The purpose of planning is to enable executives and managers to make better-informed decisions more consistently. Planning within an organization requires setting objectives and weighing the alternative methods of achieving those objectives, because there are usually multiple potential paths to success. The best results are achieved when the process considers a range of scenarios for an organization’s operating environment because the future is always uncertain. And planning also involves assessing the impact of various trade-offs because resources aren’t infinite. Executives who include these factors in their planning approach can see further and deeper into the future and therefore are equipped to make better decisions.
Senior executives should ask themselves what they would pay to have deeper forward visibility during periods of competitive challenges, market volatility or economic crisis. Visibility that enables them to shift from “What now?” to “What’s next?” Visibility into potential impacts on their income statement and how that will affect their cash flow and balance sheet. The visibility made possible by quickly having answers to a range of “what-if” questions such as “What would happen if competitors cut prices on this line of products by 7%?” or “What if corporate tax rates rise to this percent?” or “What if a key raw material price declines by 12%?”
