The Strategic Planning process at many companies is in sore need of an overhaul. As many of you know, the “Strat Plan” can take on a life of its own. It was not too long ago that I was the guy who had the pleasure of creating and consolidating the Strategic Plan along with all the initiatives created by our VPs and functional areas. The greenfield initiatives. The cost savings initiatives. The sales and marketing initiatives. The IT initiatives.  The “I have this great idea that will generate millions in revenue with zero cost” initiatives. Need I continue?

They all sounded great and many of them had reasonable assumptions, but it was simply not possible to complete all those initiatives in the year. On top of that, there were diminishing returns with each cost savings measure and many of the strategies required access to the same resources and capital. The owner of each initiative treated the benefits as if their initiative was the only one that would take place.It became my job to push back and infuse a bit of realism in the numbers since I had the big picture view and was crafting the overall story. 

I frequently said to myself, “Wow, I wish I had known about all of these great initiatives at the beginning of the planning cycle.” As I added all the initiatives to my model, along with all the goodness they were supposed to create, I was left with a huge same store decrease as my plug. Or I played the inflation factor game and increased my cost assumptions. As Anders Liu-Lindberg said in “Why FP&A Must Transform the Strategy Process,” “…by the time FP&A gets involved it’s often too late to shape the strategy, so FP&A resorts to cooking up some numbers based on the strategy.” My P&L was substantively complete before I received the strategic components that summed together to support it! Now that I had all these “good guys”, I needed to create “bad guys” to offset them so I didn’t end up with an unrealistically high profit in my plan. 

It is critical to include FP&A in your strategic planning process as early as possible. Become a true Finance business partner and engage with the respective owners before they begin to create the pro forma P&L for their initiative. Once those are all created, compile a summary of them and send it out to the entire team. In my experience, that sparked discussion amongst the senior team since they could now see the same overlaps that I did. Communication is almost always the answer. This will allow you to become a facilitator of the process rather than an actor who appears in the closing scenes of the movie to tie up the loose ends. 

I have written in the past about the importance of Finance acting as the conductor/storyteller. By involving FP&A earlier in the process, we can ensure that the story is centered around a unified vision rather than a piecemeal strategy that is more akin to a book of short stories. The latter provides everyone something that may be important to them, but the collective is weaker as a direct result. Utilize your FP&A team to make the tough decisions early in your strategic planning process so the company can rally around those initiatives and create a roadmap to get there.

Read more posts in Brian’s FP&A Done Right Series:

FP&A Done Right: 5 Signs it’s Time to Rethink Your Process

FP&A Done Right: Creating a Shared Vision Between Finance and IT

Why, Why, Why, Why? – The Hallmark of a Great FP&A Practitioner