one-year planning timeframe – but of those, 70 percent would like to increase their horizons to three, five or more than five years. And of the 51 percent of chief executives whose plans look three years into the future, more than a third (38 percent) want to increase their planning timeframe to two or more years. About one in four of all CEOs surveyed (24 percent) head companies that operate on a five-year plan, but 19 percent of them would like to shrink that timeframe down to one or three years.
Is this just a case of the grass always being greener? I don’t think so, and neither does PwC. In presenting its CEO Survey data, PwC suggests CEOs can meet the demands of an always-changing business environment by adopting multiple planning horizons. That isn’t as easy as it sounds, since it requires the ability to balance short- and long-term planning. Public companies in particular are expected to plan three to five years out. But they also must perform quarterly. They are punished mightily by investors if they fail to do either.
Operating on multiple planning horizons isn’t impossible, but for many companies, it will require the adoption of modern financial planning and analytics solutions that are capable of keeping up with the pace of business today and anticipating the challenges of tomorrow. So what should CEOs and CFOs look for in a planning platform?
- Agility. A responsive, nimble organization requires continuous forecasting based on real-time data.
- Ubiquity. You can’t be agile if a small handful of financial analysts are manually feeding the plan with information they’ve painstakingly collected from the edges of the organization. The latest financial planning solutions are intuitive enough so any stakeholder in the company can input forecasts or actuals for sales orders, headcount, or capital and operating expenses – or run what-if scenarios to analyze the potential implications of their actions. This accelerates collaborative planning and produces plans that are relevant in the near term or years from now.
- Mobility. Want to ensure your plan includes the latest, more accurate information? Make sure your planning solution works with the mobile devices your employees carry all day, every day.
- Scalability. Cloud-first platforms can easily scale as organizations increase their sources of structured and unstructured data, or broaden the use of their planning platform to more users.
I read the PwC survey as a wake-up call to CFOs: If your boss thinks your company’s planning horizon is wrong, are you making the changes necessary to change it? As the PwC report itself states: “The future has an unfortunate way of sidelining those who simply wait and see.”