Oliver Wight on the evolution of business planning

21 June 2023 Consultancy.uk 9 min. read
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Oliver Wight is a thought leader in business planning. Consultancy.org spoke with partners Les Brookes and Monte Maritz about how the concept they originated – Integrated Business Planning – helps organisations provide enhanced financial and operational visibility, driving better decision-making.

For decades, companies around the world have been aligning their supply chain processes with commercials (and vice versa) through what is known as ‘Sales & Operations Planning’ (S&OP), but as supply chains became increasingly complex in response to global challenges such as globalisation, climate change, consumer demands, and more, there was need for a more integrated approach.

This was precisely the shift that Oliver Wight were seeking to address when they developed the concept of Integrated Business Planning.

Oliver Wight on the evolution of business planning

As per the firm’s definition, the method helps clients unify “commercial planning and supply chain planning with other functions’ processes, all within a wider business strategy.” By doing this, Integrated Business Planning aims to generate a single, integrated plan for a business, using a process that ensures that every decision in the business “also serves better financial planning, meets commercial goals, and supports future product development.”

Speaking on the development, Oliver Wight partner Les Brookes recalls, “Back in 2005, we first coined the term Integrated Business Planning to supersede Sales & Operations Planning for one simple reason. Many people viewed S&OP as little more than demand/supply balancing process. But in fact, leaders were looking for an approach that generates a single integrated plan to drive the best total business value.”

Monte Maritz, another partner at Oliver Wight, adds, “Integrated Business Planning can be considered an outgrowth of the S&OP process. While the core of the S&OP process remains valid, it goes further.”

Working process

At the core of Integrated Business Planning is generating a single integrated plan to drive the best total business value. This means that it not just looks at the agenda of the leaders of sales or supply chain functions, but also at, for example, the CFO’s agenda.

According to Maritz, finance “welcomed a more holistic approach to financial forecasting and strategic support” – something which could enhance reporting, risk management, and allocation of capital. But building on this, Integrated Business Planning actually ends up stretching far beyond the remit of finance – involving functional heads from across the business and helps them meet organisational goals.

“It’s not just about alignment of inputs and processes, but also helping functional management deliver towards a holistic plan,” states Maritz. “Integrated Business Planning offers every aspect of management visibility into their businesses.”

Demand for Oliver Wight’s pioneering service has steadily grown. In recent years, however, major geopolitical and social changes have made it increasingly apparent why the concept is so important – and related requests from clients have boomed.

In particular, the jeopardising of globalised trade systems by escalating tensions between the US and China, the impacts of Brexit and the war in Ukraine on trade across Europe, spiralling inflation and the lockdown era of the pandemic have shown that international supply chains are more vulnerable to disruption than ever before.

With the effects of climate change becoming ever more apparent, and the threat of further conflicts across Europe and Asia, it is clear that similar events will mean organisations which fail to align from an operations perspective face financial instability and underperformance in the years to come.

To that end, Brookes notes, “The rapid pace of change and the ‘new normals’ of globalisation have created an urgent need for more holistic views of every organisation’s operations. They highlight the fragility of fragmented planning and forecasting. And they put a spotlight on process rigidity.”

“There really has been a revolution in business planning,” Maritz agrees. “Companies that have adopted Integrated Business Planning, or similar concepts, have been able to build more agility and resilience in their decisions and responsiveness.”

Oliver Wight on the evolution of business planning

But how can organisations ensure Integrated Business Planning succeeds? In answer to that, Oliver Wight outlines four key elements:

Continuous process

“Crucially, Integrated Business Planning is a continuous process. It seeks to integrate planning not just between departments to aid management visibility and efficiency – but also to integrate across planning horizons to ensure long-term strategy reflects shifting short-term realities,” Brookes kicks off.

“A more holistic approach means that changes to assumptions or market conditions felt in one part of the business can ripple much more quickly through all management processes.”

The continuous process should however be led from the top. “The prime purpose of Integrated Business Planning is alignment to the business strategy, top-down,” says Brookes. “That’s often driven by a portfolio strategy – but what’s missing is a proper integration of the latest bottom-up portfolio plans. For example, how do we drive decisions around marketing, new product development, or output levels, based on the current visible drivers of demand?”

Planning horizons

As already established, the value of this more responsive, feedback-driven way of thinking around management processes becomes even more evident when unexpected events or radical changes to existing assumptions impact those processes. This does not mean that Integrated Business Planning has no need for long-term planning, though.

“A more integrated planning approach isn’t just about ‘planned agility’ in the face of sudden change. We still need to focus on where demand is going to be; a North Star for any management team standing on the bridge, guiding the ship in a way that both directs and reflects what’s happening both in the engine room and with the passengers.”

While planning horizons vary between organisations – sometimes by management preference, often as a result of company specifics, for many businesses, a 5 or even 10-year planning horizon, particularly at the strategic level, might be considered more normal. In order to deliver this, a truly integrated business planning process might look at, for example, radical shifts in the modes of energy production – or even climate change itself – over generational time spans and adapt accordingly.

Admittedly, this will demand some fairly radical changes to thinking among managers. But facing challenges and planning horizons from the very immediate short-term to the long-term emphasises the need to think in less rigid ways about horizons.

“Some organisations assume they have to go into some kind of emergency process when there are radical external factors at play, but maintaining your existing governance process is the way forward – you still need to plan your rolling mid- to long-term at 24 to 36 months and prepare for long-term strategies. Yes, your daily and weekly processes are more responsive, focused on the short-term. But that’s still about disaggregating your mid-term plan from tactical decisions.”

“Integrated Business Planning can be considered an outgrowth of the S&OP process. While the core of the S&OP process remains valid, it goes further.”

Technology to drive visibility

As with most methodologies around, Integrated Business Planning can benefit from the rise of technology. According to Brookes, a range of technologies are underpinning a recent revolution seen in the practice. For example, the power of cloud can help run highly complex data processes and rapidly turn data into insights, while data analytics is helping drive more informed, better decision-making.

He continues, “Artificial intelligence can drive more accurate insights in inventory management or optimise dynamic pricing models. The internet of things can revolutionise the way products/goods are tracked throughout the supply chain.”

As Brookes makes clear, greater complexity puts a fresh onus on having the right technology to support Integrated Business Planning. For any organisation seeking to implement Integrated Business Planning, investing in technology and the required IT backbone is therefore essential to its success.

“It’s about the flexibility to model business outcomes,” he confirms. “To any one plan, there’s more than one likely outcome. So, a technology platform that allows that flexibility for more dynamic modeling really changes decision-making.”

It’s about people

While the hype around technology is never far from any business’ top conversations Oliver Wight warns that organisations should not lose sight of the most important asset a company has: its people. This is still the case when applying Integrated Business Planning. Oliver Wight continues to “place huge emphasis on people and processes when we talk about Integrated Business Planning,” because business changes rarely succeed without employee buy-in.

Brookes continues, “The simple reason is that if people aren’t in the right mindset – from leadership to shop floor – they can quickly become set in their ways and overly focused on their own tasks. Integrated Business Planning demands broader vision from people – both across the organisation, and over time horizons. That feeds into process. If the people define the “why” and the “what” of business activity, process sets the “how”.

“Systems feed into both sides of the equation,” Brookes concludes. “This reveals evidence to people of what’s happening, and the potential impact of their decisions. But as ever, it’s about the people, their will, and their ability to lead.”