It seems to me that every year at about this time it gets really cold in Canada and the northern U.S. But every year the media trumpets this fact as if it’s surprising. Global warming skeptics use the cold snap as an argument against global warming while global warming advocates use it as further proof that the global climate is out of whack.

Managers in organizations go through a planning and budgeting binge at the end of the fiscal year so they can get their estimates in for the next year. It’s as if the yearly cycle of planning and budgeting is a surprise to everyone. Most of what organizations and businesses go through in a year is cyclical in nature, so there is really no excuse to be surprised by normally recurring events and conditions. We know that we need lead time to order materials and get organized. We also know that it takes a certain period to get everyone ramped up to change focus and reorient to new goals and challenges.

I advocate combining cyclical and phased approaches to forecasting and planning. In a newsletter in 2012, I had referred to waves of strategy. In any company or organization, we should be planning at least one year ahead at middle levels while higher levels and the strategic leadership should be looking out two to three years ahead. The idea is to anticipate changes in the environment and strategy while the organization executes current plans and prepares for the next cycle.

Here is an example of how this can be implemented in parallel with current operations (assuming the organization follows the calendar year):

January: Review the previous year’s results and compare them to what had been anticipated and planned. Prepare for the annual strategy and forecasting retreat.

February-March: Conduct the annual strategy and forecasting retreat. The aim is to confirm the current year’s plans, develop guidance for planning the next year (starting in 9-10 months’ time), and develop outline forecasts and plans for the following one or two years after next. In other words, the organization should be following a rolling 3-year forecasting and planning cycle.

April-May: Issue guidance for next fiscal year so that the entire organization can identify their planning focus and prepare to his the ground running when the next year starts. These plans should be briefed up the “chain of command” so they are fully aligned with the strategic and operational guidance and direction. The mission analysis and mission leadership framework are extremely useful in this regard, as they allow leaders at all levels to hone their respective missions and plans and ensure they are operating with the senior leadership’s stated intent and strategy.

June: Review performance of first half and adjust plans and focus to end of current year. Submit initial budget forecasts, especially for funding of special projects, new product development, marketing initiatives, etc.

July-August: Senior leadership reviews long-term plans and projects under the 2-3 year forecasting framework. Budgets and plans at all levels are reviewed and adjusted in accordance with strategic forecasts and intent for next fiscal year (starting in 4-5 months).

September: Senior leadership confirms overall budgets and plans for next fiscal year and issues updated guidance and direction to organization. Subordinate elements of the organization adjust their plans and forecasts to align with this guidance.

October: Senior leadership reviews year-to-date and issues guidance and direction to end of current year. Can hold a visioning and scenario-based planning retreat to identify potential opportunities and threats in next 3-5 years and to feed planning and preparation for next year’s forecasting and strategy cycle.

October-November: Organizational elements conduct detailed implementation planning and organizing to be ready to implement projects and initiatives in next year.

December: Overall review of cyclical process with recommendations to amend for improved efficiency and effectiveness in next year.

This is not necessarily a comprehensive example suitable for every type of business or organization. However, it can provide a template for creating a planning and forecasting cycle that integrates current operations with future planning that anticipates changes and positions the organization to thrive in the short and medium terms.

Richard Martin is a consultant, speaker, and executive coach. He brings his military and business leadership and management experience to bear for executives and organizations seeking to exploit change, maximize opportunity, and minimize risk.

© 2013 Richard Martin. Reproduction and quotes are permitted with proper attribution.

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