Blogs

3 advantages of new performance management technologies

Performance Management Executive, IBM

Who really likes strategic planning? Recent research shows managers in most large and midsize firms dread strategic planning rituals. I can attest to this in my work as a performance management specialist, helping organizations better align technology and business processes. I have often encountered skepticism of strategic planning at levels ranging from lower management to the C-suite.

http://www.ibmbigdatahub.com/sites/default/files/crowdsourcestrategicplanning_blog.jpgThe promise of strategic planning

We have come a long way from the original promise of strategic planning in the 1960s, when it was heralded as a means by which corporate leadership could quantify an organization’s long-term path to growth. As early as the 1970s, concerns were being raised about the value of strategic planning—for example, in this critical examination of the practice by Louis Gerstner, former IBM CEO and iconic figure in American corporate culture. A generation later, we find that strategic planning remains one of the most challenging and often-criticized management activities. For many organizations, as noted in the Harvard Business Review, “[Strategic planning] has devolved into either an overexplained budget or just bad amateur theater—lots of costumes in the form of analysis, charts and presentations—but with very little meaningful substance that can be translated into action.”

Does anyone really know what the plan is?

I believe a major reason strategic planning has failed to live up to its promise is that it is often a static process, with limited input and distribution among corporate leadership. Most organizations focus on the numbers that the strategic plan outputs, and not on the collaboration necessary to analyze critical business decisions and achieve the numbers indicated in the planning process. When strategic planning is not sufficiently inclusive, corporate leaders lack the data necessary to make informed planning decisions. As a result, strategic plans can be often implemented with leaders unaware of the actual levels of investment risk they are undertaking. 

This fatal flaw can be seen in recent research using McKinsey’s organizational-health database (which includes results from surveys of over 765,000 employees at 600 companies over the span of a decade). In many major companies, we see not only the leadership but also the larger organization continuing to struggle with strategic planning and implementation. Research reveals that even in the strongest organizations, 25 percent of employees are unclear about the strategic direction of the company—a number that rises to 60 percent for companies that have poor organizational-health scores.

How to crowdsource your strategic planning

Crowdsourcing is a concept coined in 2006 to describe how modern businesses use technology to draw upon more diverse skill sets, from larger groups, for more effective problem-solving. New performance management technologies, with socially integrated crowdsourcing capabilities, enable organizations to overcome the fatal flaw that has long undermined strategic planning processes.

Today, IBM Performance Management offers organizations a socially integrated, closed-loop iterative planning, forecasting and predictive modeling solution. With such new technologies, for the first time the finance function can effectively partner with both the corporate leadership and the business as a whole. The value from crowdsourcing strategic planning can be seen in initiatives undertaken by companies such as 3M, which has used this innovative approach to enhance market analysis—identifying nine future market segments with aggregate revenue potential in the tens of billions of dollars.

IBM Performance Management solutions offer organizations key advantages to help build truly insightful and actionable strategic plans:

  • The insight advantage: Pulling in a more diverse range of perspectives, not only from the finance function but from across the business, increases the volume and detail of data in the strategic planning process. When combined with advanced predictive modeling, this can yield unexpected insights and enhance the overall accuracy of the plan and likelihood of attaining planning goals.
  • The motivational cohesion advantage: Socially integrated planning helps ensure broader alignment of the plan among all employees of a company. This alignment enhances motivational cohesion across the organization for more effective execution of the plan.
  • The actionable advantage: Deeper and broader alignment of all members of a company with a strategic plan renders it significantly more actionable. This enables more rapid identification of unforeseen challenges and opportunities, supporting better informed decision-making for necessary adjustments in the plan. For corporate leadership, this advantage addresses one of the most significant weakness in strategic planning—the problem of emergent strategy, or the paralysis of decision-making due to unanticipated events.  

The return on investment from crowdsourcing your strategic planning is clear and quantifiable. As McKinsey research reveals, “The payoff for cohesion is significant: companies with a top-quartile score in directional alignment are twice as likely as others to have above-median financial performance.”

Learn more about the advantages IBM Performance Management can bring to your planning, budgeting and forecasting.